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Water Bills (South-West)

The hon. Member for Truro and St. Austell (Matthew Taylor) has done his constituents a real service by enabling us to debate this issue. I am well aware of the depth of concern in the region. I pay particular tribute to the untiring efforts of my hon. Friend the Member for Plymouth, Sutton (Linda Gilroy), who recently led a high-level delegation from the National Consumer Council and South West Water to see my hon. Friend the Minister for Climate Change and the Environment. I give his apologies that, as the Minister with primary responsibility for this issue, he is not here today. He is in Copenhagen on ministerial business, but I know that he would have wanted to respond to the points that have been made, and that he will read Hansard with great care. I also pay tribute to my hon. Friend the Member for Plymouth, Devonport (Alison Seabeck) who, in the relatively short time that she has been in the House, has grasped this extremely complex issue in an outstanding way. She raised with the hon. Member for Truro and St. Austell the issue of private sewerage, and I give her the assurance that she sought that the matter is at the forefront of Ministers’ thinking. The Government have decided in principle to transfer private sewers to the company. We shall consult on the route and timing of that transfer, and take full account of the cost to customers when we do so. Ofwat provided a model of the impact on bills of the decision on private sewerage. That produced a range of different impacts for each company, and that will be clarified and improved as we develop the approach for adopting private sewers. I hope that that gives both my hon. Friend and the hon. Member for Truro and St. Austell the assurance that they sought. The Government are very much alive to the issue and are looking carefully at the financial impact. We share a common view of the problem and a determination to adopt a constructive approach, although I cannot accept all the hon. Gentleman’s proposals. South West Water’s customers pay more for their water and sewerage services than customers in other regions. That arose from privatisation, which required each customer to pay for the costs incurred by their water company. Identifying the problems does not necessarily mean that there are easy solutions, and so far none of the ideas has been a complete solution in the interests of customers. The hon. Gentleman’s party has put forward a number of ideas for reducing the burden on South West Water’s customers. They have often involved shifting the burden to national taxpayers or water customers in other parts of the country. I wonder how many ““Focus? leaflets are being put out in London stating that people in Twickenham should pay more to help out the people of Truro and St. Austell. Like other companies, water companies must meet their costs, including the costs of running services and of meeting drinking water and environmental standards. Ultimately, all those costs are paid by their customers. Ofwat sets an upper limit on customer prices, but there is a strong and visible link between what the company spends and what customers fund through their bills. I am not convinced that it would be right to break that link. There is a considerable risk that any national fund to support water companies’ costs from customers throughout the country would weaken the connection between the water company and the customer. There is a question whether companies would pay as much heed to their customers if customers throughout the country met the cost of their plans. There would be a lack of accountability and a weakening of the incentive to individual companies to keep their costs as low as possible. Any such solutions would run counter to the present legislative and regulatory framework. I also doubt that customers in other regions, each with their own problems and costs, would agree that they should shoulder the impact of any redistribution of South West Water’s costs. The hon. Gentleman brought up the particular point about redistributing the environmental costs throughout the country. Since privatisation, every sewerage company in England has had to meet the same list of legal requirements for sewage treatment, but those legal requirements vary in different parts of the country. The basic requirement everywhere is for secondary treatment of sewage, and there are more stringent standards on top of that in designated sensitive areas. Those areas include designated bathing water, as the hon. Gentleman said, as well as many fresh water sites. What is necessary to deliver those standards has varied widely and depended on the sewerage company’s starting point at privatisation—what sewerage network and treatment plants they had to start with. The cost of improvements to meet the required standards also depended on the size of the work, and in the south-west the scattered population has resulted in smaller treatment works, many of which do not offer the same economies of scale that other regions are able to enjoy. There is an essential truth in the suggestion that sewage treatment is inherently more expensive in the south-west, although the requirements are the same. That is the historic picture of costs, but although the principle of meeting the same standards will hold, customers of water companies will continue to face issues and costs particular to their regions. For example, the customers of Thames Water will, over the next few years, have to meet the costs of further improvements to water quality in the Thames tideway—a necessary but extremely demanding exercise that will be reflected in their bills, making them higher than they would otherwise have been.