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Water Management: S&T Report

My Lords, I am not saying that it is any less important than oil, but that comparison is not viable in economic terms. I was about to say that I had expressed a personal view before from this Dispatch Box. There is no question that the population and resources in this country are spread very unevenly. There is something immoral about taking a resource from other areas of the country to the south-east. Rather than build a water grid, it would be much better to move the population and centres of government and reconfigure the country more fairly to where there are resources. Water is just as much an economic resource to the north, the Midlands, the north-west, the north-east Scotland and Wales as, indeed, London is the engine of the economy. The economics do not make sense anyway. The committee raised the issue of affordability. The Government take affordability seriously and recognise that some customers, not always with the lowest incomes, may find it difficult to pay bills. The regulations on vulnerable groups help people who might otherwise be afraid to limit their use of water, possibly compromising on health and the health of others. I was reminding officials today that in the late 1970s or early 1980s I took myself off—MPs get invited to all kinds of things—to a lecture at Guy’s Hospital about public health. A scientist showed us grids of all the great diseases that kill millions of people and showed how over the years the number of people killed was falling. Then he put on the grid the point at which we found a cure, and we found that cure almost before we had eradicated the diseases. The one common factor of eradicating most diseases was a wholesome supply of clean water. Public health was the key. Frankly, any Government who seek to compromise that are heading for trouble. Therefore, we have to take this issue incredibly seriously, notwithstanding that we cannot have freeloaders not paying for water. I fully accept that, but public health is a crucial factor. The vulnerable groups regulations aim to strike a delicate balance, giving assistance to people who not only need essential use of water but who also receive income-related benefits or tax credits. We are always looking at ways to address affordability, and we are following up the recommendations of a 2004 review on water affordability. A pilot study in the south-west is looking at how benefit entitlement checks, switching to meters and water efficiency measures could help low-income households with their water bills. Another project is looking at the distributional effects of a range of tariffs, including social tariffs on customers. Revenue owed to water companies has increased in line—they are high figures and I accept what has been given here today and what is in the report—with the general growth of consumer debt. It is not just a water issue. Nevertheless, we are dealing with water today. There are big variations in debt levels in different companies, some of which have a similar customer base. It is clear, then, that some water companies deal with debt more effectively than others, and we are keen to see that debt is well managed throughout the industry. There are good practices to be learnt. We can identify those and then share them around. Ofwat and the Consumer Council for Water are working together with the companies to ensure that their debt management approaches are tailored to collect outstanding revenues effectively. Using disconnections as a way of enforcing payment was discussed during the 1999 review on water charging. At that time the Government concluded that the prohibition of disconnections was vital to protect public health and hygiene, for the reasons I have just given. Devices which reduce the flow of water to a trickle were banned at the same time, as they posed a similar risk to health. The Government are pursuing a number of initiatives to improve water efficiency. I have looked at the report. I would be misleading the House if I said I had read every word, but I looked at the visits the committee made. It is very important that visits are made. A visit to Sandwell local authority in the West Midlands would have paid great dividends. When I was a Minister in the Office of the Deputy Prime Minister, my experience with some of its projects for grey water and getting economic efficiency inside old houses to modern standards was that it is second to no other local authority in the country. In fact, Professor Dalton, the scientific adviser for Defra, will make a visit in the near future. Initiatives include the market transformation programme, considering technologies that could reduce water consumption by things mentioned in the report and in the debate today—harvesting rain water and reusing grey water for baths and showers. A project was started this year to develop the necessary evidence, economic base, feasibility, and performance and quality standards for water and a policy action plan and impact scenarios. We must determine that to make it viable. You have to explain to people that it is worth doing. One reason that people understand that it is worth doing is that it saves them money. People need the pound sign over their so-called free good. Water is not a free good. Next week, I will be introducing to this House the water regulations for Northern Ireland, where there are no water charges, no water rates and everyone thinks that it is free rain. There is modernisation still to be done. We need to know the cost, but we also need to consider the best use of rain water and grey water technologies. Defra and the Department for Communities and Local Government—formerly the ODPM, which has been much slagged off during this debate, a point I shall return to in a moment—are to undertake a joint consultation on options for further regulation to secure improved water efficiency in homes and buildings. In addition, the new code for sustainable housing, which is to be introduced later this year, will include a commitment to secure water efficiency savings. I understand that that will all included in the energy part of the home information packs to be introduced next year. I am trying to address the committee's key concerns, including product labelling, which has come up in the debate. The introduction of a mandatory EU labelling scheme for all household water-using products, similar to that for the energy-efficiency labelling scheme, with which I think many people are now familiar would, we think, be complicated. The situation with water and energy is not comparable. The fact that all energy users are metered, together with the higher cost of energy than water, means that the uptake of water-efficient projects would notbe comparable with energy-efficient projects. A mandatory EU labelling scheme would require agreement by EU states to a new directive. That may not be straightforward, as the difference in water availability in different member states means that the cost/benefit case is different in each case. It will be difficult to get a decision there. The Government are considering the feasibility of a voluntary labelling scheme and evaluating the costs and benefits of such a scheme to develop the evidence base. Focus groups with retailers, consumers and specifiers took place this summer and the report will be published later this year. The research that the Consumer Council for Water undertook this summer on consumers’ attitudes and behaviour will also provide useful information on the way forward. There has been much mention of leakage—not as much as I thought there would be, but there is an underlying assumption that this issue must be dealt with. The figures are quite appalling. To reduce leakage