Water Industry Bill

HL Deb 08 June 1999 vol 601 cc1368-401

7.15 p.m.

Report received.

Clause 5 [Regulations concerning charges schemes]:

Baroness Hamwee moved Amendment No. 1:

Page 3, line 19, at end insert— ("( ) make provision as to the matters by reference to which effect is to be given to a measured charges notice; and")

The noble Baroness said: My Lords, in moving this amendment I shall speak also to Amendment No. both of which stand in my name and that of my noble friend Lord Addington. This amendment relates to Clause 5, which deals with regulations concerning charges schemes.

In Committee, I moved an amendment which would have allowed the water undertakers to take into account certain matters when setting the period within which a measured charges notice would be put into effect. The amendment referred particularly to the environmental impact and to the cost to the water undertaker. With that amendment I was concerned to ensure that the legislation did not require an immediate response; indeed, I believe that I described it then as a "scatter-gun" response. I felt that the undertaker should not have to apply the new metering arrangements on the one-by-one basis in response to each request from a customer. My concern there, though it might appear to have been a particular concern for the water companies, was a rather wider concern for consumers, given the fact that sensibly undertaken adjustment programmes undertaken by the water companies are to the long-term benefit of consumers.

In Committee on 22nd April (at col. 1263 of Hansard), the Minister assured us that the Government did not wish to be unduly restrictive on the time-scales within which companies must install meters. She talked about cost-effectiveness and the fact that there may be environmental benefits to be gained from giving priority to metering customers in particular areas. The noble Baroness was concerned that the amendment would give the water companies too much scope to delay responding to a request for a meter. However, she also said that this did not mean that the Government did not take seriously concerns about cost-effectiveness and environmental benefits. She added that the Government had no intention of enforcing a "blanket requirement" on water companies to fit meters within exactly the same time-scale.

The Minister went on in Committee to say (at col. 1264 of Hansard) that there is scope for guidance on time-scales for meter fitting to be included in the Secretary of State's guidance to the director-general on his function of approving charges schemes. She added that the Government did not envisage such guidance to be overly prescriptive and that it would leave scope for local flexibility.

I should like to see regulations prescribed by the Secretary of State covering the issues which I have mentioned—environmental impact and cost. I should also like priority to be given to less well-off customers.

That was a point to which the Minister, quite rightly, referred as being important. Therefore, in this amendment I have not sought to list the issues involved; I have merely sought to give a nudge, if I may put it that way, for them to be included by the Secretary of State. Assuming that there will be consultation on the regulations, I seek to ensure that there will be an opportunity for all those concerned with these matters, including the water undertakers, to contribute to the draft regulations and make points at that stage.

Amendment No. 2 follows on from an amendment that we moved at the Committee stage. It deals with our concern that undertakers should consider the regulations to be practicable. If undertakers find such measures economical, consumers' bills will be reduced or at any rate not increased. Amendment No. 2 enables the Secretary of State to give undertakers particulars of people who are entitled to assistance under the regulations.

At the previous stage of the Bill the Minister was concerned about shifting the burden of administration of the scheme—he said that both the Government and the water companies have a role in this respect—and expressed concern about meeting the costs of protecting vulnerable customers (which is an essential part of the new system, as I, of course, accept) and said that the costs of the scheme should be met by the water undertakers. I have omitted reference to bearing the costs of providing information in the hope that that makes the amendment more acceptable to the Government. There is simply a reference to an obligation to provide information and no reference to who bears the cost of the exercise. I seek to ensure that where the Government, or government departments—particularly the DSS in this case—have relevant information. that is passed on. That seems common sense.

At the previous stage of the Bill the Minister was rightly concerned not to increase bureaucracy. I suggest that this amendment is directed at that concern. The DSS will have information about people who receive benefits. However, I accept that unless the regulations are drafted in a form which we may not have anticipated, information will not be made available about those who are vulnerable in other senses; for example, those receiving certain medical treatment. However, the DSS will have information about many of the people who are to be protected under the scheme. It is not sensible to require the water companies to duplicate that work.

I have a question which is closely connected to the concern I have just mentioned. What research, if any, do the Government have in mind to monitor water poverty? Monitoring the effectiveness of the assistance that is given through the regulations—in other words, a research programme on the extent of water poverty—is an important step. A research programme in this area would chime with the proposal to place social obligations on the utility providers and would complement the Government's present attack on fuel poverty. If that were done, all those involved in this area could determine the effectiveness of the regulations. I hope that the Minister can assist the House on that more general query. I beg to move.

Lord Graham of Edmonton

My Lords, I hope that the Minister will allow me to say a few words. The mere fact that we have this Bill indicates that the Government recognise that problems exist which can best be tackled through legislation. I do not know the mind of the Government on this issue but I know their intentions. I believe that the Government do not wish. to make regulations too onerous. However, I sympathise with the comments of the noble Baroness, Lady Hamwee, in this regard.

As I said at an earlier stage of the Bill, there are not just vulnerable individuals in this area hut also vulnerable groups. I refer to park home residents. I declare an interest—if that is the right phrase—as the secretary of an all-party group. Many of the problems of the people in this group stem from the interpretation or the application by park home site owners of what they believe they are entitled to charge for the various utility services of water, electricity and gas. The Minister in the other place, Hilary Armstrong, established a ministerial working party to consider a range of problems which park home owners and park home site owners have raised. That working party is considering the punitive nature of some charges and the issue of fairness as between park home owners and park home site owners. It is fitting for Parliament in a busy legislative programme to be seen to spare time to try to act fairly with regard to all sides in this area although I accept that there are villains in every community.

I pay tribute to my noble friend Lady Farrington, who has responded to my query about how we deal with the person who has had rules and regulations imposed upon him but does not comply with them. My noble friend said that until the legislation begins to bite one cannot possibly anticipate what is likely to go wrong. Having been involved in local government for 40 years and having been in this place for 25 years, I believe that one can visualise the problems that will arise. However, I am grateful for the full reply that my noble friend gave to me. I hope that if the Minister is unable to accept the amendments in this group, he will recognise that there are vulnerable groups of people in this regard. These people may not be feckless or clueless and they need someone to protect their interests. Local councillors or local MPs should protect those people, and in many instances that is the case. However, wrongdoers need to know that the Government are prepared not merely to bring forward legislation in this regard but also to enforce it.

