HC Deb 07 July 1999 vol 334 cc989-96 12.30 pm
Mr. Austin Mitchell (Great Grimsby)

I hope that you are sitting comfortably, Mr. Deputy Speaker. I hope that my hon. Friend the Minister is also sitting comfortably, because I am about to retail a horror story that is worthy of the Hammer house of horror—apart from the fact that, in this horror story, Anglian Water plays the combined role of Baron Frankenstein and Count Dracula.

At the beginning of this year, the Grimsby fish merchants who buy and fillet fish in Grimsby's market—Grimsby's wonderful new fish market, I should say—received a shock. These merchants, who carry out what could be described as the primary process, were given estimates by Anglian Water showing the scale of the increase in charges that would take effect from June. The increase had been imposed to pay for the new treatment station at Pyewipe, which was to come on-stream in that month and, indeed, has come on-stream. The existing charge for Macklam's was £738 a year; it was to increase to £20,400—an increase of 2,600 per cent., at a time when inflation was running at about 2 per cent. The current charge for Arthur Bacon was £2,700 a year; that was to increase to £49,000, an increase of 1,735 per cent. The current charge for Cheek House was £7,000 a year; that was to increase to £63,500, an increase of 790 per cent.

Those horrendous increases were due to the urban waste water treatment directive, which requires urban waste water from coastal towns to be collected and treated prior to discharge by the end of 2000—next year, in other words. Grimsby was to have the pleasure of pioneering the measure and of paying the full charges 18 months before the deadline. That was because Anglian Water happens to have a new treatment station—originally intended to remove discharges deposited on beaches in Cleethorpes—which was planned and started before the directive. The station was to be financed by the charges, although what is discharged by the fish merchants—the primary processors—is organic biodegradable waste.

The Sea Fish Industry Authority tells me: The direct discharge of this effluent to the open sea is relatively harmless, it simply returns the fish nutrients back to their origin. Indeed, generations of fish in the Humber estuary and its environs have been reared on exactly such discharges. Anglian Water says that the discharges, although organic and biodegradable, are polluting; but that is only because they are mixed with human and other industrial waste before being treated. If the material were discharged directly into the sea—that would be possible, with consent, and it is being considered in north-east Scotland—there would be no threat of pollution.

Anglian Water imposed the charges on Grimsby before imposing them on any other fishing port. I am talking about ports with which Grimsby is in direct and increasingly intense competition. For instance, it is competing with Hull for landings. Hull has no processing plant, so no charges will be imposed in that regard—if, indeed, charges are imposed at all. If they are imposed, they will be imposed in 2001, or perhaps later. Grimsby must also compete with north-east Scotland and parts such as Aberdeen and Peterhead. As my hon. Friend the Member for Aberdeen, Central (Mr. Doran) will know, the North of Scotland Water Authority intends to set up a plant under the private finance initiative, but bids will not come in until next year and we do not know when the plant will be completed.

The competition is intense. Because of the shortage of fish, Grimsby market's throughput has fallen by 25 per cent. since its establishment. The problem is that this is a mobile industry. The merchants and traders can do their business anywhere. Grimsby merchants buy in Hull; Hull merchants buy in Grimsby. If there is a threat of much heavier charges in Grimsby, the merchants will simply transact their business elsewhere.

Fish can be landed anywhere. Why should they be landed in a place where charges will be so much higher than they are in every other fishing port?

The strength of Grimsby market lies in the fact that a large number of merchants are competing, and they set good prices. The competition sets good prices. If a substantial proportion of merchants go bust because of these charges—20 or more firms may go bust—there will be less competition to set the prices. The possibility of bankruptcy is imminent for several. Anglian Water says that the increase amounts to no more than 1 per cent. of annual turnover, but the Sea Fish Industry Authority estimates that in 1994 processors' profit amounted to only 1.5 per cent. of sales, so most of the industry's profit will be eliminated by the charges. Bankruptcies will result, and firms will go under.

