Water Charges (Amendment) (Hansard, 17 January 1996)

§ Mr. Paul Tyler (North Cornwall)

I beg to move, That leave be given to bring in a Bill to amend the Water Industry Act 1991 to prohibit the use by water undertakers of rateable values as a basis for charging from 31st March 1997; to provide for charging by water undertakers in accordance with council tax bands; and for connected purposes. I put on record at the outset my warm appreciation of the widespread support for the Bill by all parties. The sponsors include senior Members not only from all parts of the House, but from all parts of England and Wales. I especially appreciate the support of the other four officers of the all-party water group, who top the list.

I have not invited Scottish Members to endorse the Bill for the simple reason that the council tax banding system is already used in Scotland to calculate sewerage charges. From April this year, it will be used for the water and sewerage elements so that the charges can be raised by that means. That may give cause for thought to any maverick Conservative Members who think that our Bill is impractical, undesirable or ill timed. Surely, what is good enough for Scotland is good enough for England and Wales.

By way of background, I shall sketch out the scale of the water charge problem. This year's average domestic bill for water and sewerage services nationally will be £205. In many water company areas, rises are around 8 per cent., which is way above inflation. However, that figure understates the burden in many areas.

The highest charges in the country are to be found in the south-west, which has the lowest average household income, above average unemployment and many more elderly residents than is the case for most other areas. The South West Water average this year is a staggering £332. Many people pay well over that—up to £600 or even more—if they live in highly rated properties. Many of those people are pensioners on low incomes.

Seven years ago, the average water and sewerage bill in the south-west was just £150. It increased by £153 to £303 by 1994, more than doubling in five years. Although the rate of increase has eased, the impact on low-income households is still disproportionately severe. South West Water's charges are £38 higher on average than those of the second most expensive water company, Anglian, and a staggering £150 more than the charges of the cheapest water and sewerage company, Thames Water.

Many hon. Members in the Chamber will acknowledge that the area has some of the highest levels of unemployment in the country, while average earnings are 20 per cent. below the national average. People who live in an area with the lowest average earnings in the country are paying the highest water charges. Some 3 per cent. of the population are paying for cleaning up 30 per cent. of Britain's eligible beaches. Some 30 per cent. of customers in the south-west are pensioners, and almost 9 per cent. of their income is being spent on water bills. Many individuals must pay even more. Nationally, the burden may not seem so dire, but the basic illogicality of the charging system is no less stark.

In the past, it has been suggested that universal metering was the answer. Even if the Government and Ofwat tried to force everyone on to water meters—which 742 is impossible in the foreseeable future—there would be minimal savings for most householders. The extra costs of installation would take years to pay off, with limited charge reductions. I am indebted to the Consumers Association and to Which? for an excellent analysis of what would happen. In the Southern company area, it would take nearly 11 years to recoup the cost of installing meters. In Wessex, it would take nearly nine years, while in the Thames area, it would take nearly 23 years. In the North West, Northumbrian and Severn Trent area, the costs of installation would never be recouped.

This is an issue of national concern. The House will recall that the Government admitted the total inadequacy of the rating system when they abolished its use for local council purposes some seven years ago. Today, it is manifestly even more out of date. Ministers acknowledged some nine months ago that there is not the faintest chance of transferring all householders to water meters in the foreseeable future.

The Bill would ensure that water companies switched to the council tax banding system in April 1997. That would have five major advantages: first, it would mean that the valuation would be relatively recent and subject to a fair review; secondly, single residents or householders could be made eligible for a 25 per cent. rebate—as with the council tax—to reflect their lower usage; thirdly, the benefit system could be used to cushion the cost for lower-income householders, especially the elderly and those in the highest water charge areas; fourthly, there would be an obvious administrative saving, since councils could collect water charges on an agency basis and could cut out duplication; and fifthly, in the interests of simplicity, accountability and transparency, the householder would be able to compare the relative costs of different local services and he confident of co-ordination if and when there were band changes.

Given that the Government now acknowledge that the estimated cost of the complete metering of domestic properties is in excess of £2 billion and that it could take from 15 to 20 years, the banding system is the only realistic solution for now. Such a system involves capital savings, rather than increased capital costs. Southern Water, which carried out the largest trial of metering in the Isle of Wight, stated that it was opposed to widespread national metering, while the most innovative and enterprising companies—such as Wessex and Welsh Water—have declared their support for the change encompassed in the Bill.

In the South West Water area—where consumer costs have doubled since privatisation and are forecast to go on rising in the next four years—huge savings would result for the average low-income household. Significantly, in Scotland—where the council tax system is already used to calculate sewerage charges—the average combined water and sewerage bill is only £107, less than one third of the current burden for consumers in the south-west.

Of course, we still need public investment from the Government and from the European Union to ensure that a disproportionate burden does not fall on local residents, but with Ministers still reluctant to pursue that we simply cannot wait for a fairer system of charges. Some west country pensioners are already paying almost one tenth of their total income for water services.

743 In the meantime, the Bill could make a substantial difference to those people without removing the metering option for those who prefer it. The Bill has the support of all the officers of the all-party water group.

We call upon hon. Members from every part of the United Kingdom and every part of the political spectrum to help us persuade Ministers to back the Bill and to get it on to the statute book as quickly as possible.