Lord Whitty

My Lords, I thank the noble Baroness for tabling these amendments which raise interesting issues. I had hoped that I had dealt with the principles involved at the previous stage of the Bill, but the noble Baroness has redrafted the amendments in a rather more sophisticated manner. Therefore I believe that we need to discuss some of the central arguments again. We are discussing a provision to extend the Secretary of State's powers. Most of the comments on this Bill have been aimed at reducing the Secretary of State's powers.

The amendment follows on from the amendment that we debated at Committee stage. It would enable the Secretary of State to set out in regulations factors which should be taken into account in responding to customers' requests to move to a measured charge, although these factors are not specified. I believe the noble Baroness said that it was difficult to specify them fully. The Government do not believe that this extension of the Secretary of State's powers is necessary. I refer to what my noble friend Lady Farrington said in Committee. Requiring companies to respond almost immediately to each measured charges notice would not necessarily be in the wider interests of consumers, and such an onerous obligation may not be appropriate. We must recognise that companies will need to plan their programme for meter installation. In principle this planning may take account of factors such as addressing the needs of the less well off, for whom savings through moving to a meter may be particularly significant; or installing meters first in areas where they bring the greatest environmental benefit.

Under Clause 4 of the Bill as drafted, the Secretary of State would be able to give guidance to the Director General of Water Services and the director general would be able to consider companies' proposals for responding to measured charges notices as part of his new responsibility to approve charges schemes. Surely the director general would be better placed than the department, in pursuance of a direct power, to consider what level of performance companies can reasonably be expected to deliver, what local considerations apply and so forth, and then to agree proposals for meter installations which represent the interests of customers as a whole.

As we said in Committee, there is a balance to strike. It is best that the director general establishes that balance within the broad guidance. We have no intention of enforcing a blanket requirement on all companies to fit meters within a very short period or to exactly the same timescale. That would have a negative effect. On the other hand, customers should not be expected to have to wait for very long before the meters are fitted.

I can assure the noble Baroness that on the guidance and other matters the normal consultation requirements will apply. I hope that the noble Baroness recognises that the arrangements which are already set out provide an appropriate basis on which we can take forward the preparation and approval of charges schemes. In particular, these arrangements will facilitate some of the flexibility she seeks on the timing of meter installation. Therefore the first amendment is not necessary and could be counter-productive.

We debated a similar amendment to Amendment No. 2 in Committee. I am pleased to see that the noble Baroness has deleted the reference to all costs being borne by the Government. She has clearly taken that point. Even so, the amendment still shifts dramatically the burden of responsibility onto the Government. Obviously the Government are concerned that all vulnerable groups are protected—indeed, in many cases, that is the whole rationale of this part of the Bill—but the companies have responsibilities as well. While there is a role for the Government, shifting the whole responsibility onto the Government in terms of identifying individuals is not appropriate. There is no question that water companies will be required to devise their own schemes for identifying those entitled to protection and making separate and perhaps different decisions on whether receipt of a particular benefit will trigger protection. We must have some degree of uniformity across the country. We need to make that clear in regulations which will specify the criteria against which entitlement to protection will be determined.

On the other hand, we are keen to keep to an absolute minimum the bureaucracy involved in the proposals—for example, by identifying pre-existing documentation which will make eligibility easy to establish. In many cases a bill is based on average measured use and the proposed protection would be relatively easy to administer. All these factors should ensure that companies do not face disproportionate costs in managing the scheme to protect vulnerable groups. At the same time, it would not shift the total burden onto the Government to identify which are those vulnerable groups.

My noble friend Lord Graham referred specifically to park home residents as a vulnerable group. Clearly there are particular problems involved there. The context of the discussions with my colleague Hilary Armstrong may lead to an outcome which could be reflected in the regulations and the guidance we will give in this regard.

There is a limit to what can be done by the Government. We do not have a central record of all those suffering from the medical conditions to be covered by our regulations. Contrary to the objective of the noble Baroness's amendment, the amendment would lead to unnecessary duplication of administration between the Government and the water industry. Clearly water companies can seek from the Government information that is readily available, but it should be their responsibility to make the identification and to make sure that vulnerable groups are not adversely affected. The Government will play their full role but the water companies have an important part to play. For them and the Government protection of vulnerable groups is not an optional extra in the water charging system. Indeed, the whole point of the Bill is to make the protection of vulnerable groups an objective.

The noble Baroness asked what research is planned on water property. The national water metering trials include some research into the effect of meters on demand for different groups, which we have taken into account. We have made clear our intention to ensure that those who could suffer severe handicap as a result of the changes are protected. We therefore need to monitor the effect of our new proposals to ensure that there is protection for vulnerable groups in practice and to keep under review the need for wider measures in the light of that experience.

Without repeating myself too much, the point is that water companies are much closer to their customers than the Government. Broad guidance to the director general will enable him or her to give clearer guidance to the water companies. But it is their responsibility. They send out the charges; they know their customers; and they know the basis on which customers pay their bills. Our proposals for developing protection for vulnerable groups represent the right balance between the Government and the industry. The noble Baroness's amendment would shift that responsibility back onto the Government to an undue degree. I hope that she will therefore withdraw the amendment.

Baroness Hamwee

My Lords, in order to avoid bringing forward a further amendment at the next stage, can the Minister say whether it is proposed that the DSS will hand over directly information about those customers who are eligible through their entitlement to benefit?

The Minister referred to possible differences across the country. I am concerned that the water companies will be forced to reinvent a wheel—which would be a complete nonsense—in connection with those whose entitlement to benefit is relevant. I understand the distinction between those who may be on a list or on a data base because of that entitlement and those who are not on any sort of data base because their entitlement arises specifically from the provisions of the Bill. In order to avoid bringing forward at the next stage an amendment which is limited to those who would be passported through entitlement to benefit, can the Minister say any more about how the practical arrangements might work?

Lord Whitty

My Lords, if the noble Baroness means will the DSS hand over its lists of benefit recipients to the water companies, the answer is no. It would not be reasonable that that information should be provided to a private company, with all the data protection problems that it would raise. In most cases, if one is a benefit receiver, one will have documentation which is relatively straightforward to show to the water company. As we are defining the most vulnerable groups by size of family and so on, a simple list of people receiving a particular benefit will not be appropriate. In addition to data protection problems, it could be misleading to provide a full list.