Grimsby's ability to set a good price will be lessened, as will its attraction in regard to fish landings. The charges will deal a blow to our competitive position in the United Kingdom, and, when they are imposed everywhere—as they will be—will deal a blow to the competitive position of British fishing, as opposed to the European position. The directive leaves it open, but I have no doubt that if charges are imposed everywhere, they will not be imposed in the same heavy-handed fashion elsewhere. Other countries do not have the hard-nosed water companies that we have.

Other countries are helping their fishing industries to adjust. Denmark, for instance—

Mr. Bob Blizzard (Waveney)

Will my hon. Friend give way?

Mr. Mitchell

I will in a minute, when I will be making a point directly relevant to my hon. Friend's constituency.

Denmark is giving its industry relocation grants. France is giving its processors 70 per cent. grants to enable them to install treatment equipment in their plants; 35 per cent. comes from the chamber of commerce, while 35 per cent. is provided by European grant money. Other countries are coping without higher charges, and that will deal a blow to the competitive position of Grimsby and the British industry as a whole. It will also deal a blow to fishermen, because the cost of fishing will increase. Fish is already experiencing difficulties in the supermarkets. Demand is down because the price is up: people are turning to alternatives such as chicken. As a result, there is surplus capacity on the processing side. We are already seeing manufacturers restructuring and jobs being lost, and the charges represent a further prod in that direction, because they will increase the cost of fish in the supermarket.

As soon as this became known, I was confronted by an outcry. I began corresponding with Anglian Water. The joys of corresponding with Anglian Water must be experienced to be believed: I really ought to publish the correspondence on the internet. It involves all the pleasure of corresponding with an "I speak your charge" machine that replies only, "We must do this in order to clean up the environment. Charges will go up. You will enjoy it later."

Anglian Water has pretty much refused to budge. It did agree that its initial sampling procedures, on which it has based its charges, were wrong. I am glad that it agrees about that because the procedures were wrong, so Anglian Water has made no great concession in that respect.

I arranged a meeting with my right hon. Friend the Minister for the Environment. He urged compromise. Anglian Water said, "In that case, we will start the charges one month later." That, too, was no great concession because Anglian Water could not have started the charges in June anyway. It also said that it would limit the increase this year to two and a half times the existing charge, or 250 per cent when inflation is 2 per cent., provided that the full charge—up to 500 per cent. for smaller merchants, which will amount to about £250,000 for one of our biggest processors, Bluecrest come in—next year, so Anglian Water gets the merchants into its net, and then closes the trap.

Anyone who protests about the charges is now being referred by Anglian Water to its legal department. Such is Anglian Water's desire for accommodation and compromise. There is still to be an increase of 2.5 times, and a damaging blow is still to be dealt to Grimsby—and it is based on inaccurate information. Samples of the effluent that is discharged vary widely. The Sea Fish Industry Authority has carried out checks, and its findings are very different from those of Anglian Water, whose findings from surveys and spot checks fluctuate wildly.

There is no legitimate basis for these charges. It is a basic principle that charges should reflect the actual costs. Anglian Water does not know the actual costs, and it therefore has no legal or reasonable basis for the charges.

There has been no co-operation with the Fish Merchants Association, because Anglian Water has been unhelpful on the "divide and rule" principle. Indeed, Ofwat wrote to me on 28 June saying that Anglian Water did not properly consult fish merchants". properly. That was a crushing indictment of Anglian Water.

Fish merchants have had no time to implement changes in their procedures to reduce effluent. All sorts of changes could be made, but they all take time, investment and planning. Merchants could use less water—which they use at the behest of their customers, who want the product to be clean and not to be filleted in dirty water—or they could arrange for primary treatment of effluent, or they could remove solids, which could be collected by the council. The big processors could construct a dissolved air flotation plant—which would cost £250,000, so it really is only for the big boys. Consents for direct sea discharges could be obtained. Small business men could be grouped, so that they might better cope with the charges or install plant to reduce effluent.

