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Water Bills (South-West)

I shall come to regulatory issues in a moment, but I must make some progress or I shall run out of time. My hon. Friend the Member for Falmouth and Camborne (Julia Goldsworthy) secured an Adjournment debate in the main Chamber on 14 November 2005, when she was told that the Government’s approach was to ““tackle low incomes generally.? Water bills in the region have continued to rise while we have been tackling serious poverty, particularly in Cornwall, where wages are among the bottom 2 per cent. nationally, and while the gap between Cornish incomes and national incomes has widened since 1997. The south-west has the highest proportion of pensioners. The Minister shook his head in respect of this issue of poverty, but will he consider the fact that the average water bill of £483 eats up 7 per cent. of the disposable income of a single pensioner who is in receipt of pension credit? Measures have been designed to tackle the problem, but they have not addressed the scale of the problem of water bills. A national income tax rate of 7 per cent. for water bills would cause an explosion of anger, but that is what many people on low incomes in the south-west face. Given the time constraints, I want to shift my focus to solutions. I have consistently called for action to remove the disproportionate and unfair burden of unaffordable bills from households in the south-west. This is not just a matter of high profits, so even the toughest regulation would not provide a solution. In the financial year 2005-06, South West Water’s return on capital employed—the equivalent of the interest rate that the company could get by banking the money in a financial institution—was 4.8 per cent. That is a slight reduction on the year before, and the figure is the lowest of any water company in England and Wales. The company also has the lowest costs of borrowing, so while there might be room for manoeuvre at the margin, we are not talking about a solution to the high bills. The high rates reflect the genuinely high costs of the clean-up, especially the capital costs of the ““clean sweep? scheme. In addition, the company now has to pay the costs of the capital invested. We need a mechanism for redistributing the environmental costs more fairly across the country. As the Conservatives faced loss of office, we reached a point when the then Secretary of State for the Environment, the right hon. Member for Suffolk, Coastal (Mr. Gummer), took a proposal to Cabinet for such a funding increase, but it was turned down by his Cabinet colleagues. There is no indication that Labour has changed the view in any way, but I would like to know what the Minister’s position is. Labour has put in place exactly such a mechanism in relation to bills in Northern Ireland—it has capped the level of those bills—and that is funded by UK taxpayers. It is hard to see why the Government take one view on Northern Ireland but another one on the south-west. They have also introduced a similar mechanism for electricity bill payers in northern Scotland, who would have otherwise faced disproportionately high bills. I do not believe that such help breaks any rule that the Government have seen through; it is more likely that they simply see helping out the south-west as being too expensive. I do not want to concentrate on what I believe the Government will continue to reject, much as my Liberal Democrat colleagues and I will continue to campaign. I want to examine other options. There is the possibility of extending the benefits system at some level to try to help those on low incomes. The Government should re-examine that because bills have continued to soar. In addition to lasting solutions such as that, action could be taken on second home owners. Second homes have been switching to using meters, because as they are unoccupied for much of the year, their bills are much lower than average. Yet holiday-home owners are perhaps the greatest beneficiaries of the beach clean-up programme for which they are now avoiding paying. Every second home that switches to using a meter, and cuts its bills in the process, increases bills for everyone else, because South West Water still has to raise the same sums overall. A quarter of Britain’s second home owners—some 58,000 households—are to be found in the south-west. Taking them up to the average levels of payment would not cut overall bills significantly, but doing so could at least create a fund to help with the benefits system and to help those on low incomes to pay those bills. The Minister may refer to the Government’s pilot affordability scheme, but the Consumer Council for Water points out that it is falling"““far short of what is needed?." Indeed, it covers only 1,000 out of 600,000 households and is failing to make structural changes. South West Water is trialling its three-year water care project, which is better news. Customers identified as struggling to pay their bills—those who are not paying or who have contacted the company to say that they cannot pay—are actively contacted. The bailiffs are not simply sent in, nor do warning letters simply come through. The company now actively contacts people to offer advice on their billing and to see whether they could go on to a lower rate or benefit from a water meter. Practical help in installing low-water-use devices is available; the company will pay for people to get things such as low-water-use cistern devices and water-saving shower heads. The company will help people to move to a more comfortable debt repayment scheme and offer a new start on their water bills, rather than having the bailiffs press them for money that they simply do not have. That is a solution for a tiny number. It is no long-term solution, because people’s bills continue to be high even after much of that action. The Consumer Council for Water, South West Water and DEFRA are examining whether, short of some of the big scale, long-term solution that I would press for, we can at least find systems that reduce the bill for ordinary families and pensioners in the south-west by changing the tariff regime. I am thinking of the so-called rising block, whereby people would pay an affordable amount for an amount of water that would allow their household to operate on a reasonable basis through the year and would provide essentials, such as washing and toilet functions. The cost would be relatively low, and as people start to use more water, for example for watering the garden, running a swimming pool and so on, they would start to pay higher rates. That is the so-called rising block tariff and I understand that the Minister may have DEFRA’s research on that. I call for Ministers to give an open door to such a scheme being trialled in the south-west, although I do so with caveats. The first is that the Government would have to share information on household numbers, because we know that larger households with a lot of children need to use greater amounts of water, thus a rising block tariff could hit larger families hard were it done on a simple per-property basis. The second is that the needs of some disabled people who have relatively high levels of water use arising out of their disabilities would have to be recognised. Finally, we would need to examine the second home issue seriously, because such properties already benefit from the installation of meters and use water for only part of the year. A rising block tariff could give them an even bigger discount as a result, so the systems should apply specifically to occupied households. A consideration of the numbers in full-time residence at a household would catch that particular issue. To some extent, that matter has been researched, and I believe that the Minister has seen some of the work. Such a scheme would need to be modelled specifically for the south-west. I believe that Members of Parliament who represent the region would co-operate, and that South West Water and the Consumer Council for Water are keen to do so. It would provide a solution and, were we to get on with it, it could be done in time for next year.