To some extent there is a clear onus on the company to try and find out; there is a clear onus on the company to respond to claims from their customers that they are protected in this way; and there is a clear obligation on the public authorities, if consulted, to give the information. But there is not an automatic provision of lists irrespective of the wishes of the customers.

Baroness Hamwee

My Lords, I am grateful for that reply. Noble Lords will understand that I am not seeking to breach confidences but merely seeking the most practical approach. As to the first amendment and the point made about the extension of the powers of the Secretary of State, I shall say only touché!

I hope that the director general, in undertaking what the Minister described as normal consultation arrangements, will make sure that those arrangements are effective. I shall consider what has been said in response to these two amendments. I beg leave to withdraw Amendment No. 1.

Amendment, by leave, withdrawn.

[Amendment No. 2 not moved.]

Baroness Miller of Hendon moved Amendment No. 3:

Page 3, line 44, at end insert— ("( ) The power to make regulations under this section shall only be exercised after consultation with all such bodies and persons as the Secretary of State considers it appropriate to consult in relation to the proposed regulations. ( ) No regulations shall he made under this section unless a draft of the regulations has been laid before, and approved by a resolution of, each House of Parliament."").

The noble Baroness said: My Lords, this amendment would add two subsections to Clause 5. Clause 3 gives the Secretary of State far-reaching powers to make regulations controlling the contents of the water companies' charging schemes which the director general is required to approve or disapprove, as the case may be.

In Committee, I pointed out that the director general is specifically required under subsection (7) of Clause 4 to have regard to the so-called guidance that he receives from the Secretary of State as to the manner in which he performs his duties.

Although the provisions of this clause actually diminish the discretion of the director general and diminish the independence from political interference that he has enjoyed since the industry was privatised in 1989, I shall certainly not quarrel with them at this late stage. However, it is absolutely right that the Secretary of State should, in the interests of open government, which the party opposite claims to espouse, be required to consult about any regulations that he proposes to make. Apart from anything else, that will relieve him from charges of playing politics with the industry.

The requirement to consult in the terms of the amendment is not unduly onerous. The amendment calls for the director general to consult only with such persons as he himself deems appropriate.

But there are vulnerable groups whose interests need to be considered at any stage of approving charging schemes: persons with a low income or those with a need to use exceptionally large quantities of water for medical reasons. The noble Lord, Lord Ahmed, reminded the Government at Second Reading that the Moslem community also had special needs.

In the debate on this clause in the other place, the Minister for the Environment specifically gave a pledge that, We shall, of course, consult on the regulations in the draft".—[Official Report, Commons, Standing Committee A: 12/1/99; col. 68.]

Consulting about regulations after the Secretary of State has committed himself to a draft will leave the interested parties pushing a very large rock up a very steep hill. Ideally, the Secretary of State should consult before his own ideas are committed to paper.

In turning down my amendment in Committee, the noble Lord, Lord Whitty, said that he did not believe that it would add to the commitment given in the other place by his colleague the Minister for the Environment if the obligation to consult were to be included on the face of the Bill.

I do not doubt the word of either the Minister in the other place or the Minister in this House. But Ministers change, and "new brooms" often have different ideas. A firm and binding obligation which can be changed only by subsequent primary legislation is required to ensure that the interests of vulnerable groups are fully taken into account before the Government commit themselves to a course of action.

The party opposite insists that it keeps its promises. I believe that it does. Ministers in both Houses insist that their word is their bond. On a personal basis I unreservedly accept that. However, as I have said, Ministers come and go. In this case, there can be no reason why Parliament should not have its bond in the form of a statutory obligation.

The noble Lord, Lord Whitty, suggested in his reply to me that the Secretary of State's power to make regulations is constrained by Clause 5(4). That constraint only prevents the Secretary of State from limiting water undertakers' total income. It does not prevent him from interfering in how the total charges are to be split up among different categories of consumers or about whether specially disadvantaged groups are to receive special consideration.

This amendment does not impose any obligation on the Secretary of State in that regard. All it does is oblige him to consult. As the Ministers in both Houses pledged that they would consult, I cannot see why they are reluctant to put that commitment into writing in the Bill.

The second part of the amendment follows on from the one to which I have just spoken. Apart from the consultations about the regulations that the Secretary of State will make directing the director general as to how he is to perform his duties, it is right that those regulations should be scrutinised by Parliament. He would then have to answer for his decisions if he failed to take into account the representations that he received during those consultations. The right and proper way to scrutinise those regulations is by the affirmative resolution process.

The Minister told me that the Delegated Powers and Deregulation Committee had not made any recommendations regarding the regulation-making powers under this clause. That is a very powerful argument. But there is nothing to prevent the government going for the entirely transparent process of allowing the Secretary of State's decisions to be subjected to positive vetting, rather than risk their being allowed to slip through almost unnoticed by the alternative method.

There will be no risk to the Government's timetable. If there are no problems with the regulations, they will go through on the nod. I urge the Government to demonstrate their sensitivity to the opinions of special interest groups by assuring them that their views have been positively considered, even if not acted upon by Parliament. I beg to move.

7.45 p.m.

Lord Whitty

My Lords, the noble Baroness's amendment deals with two separate issues, consultation and parliamentary procedure. I note the confidence that she has in myself and my current colleagues but that she has a fear for the future.

It would be unreasonable to expect that any future government would issue regulations without a reasonable degree of consultation. It is in everyone's interest, particularly the Government's, that the regulations are fair and practical and take into account everyone's view. This Government have given their commitment clearly in a consultation document and the consultation based on that document, and we are continuing to refine proposals in consultation now on which there will be further consultation when we produce the draft regulations. So the process is full of consultation.

I believe that it is unnecessarily suspicious of the noble Baroness to say, in relation to future Secretaries of State of whatever party, that the implication of providing draft regulations does not imply that substantial consultation would be needed. Therefore. I do not believe that the first part of the noble Baroness's amendment is necessary.

However, I feel more strongly in regard to the second part of the amendment. A key reason for adopting the approach set out in the Bill is the openness of our policy to date. In Committee, the noble Baroness herself said that it was important for a statutory instrument to be subject to proper scrutiny. But we have already set out our intentions clearly. We have invited comments on how to ensure that targeted protection is available to those who need it. It is not therefore the case that the tabling of the regulations will be the first indication of the Government's proposals in this area.