The Sea Fish Industry Authority is prepared to advise on alternatives; even Anglian Water could help and advise, but it has done nothing. The fact is that there has been no time to act on any alternative, because Anglian wants its money—its pound of fish—now.

The fishing industry in north-east Scotland has brought in environmental consultants—CORDAR—financed by local authorities, to tell it how it might reduce effluent and, therefore, the charges that it pays. In Grimsby, we have had no time to take similar action.

Anglian Water has not even considered the regulator's suggestions. The Environment Agency told me that scope exists for Anglian to present an argument to OFWAT that Grimsby fish merchants are a special case and their costs should be phased in. To which, in a letter to me, dated 6 July, Anglian Water simply replied: Using the economic argument would set a precedent applicable to other groups". Gosh—how awful it would be if people were able to contest charges on economic grounds!

On 7 April, the Office of Water Services suggested to Anglian that charges should be delayed until waste minimisation and agreed sampling procedures have been put in place. There was no response.

The Ministry of Agriculture, Fisheries and Food has finally been stirred, and realised that the charges will damage the industry. MAFF urged caution in applying the charges, which are only one of many burdens being imposed on the fishing industry. MAFF has received no response from Anglian on the matter.

Grimsby is on the front line of this issue, as all the other water companies are waiting to see what happens there before imposing their own charges elsewhere. Some companies, such as Yorkshire Water, are being a little more sensible about the issue. However, South West Water is proposing increasing water charges from 3'7p to £5 per cubic metre. North-east Scotland's pelagic industry is facing a 28-fold increase in water charges. Therefore, everyone is waiting to see what happens on the front line.

My hon. Friend the Member for Waveney (Mr. Blizzard) is interested in related events in Lowestoft, and I hope that he will lead the resistance to similar charging there.

Mr. Blizzard

Fish merchants in Lowestoft are watching the situation with great trepidation, as Anglian Water is just about to commence work, just north of Lowestoft, on a new sewage works, and we fear that the same charging regime may be imposed in my area. My hon. Friend has made the point very well that no business can face such crippling charges, and pointed out the irony that fish merchants' waste itself does not harm the marine environment.

I also tell my hon. Friend that my experience of Anglian Water is essentially the same as his—Anglian is arrogant and insensitive. Moreover, Anglian itself was recently fined £14,000 for polluting the beaches at Lowestoft, resulting in the loss of a European blue flag.

Mr. Mitchell

I am grateful to my hon. Friend for his intervention, which reinforces the argument.

I should also emphasise that these Grimsby merchants are new Anglian Water customers. Previously, Associated British Ports added 18 per cent. to its charges, and then divided up those charges and billed individual businesses. When ABP discovered the size of the charge increases, it decided to let Anglian Water cut out the middle man and crucify its customers directly. Those Grimsby merchants are therefore new customers, for whom Anglian should allow a one-year moratorium in applying the new charges so that a proper and legal charging basis may be agreed, and customers advised on how to reduce charges. After the moratorium, the new charges could be phased in.

I also ask the Government to consider how they might assist the British fishing industry, the competitiveness of which is being affected by a massive increase in charges. Our industry needs help and support which has been made available in Europe, but not in the United Kingdom. Something has to be done to encourage our industry. It needs encouragement and advice on training, and proper investment in new procedures to reduce effluent—which, consequently, would reduce bills. I am sure that no other European Union member state would insist that the new charging regime should be implemented as fully and rigorously as Anglian is trying to do.

Despite the temptation—as hon. Members will see, I am labouring under strong feeling on the issue—I shall not apply John Edmond's two-word description, one word of which was "greedy", to Anglian Water. I do not want to call Anglian greedy—its behaviour will prove whether it is. Nevertheless, Anglian Water has the power to do anything. It has the power to establish a moratorium and to phase in the charges gradually. It should exercise its power for the benefit of our fishing industry, which has been very hard hit, and to create good relations with its customers. It is a monstrous and unforgivable tactic for Anglian to use its legal department to threaten customers who express doubts about the size of the charge increases.

