Water Charges: Proposed Increases (Hansard, 20 February 1990)

§ The Parliamentary Under-Secretary of State, Department of the Environment (Lord Hesketh)
My Lords, in calculating the proposed charges limits Ministers were bound by the duties imposed on them by Section 7 of the Water Act 1989, principally the duty to ensure that companies can finance the proper carrying out of their functions as appointed water undertakers.

§ Lord Dean of Beswick
My Lords, is the Minister aware that, if one takes the figure that the Minister is allowing, plus inflation, which is not contained in that figure, on those criteria the increase for people in the Bournemouth area over the next three years will be in the region of 70 per cent. to 80 per cent.? Where is the protection for the consumer that the Minister in another place promised during the passage of the Water Bill in order to justify that privatisation measure which they forced through this House and another place?

§ Lord Hesketh
My Lords, I am sure that it is well worth remembering that an amendment from the Benches opposite was carried in your Lordships' House last summer and constant demands were made for ever tighter standards. The costs that will be burdened on the consumer are those that are required in order to raise and achieve the standards that were so manfully defended and sought by those on the Benches opposite during the debate on the Bill in your Lordships' House before it became an Act.

§ Lord Elliott of Morpeth
My Lords, is my noble friend aware that as chairman of a statutory water company—the Newcastle and Gateshead water company—I am more than fully conscious of the long and arduous discussions that have taken place between the water companies and the Government on price increases? Does he accept that company chairmen like myself appreciate to the full that every criterion had to be justified before a price increase was granted? In my opinon the very last thing that this Government could ever be accused of is not supporting the well being of the water consumers of this country.

§ Lord Hesketh
My Lords, of course I stand in the shadow of my noble friend who is an acknowledged expert on the industry. I can assure your Lordships' House that his point is very well made. There have been long and very complicated negotiations to achieve that fair balance.

§ Lord Graham of Edmonton
My Lords, does the Minister understand that when over the next three years the water consumers in, for instance, the Colne Valley, are faced with a 50 per cent. increase, and those in the Lee Valley with a 45 per cent. increase, they have to translate those increased costs for water into their wage applications with its impact on the inflation policy of the Government? Does the Minister understand that the Government ought to tell the whole story to the consumers and come clean, and make sure that every consumer understands that the cost of his water is being inflated as a direct result of government policy?

§ Lord Hesketh
My Lords, the noble Lord, Lord Graham, asks the Government to come clean. The Government are coming clean by insisting on cleanliness in water. It is worth remembering that an average bill is currently some £57 per annum.

§ Viscount Mountgarret
My Lords, does my noble friend agree that part of the problem is that historically consumers have had water somewhat on the cheap for quite a long time and that we are just beginning to catch up?

§ Lord Hesketh
My Lords, the truth of the matter is that there was severe underfunding of the investment in the infrastructure and because of privatisation we have been able to rectify that. That is why the consumer is now having to pay for the increases in standard and quality that we all want.

§ Lord Grimond
My Lords, although there may have been underfunding, is the Minister aware that my water rates in London increased by over 10 times in the 10 years before nationalisation?

§ Lord Hesketh
My Lords, I am afraid that I do not have the figures prior to nationalisation but if I can add to the remarks of the noble Lord I shall write to him.

§ The Earl of Onslow
My Lords, is the Minister aware that London water is considerably cheaper and cleaner than Perrier water?

§ Lord Hesketh
My Lords, I have always been an enthusiast for the tap.

§ Lord John-Mackie
My Lords, there have been increases for almost a year now. When will the standards about which the Minister speaks be achieved?

§ Lord Hesketh
My Lords, they are being achieved and will be achieved. There are various different standards as I am sure the noble Lord is aware. They will be achieved within the timescale that we set out and agreed.

§ Lord Williams of Elvel
My Lords, is the Minister aware that this morning Thames Water announced an increase of 12.2 per cent. in its prices? Is this the pattern of things to come from the privatised water authority?

§ Lord Hesketh
My Lords, for the noble Lord, Lord Williams—who is a member of the Front Bench opposite which insisted on improving standards—to come to the Dispatch Box and ask me why, when those standards and costs are reflected in a rise in charges I find slightly curious.

§ Lord Williams of Elvel
My Lords, will the noble Lord bear in mind that I did not ask him why? I asked whether that is the pattern of things to come.

§ Lord Hesketh
My Lords, it is the very nature of improvement in an infrastructure that it will cost money.

§ Lord Dean of Beswick
My Lords, is the Minister aware that figures that were quoted by the noble Lord, Lord Elliott, for the Newcastle authority will mean that users of the water in that area over the next three years will face an average increase of 15 per cent? That is twice the amount of the present inflation figures. As my noble friend Lord Williams on the Front Bench has asked, what will the Government do when the new massive private companies start to levy their charges? Will all water users be faced with an increase of upwards of 15 per cent? If so, what will become of the Government's fight against inflation?

§ Lord Hesketh
My Lords, I think it is worth remembering that we are actually talking about an increase over the years ahead of some 23p per month. If that is the price of achieving the highest water standards in the world, I do not believe that it is too high a price to pay.