In Committee, I pointed out that the use of negative resolution procedures in this sector is entirely in line with other equivalent regulation-making powers under the Water Industry Act 1991. It would, therefore, be bizarre to moved to a changed basis from one which was accepted when the current structure of the water industry was first introduced. At the time, the noble Baroness noted that but suggested that other regulations under the Act referred to highly technical matters and were not of the same order of concern as the regulations referred to under Clause 5. I cannot agree. To take an example, Section 67 of the Water Industry Act 1991 allows the Secretary of State to make regulations governing the standards of wholesomeness of water supplied to customers. Such regulations have wide-ranging public health and welfare consequences and implications. They can have a significant effect on the costs of water, the way in which the companies operate and the income they receive from customers.

For example, if additional treatment or replacement of infrastructure is needed to meet particular standards, the director general would need to take into account such matters in setting price limits for water companies. That is the constraint which we have built into the Bill under Clause 5(4) to which the noble Baroness referred. That subsection also ensures that the Secretary of State's regulation powers do not tread on the toes of the director general's function as economic regulator. We have given a clear indication of the scope of the regulations' intended use, consistent with the Government's legitimate social and environmental concerns, for example, for vulnerable groups, and consistent with the way in which previous water legislation has dealt with these issues.

After the initial use of these regulations it is very likely that at least some of the subsequent uses would be minor and mainly technical updatings of the scope and nature of the protections offered, for which use of the affirmative resolution procedure would be quite disproportionate. As for initial use, the House already knows our intentions. Like the noble Baroness, I also said that the Delegated Powers and Deregulation Committee has seen nothing in the clause that requires it to be drawn to the attention of the House. In other words, by implication, the committee is happy with the negative procedure.

Therefore, I do not think that the amendment is necessary and hope that the commitments we have given on consultation deal with the first part of the amendment. Procedurally, I do not believe that the second part of the amendment is appropriate and I ask the noble Baroness to withdraw it.

Baroness Miller of Hendon

My Lords, I thank the Minister for the full answer he gave me to the two separate parts of the amendment. I also thank both him and the noble Baroness, Lady Farrington, for their courtesy in inviting me to write to them, which I did. I thank them for their clear and concise answers. Of course, I did not agree with them, which is why I brought the amendment back today. I am disappointed that the noble Lord did not think my powers of persuasion were sufficient to make him change his mind, but that has to be my fault and not his.

The only point I wish to make concerns the first part of my amendment. I am not casting aspersions on future Members who might hold the position held by the noble Lord today, but since it has been suggested that there will be consultation, I cannot see why that could not be written into the Bill. However, I accept that that is his view and I shall not push the amendment further. I have made my point and the Minister has made his.

It is true that we discussed the positive resolution earlier, and I described these as technical matters. Perhaps I did not explain myself well, because when one talks about the quality of water, it is a fact; it is good, bad or indifferent and it can be measured in a sensible way. Here we are discussing different groups of people wanting to be qualified as vulnerable, and that would be a matter of opinion not of fact. That is why it would be more important to have it done by positive resolution rather than negative resolution. However, I accept what the Minister said and beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 6 [Right of consumer to elect for charging by reference to volume]:

Baroness Miller of Hendon moved Amendment No. 4:

Page 4, line 25, at end insert— ("(3A) Whenever it is not reasonably practicable to fix charges in respect of any premises by reference to the volume of water supplied, or to do so would involve the incurring by the undertaker of unreasonable expense, then the undertaker may instead fix charges in respect of those premises on the basis of the average consumption of water in premises of comparable size.").

The noble Baroness said: My Lords, I would like to speak to Amendments Nos. 4, 5 and 14. Clause 6(3) allows an undertaker to decline to charge on the basis of a metered charge where a meter is requested, but it is not reasonably practical for the undertaker to do so or it cannot do so except at an unreasonable cost. For example, there might be a block of flats where not all tenants want meters or where the physical construction of the building makes insuperable difficulties. The Bill is silent on how water is to be charged for in those circumstances.

The secondary amendment is purely consequential on the main one. The main amendment is to clear up that deficiency by allowing water companies to charge on the basis of average consumption in similar premises. The noble Lord, Lord Whitty, when he responded to my noble friend Lady Seccombe who spoke to this amendment in Committee, said that the amendment, does not allow the water companies any flexibility in those circumstances".—[Official Report, 22/4/99; col. 1266.]

I should have thought it gave them a great deal of flexibility, but what I think or do not think does not matter. It is what the water companies themselves think, they are the promoters of this method of resolving the problem. So unless the Minister will now argue that there is some objection to it, it is difficult to see why the Government should continue to refuse to consider it.

I do not agree with the Minister's suggestion that this is a matter that should be left to the director general to approve or otherwise in accordance with his powers under Clause 4, which relates to charging schemes. I believe that this is a matter where the Government, in their own Bill, should close a gap which they have themselves created, not, I hasten to say, through any wrongful intention, but simply because they took a proper decision to allow the water companies art exemption and failed to cover the resulting gap. I believe that it is in your Lordships' House that the gap should be closed, not at the desk of a newly created official.

I now wish to speak to Amendment No. 14, which is also in the group. The Minister will recall that at the Committee stage I had tabled the same lengthy amendment as a probing amendment, but I withdrew it before moving it because it was suggested to me that Clause 11 covered the concerns which are the subject of the amendment. However, I am now advised that this is not the case, which is why I have re-tabled it and present it here this evening.

The object is to resolve a particular difficulty, or perhaps an anomaly, which affects blocks of flats. In most cases, with older blocks of flats, it has proved to be impossible to install a meter for a whole block unless all the tenants agree. Also, as I pointed out in my remarks on the earlier amendment, in some cases the configuration of the pipework in a block means that either all the flats are metered or none can be.

This amendment deals with the problem in two alternative ways. First, the owner of the building requests the installation of a meter measuring the entire supply coming into the building. The owner pays the whole water charge to the supplier. The metering in this case can be done without the mechanical problems I have just described. The owner then debits each tenant with a share of the cost of the water supplied to the building.

Your Lordships may wish to know that the director of Ofwat has recently produced a set of draft regulations on the re-sale of water which will protect tenants from unscrupulous landlords, to avoid the problems that have existed in the past in relation to electricity and gas supplies.