Anglian Water's only defence is but a sophisticated form of the Nuremberg defence. Anglian tells me, "We're improving the environment—everyone wants that". Anglian said: We are merely seeking payment for the services we are providing". The Nuremberg defence was, "I have killed you for your own good and for the good of others", and Anglian has taken the same line.

Our fishing industry accepts the need to clean up the environment. It has cleaned up its own environment by using an enormous amount of water. However, it cannot absorb such a huge increase in charges. We are not at the 11th or the 12th hour—it is 12.30. Nevertheless, I tell Anglian Water that the charges will be resisted. I cannot advise merchants to pay the charges, or say, "You've got to behave reasonably towards Anglian Water because Anglian has behaved unreasonably and inconsistently towards the fishing industry."

I tell Anglian Water this, "If you persevere in blind, unaccommodating, inconsiderate and greedy behaviour, you will irreparably damage the fishing industry and—specifically, and in advance of the rest—the Grimsby fishing industry. You'll kill the goose that lays your golden eggs. If you do that, I'll not forgive you, Grimsby will not forgive you, and the fishing industry certainly won't forgive you."

12.47 pm
The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Mr. Alan Meale)

I congratulate my hon. Friend the Member for Great Grimsby (Mr. Mitchell) on securing this debate. It is a very important debate not only because of the importance of the United Kingdom fishing and food processing industries, but because of the importance of the communities in the areas represented by my hon. Friend and other colleagues in the Chamber.

I pay tribute to my hon. Friend, but also to other Labour Members for attending the debate. It is noticeable that only Labour Members have attended this very important debate on an issue affecting not only Grimsby but many other fishing communities across Britain. I am sad that Opposition Members have not bothered even to be here.

My hon. Friend has a long history of supporting and expressing the concerns of the fishing industries. I remember that, long before I was elected to the House—even before my hon. Friend was a Member of Parliament—in the mid-1970s, he was campaigning on issues affecting the fishing industries. Similarly, some of my other Friends in the Chamber, in their short time in the House, have expressed in the House concerns about food processing and fishing companies in their constituencies. My hon. Friends the Members for Scarborough and Whitby (Mr. Quinn), for Waveney (Mr. Blizzard) and for Cleethorpes (Shona McIsaac) persistently raise their concerns. My hon. Friend the Member for Aberdeen, Central (Mr. Doran) also raises matters of concern frequently, but fishing is a devolved matter in Scotland, and my hon. Friend the Member for East Lothian (Mr. Home Robertson), who deals with these matters in Scotland, is present in the Chamber.

Mr. Deputy Speaker (Sir Alan Haselhurst)

Order. I ought to point out to the Minister, as the Chair has frequently had to do to hon. Members, that half-hour Adjournment debates are the property of the hon. Member who introduces them. They are not wide-ranging debates, and the absence or presence of other hon. Members has no significance for them. The debate is a matter between the hon. Member for Great Grimsby (Mr. Mitchell) and the Minister.

Mr. Meale

I appreciate that point, Mr. Deputy Speaker. I referred to my hon. Friends because of the enormous number of representations made to me before the debate. I realise that the debate is narrow and time limited, but I recognise the concerns of many of my hon. Members.

This is a serious matter, but I must disappoint my hon. Friend the Member for Great Grimsby by saying that the Government do not have the power to intervene in the charges set by Anglian Water this year. Under the law, we cannot tell Anglian Water what to charge. Neither Ministers nor Ofwat have the power to control charges, provided companies do not discriminate unduly and remain within price limits. Our only power—we have used it as best we can—is to encourage all parties to search for an agreed solution.

My right hon. Friend the Minister for the Environment recently met a delegation led by my hon. Friend. We have not been able to achieve an agreement, but I am more than willing to meet my hon. Friend, and others, to discuss their concerns. We shall use our best endeavours to gain some movement.