across the water supply system, the Government extended Ofwat’s powers to act against companies that do not meet their performance standards. We are concerned that the current framework for setting leakage targets has neither the understanding nor the confidence of the public and does not take proper account of the full range of costs and benefits, especially environmental and social costs. We would prefer a methodology for setting leakage targets that is fit for purpose and can be explained to customers in a way that attracts credibility and confidence. That goes back to the point made by the noble Lord, Lord Broers: if there is no understanding by the public—the consumers—of the issue because it does not matter what the Government do or what exhortations are made, we will not get the change in behaviour that we so urgently require. A review of the methodology for setting leakage targets is now under way, led by Ofwat in conjunction with Defra, the National Assembly for Wales, the Environment Agency and the Consumer Council for Water. Water metering stands at a pathetic 28 per cent. I have freely declare an interest. I asked earlier this year whether I could have a meter in both my homes. I must say for Thames Water—much maligned—that the time taken between the knock on the front door and the guy driving away, including everythingto be done, paperwork and the lot, was less than10 minutes. I cannot knock that taking less than10 minutes. I have still to hear from Severn Trent, though, I must say. So Thames Water is not all bad, although we understand that those who need to drive around London cannot do so because their long-delayed attempts to fix leaks are causing chaos elsewhere. I certainly note the criticisms. As the noble Lord, Lord Dixon-Smith, said, it has a second-to-none performance in getting clean water to come out of the taps, bearing in mind the number of times it has been used. We must be balanced about the issues. Nevertheless, 28 per cent is pretty poor. The water companies have plans to lift that to 47 per cent by 2014, which is not that far away, and to two-thirds—66 per cent—by 2029. They have a range of plans for doing that, including using their existing power to require customers who moves to another house to have a meter when they apply for a water supplier as a tenant or owner-occupier, even if nothing has changed in the house except the customer. New dwellings have meters, which is our problem: we have housing stock of 25 million houses, but we build and replace only 150,000 to 180,000 a year. That is pathetic. We will wait forever for meters, whether for energy or for water. However, 2 million houses are marketed each year in England, of which about 1.5 million are actually sold, so there is potential there if the water companies can use their powers. I have already used up my time, for which I apologise, because I have a whole sheaf of issues to cover and I will have to be the worst nightmare for civil servants as a Minister and reply to Members in a billet doux. There is, however, one point that I must put on the record. I take none of this personally, but, as I have said before, I invite any Committee, whether of this House or the other House, to hold an inquiry on the sustainable communities plan. The myths about this plan that are perpetuated in almost all debates—whether on housing, the energy supply, the infrastructure, or water, which we have had again today—are massive. Unless they are rebutted, they will keep being repeated. First, the plan did not come out of nowhere in 2003. The four growth areas of the south-east were identified as far back as 2000-01. There was consultation along the line. The communities plan is a vision document; it does not set out where developments will be. All developments are subject to the normal planning laws. The water companies have five-year plans, which they look at each year, and a 25-year distribution-requirement plan. The water companies and the Environment Agency are fully engaged. None of them can say that the communities plan was a surprise. I fully admit that some areas of the country were asleep, even after it was published. They said that they did not understand what was planned in the growth areas. I fully accept that there is sometimes some confusion in the public prints—this is mentioned in the report—about the figure of 200,000, which happens to be used in two different contexts. There are not 200,000 more homes in the south-east, but an extra 1.1 million, because 900,000 were already delineated in the plan, although they do not have specific planning permission because they are for particular locations. Everyone already knew about them. The communities plan came along with the aim of lifting that vision over the specified period to1.1 million homes—an extra 200,000 homes. Kate Barker said quite separately that the replacement and rebuilding programme in the country was pathetic. It always has been; every home in this country must last for an average of 1,000 years. Even to say that shows how stupid it is. In Germany and France, average homes are recycled about every 100 years; here, it is every 1,000 years. It is barmy even to say it, but that is the reality of the number of demolitions of old dwellings and the number of new dwellings in this country. We do need an uplift in our output. Kate Barker used the figure of 200,000, which has sometimes got into the lexicon as 200,000 homes for the south-east, but she was talking about England as a whole. It was a national figure for annual production. There are many issues involving the planning system, the 25-year water-infrastructure plans, Ofwat’s five-yearly price reviews, the water companies, the Environment Agency and individual planning applications. Ashford was a case in point. It is one of the four growth areas, albeit the smallest. There was a real problem with the water supply both in and out of Ashford, but it has been settled to everyone’s satisfaction. It slowed nothing down, and was a surprise to no one. The water companies, the Environment Agency and the builders are more than happy with the outcome. They are on course to deliver a visionary international city, if we can get the trains stopping and starting there again. It was dealt with adequately in the context of the Sustainable Communities Plan. It is not as though a plan was imposed for all these houses which no one knew about and then it was realised that there was not enough water. That was not the case. All those issues were known to a greater or lesser degree. Anyone who said, ““It was a surprise: we did not know about it””, frankly was not doing their job, which applies equally to everyone, whether they were in the water companies, the Environment Agency or anywhere else. There was a full discussion. The communities plan arrived almost three years after the growth areas were set out in the 2001 plan. We were putting a greater vision on the flesh and making the point—on page 47—that none of this growth would take place unless the infrastructure was put in. Nor was it just physical infrastructure: it was social infrastructure, including police stations and doctors’ surgeries—I agree that these all use water—as well as housing, roads and the odd prison or two, which are also part of the social infrastructure and have to be mentioned. It would not take place unless the infrastructure was there. It is not a question of forcing growth irrespective of the supply of electricity, water, further utilities and other issues. It is set out for anyone to read. I have said to this House and to committees elsewhere that if they want to do an inquiry into the Sustainable Communities Plan, they should do it, but they should read it first. Now I will give way to the noble Baroness.