Noble Lords will also be aware that it is a common practice in blocks of flats that have been sold on long leases or as freeholds to the tenants for all the expenses of the building to be apportioned among the occupiers on the basis of some agreed formula contained in the identical leases. Floor area or rateable value are common criteria.

Subsection (4) defines "owner" as the immediate lessor of the occupiers or any management company or organisation. These are also commonly used devices in the case of such blocks of flats. I concede that it may be very generous, or possibly rash, for a landlord who decides to pay the water bill for the entire block and then to undertake the responsibility of acting as a debt collector for the water company by collecting it back piecemeal from the individual lessees. There will be some cases where it will be commercially worthwhile for a landlord to undertake this onerous task.

The proposed Ofwat regulations may allow him to make a small percentage profit, or the water company may allow him a discount, or the leases may allow him to make an administration charge on all amounts disbursed for the block. The landlord will make up his mind whether or not he wants to get involved. The truth is, I suspect, that not many landlords will.

That is where the second arm of the amendment—plan B, if you like—comes in. This will enable the water company to assess and charge for water on the basis of the average consumption in dwelling-houses of comparable size. I have discussed the implications and advantages of this system in my Amendment No. 4 to Clause 6 and I shall not take up the House's time by repeating the points. Once again, I have provided for potential disputes to be referred to the director by either party under the procedure laid down in Section 30A.

Whichever method is used, it will enable the occupiers to escape from the increasingly obsolete method of calculating water charges based on an out-of-date rateable value. The amendment is long but the principle and the objectives are short. Once more, I ask the Minister to accept it. If she does not wish to do so, perhaps she will offer some other solution to the problem. I beg to move.

8 p.m.

Baroness Farrington of Ribbleton

My Lords, as an overall principle, we want to see a water charging system which gives customers increased choice. For some people, this may mean opting to have a meter installed because they would prefer to pay on the basis of a measured charge. However, there will be some circumstances where it will be impractical to fit a meter or one could be fitted only at great expense. The noble Baroness, Lady Miller of Hendon, cited the example of a block of flats with shared supply pipes. While I do not believe that it makes sound economic sense to force water companies to spend a disproportionate sum of money on fitting a meter in these circumstances, I agree with the noble Baroness that it would be desirable for customers to have access to an alternative basis of charging.

In our consultation document, Water Charging in England and Wales, A New Approach, we recognised that some customers could face problems of not being able to have a meter fitted for reasons of practicality or expense and proposed that in such cases householders should be able to pay an assessed charge. We therefore strongly support the principle of protecting customers' interests in such circumstances. I made clear during Committee stage our intention to avoid the inequity which has been identified where customers serve a measured charges notice but find that it is unreasonably expensive or impractical to fit a meter.

Protection to such customers can be delivered effectively through the mechanism that we propose to introduce, via Clause 4 of the Bill, for the director general to approve companies' charges schemes. Furthermore, in contrast to the arrangements put forward in this amendment, the use of Clause 4 would give water companies flexibility to consider arrangements for assessing charges which meet their customers' concerns. Possible options include charges based on average consumption, an assessed consumption based on the number of occupants, or an assessed consumption based on the size of the property, as suggested in the noble Baroness's Amendment No. 4.

Amendment No. 14 seeks to assess particular issues which may arise where it is not possible to install meters in blocks of flats. The noble Baroness's amendment introduces the idea that there are two ways of dealing with this problem when an occupier wants a measured basis of charging. One option would be an assessed charge, more nearly related to the bill that might have been payable, given average consumption, in a property of similar characteristics. This is the same provision as that in Amendment No. 4, which seeks to apply this in any case where a requested meter cannot be installed.

The amendment also provides for consideration of an alternative arrangement whereby the whole block is metered, the undertaker charges a measured bill to the owner, lessor or management company, and that owner re-charges the individual occupiers. As drafted, the amendment is permissive and not triggered unless the owner asks to take on responsibility for paying water charges for the block and is subject to the terms of any lease.

However, like Amendment No. 4, there does not appear to be anything in Amendment No. 14 which cannot be implemented under the existing provisions of the Bill. As I hope I have explained, the development of an assessed charge to protect the interests of these customers can be delivered effectively through the mechanism that we propose to introduce, via Clause 4 of the Bill, for the director general to approve companies' charges schemes. In respect of the proposal for the landlord to take on the responsibility for charges, such an option already exists, subject to the terms of the leases.

We believe that this rather complex amendment shows the difficulties and potential inflexibility of attempting to set down in primary legislation the level of detail of all that should happen in such cases. I believe that it would be unnecessarily prescriptive to set out the procedures for calculating assessed charges on the face of the Bill. I hope that the noble Baroness will recognise the clear support that I have given to the principle of assessed charges where meter fitment is impracticable or unreasonably expensive, and will agree that in those circumstances these amendments are not necessary.

The noble Baroness also raised during the earlier stage of the Bill the issue of subsection (5) of Amendment No. 14, requiring any dispute under this section to be referred to the Director General of Water Services for determination under Section 30A of the Water Industry Act 1991. We believe that such disputes could take many forms between the owners and occupiers of buildings and between landlords and their tenants. It seems highly unlikely that the director general or his staff will be qualified or equipped to deal with the whole variety and potentially considerable number of disputes that this amendment could result in their receiving. For this reason alone, there must be some doubt that the amendment as drafted is workable. However, I hope the reply that I have given is as helpful as it possibly can be and will enable the noble Baroness to feel that she can withdraw the amendment.

Baroness Miller of Hendon

My Lords, I thank the Minister for her very helpful response. I suppose the difference between us lies in the fact that maybe I am seeing this glass half empty and the Minister is seeing it half full. She is very optimistic that this method of assessment will work and come into play. I am asking for something a little more specific, but I accept absolutely what the noble Baroness says and I wish her optimism well. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 5 not moved.]

Baroness Hamwee moved Amendment No. 6:

Page 4, line 39, leave out ("twelve") and insert ("twenty-four")

The noble Baroness said: My Lords, Amendment No. 6 seeks to give a consumer a rather longer period to opt back from metering; in other words, it seeks to revoke the measured charges notice. The amendment is to some extent about the adequacy of the right to opt back and also how far it represents, as drafted, a significant increase in consumer choice.