The Government value the fishing industry, and substantial grants for a range of improvements have been made to fish processors under the European Union fish processing and marketing scheme. Since the processing and marketing and port facilities teams were launched in 1996, the Ministry of Agriculture, Fisheries and Food has made grant awards totalling more than £8 million to English fish processors, markets and fishing ports. The Sea Fish Industry Authority, which is sponsored by that Ministry, recently produced a 50-page guidance note on water and effluent minimisation, which has been sent free of charge to fish processors. The document contains guidance to fish processors on how to identify areas of wastage and minimise increases in costs.

We support the determination of our fishing industries to be fully competitive internationally. My hon. Friend suggested that we should do more than other countries to improve the environment, and he said that firms abroad receive financial help for environmental improvements. Each EU country supports its industries in different ways to suit local arrangements, but there are legal limits on assisting industries financially without falling foul of competition rules.

If my hon. Friend has any evidence that other EU states have supported their fishing industries beyond the limits of competition rules, it would be a matter for the European Commission to investigate. Other member states have different priorities and contribute different shares to the EU budget. Their fishing industries are in different stages of development and vary in their relative importance to national economies. It would not be appropriate to seek to match the spending of other countries in these areas. Spain, for example, receives a much larger allocation than anyone else, because of the size of the Spanish fishing fleet and the relative poverty of the areas concerned.

To provide decent services and to protect the environment, it is reasonable to expect all users of services to pay their way. In particular, charges should broadly follow the principle that the polluter pays. Producers—including the fish processing industry—of trade effluent hitherto discharged with little or no treatment have benefited for many years from relatively low charges.

Mr. Frank Doran (Aberdeen, Central)

My hon. Friend mentions the polluter pays principle, but one of our major difficulties is that different water authorities apply the rules differently. The industry is highly competitive, and when my hon. Friend the Member for Great Grimsby (Mr. Mitchell) talks of possible job losses in Grimsby, I have to hope that some of those jobs might come to Aberdeen, but the playing field is not level.

Mr. Meale

I take that point, and I sympathise on the points made about the introduction of new charges. That is why I have offered to broker a deal.

Although the average bills of fish firms have been lower than average household bills, the firms produce much more effluent than households do. Consequently, their bills per cubic metre have been lower on average. According to Anglian Water, the previous charges to fish firms in the Grimsby area were about 25p per cubic metre. The increased charges work out at about 66p per cubic metre—just over half the volumetric price that domestic customers pay. Given the volume of fish firms' effluent, it is remarkable that previous trade effluent charges for some firms were as low as £112 when the average household sewerage bill in Anglian Water's area was £164 in 1998–99.

A few fish firms have claimed, as a reason for continuing to pay low charges, that they produce natural waste. However, fish processing includes processes such as battering and crumbing. It also produces discharges with a high content of putrescible solid waste. By its very nature, the industry is dirty, and effluent can contain blood, offal, oil, flour and other residues. The effluent is comparatively polluting and expensive to treat.

In England and Wales, since before privatisation, trade effluent charges have been calculated according to the Mogden formula, under which charges are set partly according to the nature of the effluent and partly according to the level of treatment undertaken. That is in line with the polluter pays principle, which we fully endorse.

Fish firms are being asked to meet the higher costs of treating their effluent to at least secondary standards, as is required by the urban waste water treatment directive. We support the directive's main aims, and I shall outline some of the main improvements that it requires. There should at least be minimum requirements for the treatment of all significant discharges of urban waste water from the sewerage network to fresh waters, coastal waters and estuaries. Secondary treatment—that is, treatment by a biological process—is required as the norm for urban waste water discharges.

The directive requires that the most potentially polluting urban waste water discharges—in other words, those into sensitive areas—should have been treated by the end of 1998. Those serving communities of 15,000 people or more must be treated to secondary standard or higher by the end of 2000, but treatment of smaller discharges can be deferred until the end of 2005. We consider that all of that is right, and we want improvements to be introduced as quickly as possible—

Mr. Deputy Speaker

Order. We must now begin the next debate.