Clause 6(5) allows for the revocation of a measured charges notice and a reversion to an unmeasured basis if a consumer thinks that that suits his needs rather better. The Minister in another place described this as being a consumer protection measure comparable to the protection given under consumer protection legislation, under which consumers can change their minds in a specified cooling off period. I am not sure, however, that I can recall another product or service which, if riot rejected by the consumer within a specific period, is then regarded as a commitment on the part of the consumer for ever—not only the consumer in this case, but the consumer's successors.

The Minister also said that a balance had to be struck between providing choice for consumers and ensuring stability in charging. She said that about a year was probably the right balance. The implication seemed to be that a slightly longer period might be considered. At the Committee stage in this House, I argued that a period of 12 months was simply inadequate for a consumer to assess whether a measured charge best suited a particular household's needs. Needs will vary from year to year and period to period as a household changes its nature. If consumers are to have real protection, there would be no limit on the period for reversion. Looking at the 12 months, I also argued that: it was quite simply too short because there would not be a full year's bills on which a consumer could base a judgment. I was therefore concerned that this was not in any real sense increasing consumer choice, because the choice would not be an informed choice.

The amendment I proposed in Committee sought to take out time limits entirely. The Minister then resisted that open-ended provision. I responded briefly to that by wondering aloud whether a fixed period longer than 12 months would meet everyone's concerns. That is the purpose of Amendment No. 6. The amendment seeks to achieve the balance that the Government have said they are seeking. It proposes a 24-month rather than a 12-month period. It does not propose that a consumer can switch backwards and forwards more than once. It seeks simply to extend the period within which one reversion can take place. I hope that that will meet all concerns.

If there were a realistic possibility of our moving to some consistent basis—for instance, council tax bands rather than the move towards metering—I might he less concerned. But I have been informed since the Committee stage that the word on the street, to the extent that the street talks about these things, is that the use of council tax bands is entirely off the agenda. It would be helpful if the Minister could say something about that. I beg to move.

Lord Whitty

My Lords, the noble Baroness has somewhat restricted the ambitions of her previous amendment. We are now arguing about whether the period should be one year or two years. Perhaps I may say at the outset that we should see this in proportion. It is an important objective of the Bill to give consumers some rights to revert if they find that charging is not working out. At present there is no such right. We have to establish a balance with regard to the period of time the scope for reversion should apply.

Water companies are concerned that granting widespread powers to revert will increase uncertainty, impose extra costs on them, which eventually would be passed on to the rest of their consumers, and reduce stability in their planning. On the other hand, as the noble Baroness said, we need to ensure that customers have an essential protection to guard against cases where customers opt for a meter and find that they lose out or suffer in some other way as a result. We are looking to strike a balance. It is important to give people adequate time to assess what the change of charging has brought to them. On the other hand, the water companies need some protection.

In my view, it should be fairly quickly clear to consumers how the different charging system has affected them. In most cases they will be able to tell from their first six-monthly bill. It is true, as the noble Baroness implies, that the longer they have, the more information they will have. But we have to draw a line somewhere. They will have a fairly clear indication from their first six-monthly bill. If the second bill would normally appear after the 12-month period and they are concerned, they can insist on earlier billing in order to meet the deadline. Therefore, I am not convinced that, even in principle, extending the deadline would bring significant additional benefits or significant additional information to consumers.

There are, however, some technical points about the amendment as drafted which I wish to draw to the noble Baroness's attention. I assume that one effect of the amendment is unintended. Under our proposals, customers who opt for a meter but find virtually at once that it does not suit their needs would have the reassurance that they would not have to face more than 12 months on a measured charge. However, the amendment, if accepted, would enable water companies to refuse to allow customers to revert to an unmeasured charge until two years after the meter was installed. Customers who opt for a meter and realise quickly that they have made a mistake—for example, after six months—would not regard this amendment as being in their interest. The amendment has an additional defect in that it would require a corresponding amendment to Clause 6 to make it workable. Therefore, as it stands, it is a technically defective amendment. In the light of those arguments, both the technical and the substantive, I hope that the noble Baroness will feel able to withdraw her amendment.

The noble Baroness asked me about the current position on shifting charging to council tax bands. This is a complex issue. If water companies wish to proceed to develop council tax-based charges, the next step for them is to draw up detailed proposals. My colleague Michael Meacher has met water companies on a number of occasions and we certainly have not ruled out for all time a move to council tax charging. As there is a complex effect in terms of winners and losers, it seems a difficult move to make. Companies which were going to make that move would have to make some substantial preparations. If companies require any information to help them develop their proposals, they can approach the department for that information. But at present we do not see an early move to council tax-based charging. We have not received a request to release the council tax information on which such a system could be based. But that is different from saying, as the noble Baroness said, that we have ruled it out entirely.

8.15 p.m.

Lord Skelmersdale

My Lords, before the noble Lord sits down, he said that he believed that after the first six months a customer would be able to make a realistic assessment; and then after the six months he would have another five months to make up his mind what to do about the situation. However, it depends where in the year the six-month period comes up. Has the Minister any information on the average pattern of water use? One would have thought that people take more baths or showers in the summer. Therefore, the noble Baroness might well have a point in saying that 12 months is not long enough. Whether two years is right, I have no idea. Perhaps the Minister could respond to that comment.

Lord Whitty

My Lords, the level of water consumption changes over the year, but not quite as dramatically as the noble Lord indicated. If people are worried about their first six-monthly bill, they can request from the company a second bill before the next six months is up. In other words, they could meet the 12-month deadline to see what the total, or something close to the total, 12-month pattern would look like. However, in general, I would say that the first six-monthly bill either comes as a shock or a pleasant surprise once one changes one's metering arrangement. To some extent, most people, having been convinced that they need to change their system, would have an expectation of which way it would go. If it went in the opposite direction, that would be clear from the first bill in almost all circumstances.

Baroness Hamwee

My Lords, I am grateful to the noble Lord, Lord Skelmersdale, who precisely picked up the point which concerned me. I take the two criticisms of the amendment. The first was that I have not dealt with the consequential amendments later in the clause in a way which would make the amendment properly workable. The most important piece of information that I have received concerns the ability of a customer to insist on earlier billing than normal. I had not been aware of that, but I am sure it is my own fault that I had not taken that on hoard. That being so, it is particularly important that water companies are encouraged, if not directed, by the director general to highlight that provision when information is being given about the ability to opt for metering and then to switch back. Customers need to know what mechanisms are available to them to take decisions. I am sure that I am not the only Member of this House—certainly not the only person in the wider community—who bins all the bits of small print that tend to accompany bills from utilities. I hope that very plainly presented information about this matter will be an absolute requirement when these provisions come into effect.

As to council tax, the point about winners and losers is one that has also been made to me. I am told that the water companies are still concerned that perhaps for reasons of data protection—nevertheless, it is a real problem for them—council tax banding information is available only in conventional or (if I may so put it) primitive documentary rather than electronic form. It is a pity that a way has not been found to provide information that is quickly and easily accessible—no different from information that can be accessed by asking a whole series of questions of a local authority and receiving pieces of paper—in a way that they can handle more easily. I express that little whinge. However, to return to the question of the 12 and 24 months I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Miller of Hendon moved Amendment No. 7:

Page 5, line 12, at end insert— ("(7A) In any case where—

1. (a) the premises had been let for residential purposes for a term not exceeding 21 years, whether commencing before or after the commencement of this Act, and
2. (b) the lessee for the time being had given a measured charges notice to the undertaker without the express written consent of the lessor for the time being, and
3. (c) the premises have reverted to the original lessor or his successor in title, whether upon the expiry of the term, or upon forfeiture or abandonment or disclaimer or surrender of the lease or by any other means,

the consumer (here meaning the original lessor or his successor in title or, if the premises have been re-let, any new lessee of the premises) may within 12 months of the premises reverting to the original lessor or his successor in title, give a notice to the water undertaker revoking the measured charges notice.")

The noble Baroness said: My Lords, I must begin by declaring the same minor interest as I declared at the earlier stages of this Bill. I am both personally and via family companies in which I am a shareholder the landlord of some rented residential properties. I am not involved in their day-to-day management, and I am advised that it is a matter of indifference to me whether any present or future tenants do or do not elect to have meters.

This amendment is to deal with an anomaly to which I drew attention at both Second Reading and Committee stage. I believe that it is more than an anomaly: it is an injustice that Parliament should not create because the victims are far less powerful and weaker economically than the water companies. The amendment covers the situation in which a person lets out his home for a short period. His tenant then opts to have a metered supply, as is his right. Under Clause 11 the landlord is positively prevented from objecting or even being consulted by having to give his consent; in other words, the landlord has absolutely no say or control over the matter. I do not argue with that. Clearly, the tenant who pays the water bills should be entitled to be charged for the water that he consumes in the way that suits him best.

However, what happens when the tenancy comes to an end? I am talking about short tenancies, not very long ones. If the premises revert to the lessor after the 12-month cooling off period granted by Clause 6(5), the lessor is permanently stuck with a meter that may not suit his own domestic arrangements. One can imagine, for example, the common situation of a person who lets his house for a couple of years while he works overseas. As the Bill stands, the lessor is not only prevented from objecting to the metering of his own property but he also cannot restore the position when he comes back into possession of it.

It is axiomatic of English property law—indeed. I imagine, any sensible commercial system of law—that a tenant or lessee cannot grant rights over a property or impose liabilities on it which extend past the date of the expiry of the lease. To give a very obvious example, a tenant cannot grant a sub-tenancy which extends past the length of his own term. He cannot grant a perpetual right of way, a right of light, a right of drainage and so on. Clearly, he should not be able to impose on the landlord a burden to which the landlord has no right to object and cannot have removed after the tenancy has expired and the tenant has long since moved on; and that is a burden which will last for ever.

The noble Lord, Lord Whitty, in responding to me at Committee stage, suggested that there would be administrative costs on the water companies for what he called "unconstrained switching" and "uncertainty in pricing by the industry". I believe that that makes a major mountain out of a very minor molehill. The number of cases throughout the entire country in which the combination of all the necessary ingredients may arise must be very small. For example, the premises must be let for more than a year and the tenant must have opted for a meter. When the tenant moves out and the property reverts to the landlord he or his new tenant must decide that he does not want a meter. I can confidently predict that there will be very few such cases a year and an immeasurable and insignificant cost to the industry and its other customers.

In the past few days we have seen the furore in the press about Rebecca Mark who is reported to be about to make £33 million from her share options in Wessex Water. That company is about to be floated—no pun is intended—on the New York Stock Exchange. I do not comment on the rights or wrongs of her position, but with sums like this being involved in the industry why do the Government worry about whether the water companies might incur a negligible amount of administrative costs and lose what to them would be a minor amount of income as a result of a home owner reverting to his previous personal arrangements with them? At least the noble Lord the Minister accepted my point that there would be no need for the supplier to remove the meter or re-install it at a later date.

Just a little over two years ago the party opposite when in opposition reviled water companies as greedy profiteers who reduced large parts of the country—I recall that it had Yorkshire particularly in mind—to the state of an arid desert due to a combination of inefficiency and the spending of their allegedly excessive profits on dividends rather than on their infrastructure. At the same time, their directors were reviled as fat cats. We now find the Government coming down on their side with the excuse that their profits might suffer a minor scratch, not even as much as a dent, if lessors were allowed to protect their own property rights.

The question is whether it is the Government's policy that every property shall in the short term be metered so that once a property is in, it can get out only in the exceptional case provided for in Clause 6. This amendment provides simple justice to a very small group of property owners so that their rights and assets are not diminished by the act of someone who, by definition, has a short and transient interest in the property. If there is a financial detriment, it should fall on the giant water companies which will be the ultimate winners in the metering process rather than individual small property owners. Amendment No. 8 is consequential on Amendment No. 7.

I urge the Government to accept these small provisions which do not detract from the Bill in any way, but which prevent a property owner from having a right taken away from him unilaterally. I beg to move.

Lord Skelmersdale

My Lords, in response to the previous amendment, the Minister (to paraphrase and précis his comments at the same time) told the noble Baroness, Lady Hamwee, that she had gone over the top. I am quite sure that he will say exactly the same to my noble friend. In answer to the point made by my noble friend in Committee, the noble Lord commented that the power was in the hands of whoever paid for the water. In other words, if the landlord paid for the water he was covered by the Bill; if the tenant paid for the water he was covered by the Bill. That is fair enough. But my noble friend makes a valid point. In those cases where the tenant is in the property for a short period and elects to pay for the water through the water bill, surely the landlord should have some powers as regards his property.

In this country we used to have the system of shorthold tenancies. They lasted for a maximum of six months and had to be renewed. That is no longer the case. The former government extended the period to a year, or perhaps two: I cannot remember. I suggest that the period of the true shorthold tenancy would be an appropriate period for the involvement of the landlord in the decision on water metering.

8.30 p.m.

Baroness Hamwee

My Lords, I support the noble Baroness's amendment. She is right to come back to this point. We have talked about the need for balance. She identifies a point where the Bill is unbalanced. I support her attempts to rectify that balance.

Baroness Farrington of Ribbleton

My Lords, Amendments Nos. 7 and 8 would mean that water companies would have to accept a notice of revocation from subsequent tenants or from property owners into whose property a meter had been installed at the instigation of the tenant without the express permission of the landlord, even where that may have occurred 20 years before.

We have made clear our desire to increase customer choice in water charging, and our proposals do that. However, we have previously explained that this needs to be tempered by ensuring that customers have some stability and predictability in their bills. Giving this very extended right to opt in and out of measured and unmeasured charging could cause uncertainty for the industry and the regulator in predicting companies' revenues and could lead to increased administrative costs. To be drawn into discussions about potential fat cats and levels of drought in Yorkshire—a county which is slowly falling into the sea, I understand, on the other side of the Pennines—and a debate on profits I believe would spoil the positive relationship that we have had during the passage of the Bill.

Anything which reduces the stability in bills we agree is the concern of customers. That is why we thought carefully about the provisions in the Bill which relate to consumers switching between measured and unmeasured charging. We believe that provisions in the Bill regarding reversion provide the right balance between greater choice for customers and ensuring stability in water charging. We are working from the position that those who pay water charges should be neither more nor less advantaged because they live in rented or owner-occupied dwellings. It would not be consistent with this approach to give tenants or landlords rights which are not available to other consumers. That is what underlies our thinking, not a wish to make life more difficult for landlords.

New tenants moving into a property have as much chance as house purchasers to establish beforehand the basis of calculation of rent and other charges; and if they feel strongly about water metering they will weigh that alongside other factors in taking on the tenancy. The regulations to protect vulnerable groups under Clause 5 will apply just as much to tenants as to owner-occupiers, and will offer protection to those with a high essential water use who could face hardship if moving into a property with a meter. The noble Baroness gave the example of a landlord who moved back into the property as an owner-occupier. He would be in exactly the same position as any other owner-occupier moving in.

On the question about shorthold tenancy, under Clause 11, new Section 209A((3) does not apply where the tenancy is a fixed term tenancy for a term of less than six months. I hope that that answers the question.

The regulations protect vulnerable groups. If landlords feel strongly about the basis for water charging in their properties, it is open to them to arrange to be responsible themselves for paying the water and sewerage charges to the undertaker and charging tenants a rent that includes water services. In such circumstances, the tenant would not be expected to have an interest in seeking to change the basis on which the undertaker set the charges. This is an important reassurance for landlords unwilling to have a meter in their premises. We have listened carefully to the points made by the noble Baroness, Lady Miller of Hendon, about potential problems for landlords.

I wish to state again that there is nothing inherent in metering that makes anyone's bills higher or lower. On average, they should be about the same. So although metering may be more or less attractive to different consumers, it should not affect average costs or the value of the property.

We do not believe that there is a persuasive case for treating rented properties differently from others. Where the landlord takes on the role of consumer and tenants do not have direct responsibility for the water bill, it will be the landlord who decides whether to have a meter. Where the tenant has liability for the water charges, the method of payment is predominantly a matter between him and the water undertaker, and we consider that the same regime should apply as to owner-occupied premises.

I appreciate that the noble Baroness, Lady Miller of Hendon, may feel that some of the points have been repeated. But I hope that the totality of the answer will demonstrate that we have given careful consideration to the points she raised. I hope that she will feel able not to press the amendment.

Lord Skelmersdale

My Lords, before the Minister sits down, perhaps I may say that both she and the noble Lord, Lord Whitty, have spoken about balance. Does the noble Baroness agree that if one sector of customers has one year in which to operate the scheme and another sector has six months, something is out of kilter?

Baroness Farrington of Ribbleton

My Lords, the circumstances are different in those cases. During a period of tenancy the consumer is bound to be a different person. The example cited by the noble Baroness, Lady Miller of Hendon, was of a tenant moving in and moving out. The comparison during a 12-month period would not be for the same occupants using the same amounts of water.

Baroness Miller of Hendon

My Lords, I thank my noble friend and the noble Baroness, Lady Hamwee, for their support on what I consider an important matter.

I thank the Minister for her lengthy answer but I do not accept it for several reasons. Before giving the reasons, I wish to meet her point about the fat cats, Yorkshire and the arid desert. I did not mention those factors when I argued a similar amendment in Committee. In Committee, I tried to be factual about the position. That got me absolutely nowhere, so I thought that I would change my tactic. There is no harm in trying! I tried and the Minister rose a little to what I said. But that was the purpose of my comment.

I wish to make a couple of points. First, I do not believe that the Minister has addressed herself to one of the most important areas I was discussing. It was the tenant having the ability to extend rights over a property beyond the length of his lease. I mentioned a tenant being unable to give a right of way beyond the time he lived in the property.

The provisions are new to English property law and need examination. I have no intention of dividing the House tonight, but I hope that the officials in the Box in particular will listen carefully to my comments. I do not believe that the issue should be pushed under the carpet.

The Minister said that when an owner returns to his property it is just like a new owner moving in. A new owner buys a property as it exists. Let us suppose that an owner, possibly a man with children at boarding school, is posted overseas. The tenant moving into his property may be a single person who decides to have a water meter. So be it. However, when the owner returns, the tenant having moved out, he might feel that that is not an economical move. The property was his, but it was altered against his will because he had no right. That is atrocious.

This is a particularly difficult issue. I have no interest one way or another—because I happen to have an interest in a property, it will make no odds to me one way or another—but I have declared an interest. For that reason, I would loath to have to push the amendment. If it were someone else's, I would have loved to support it. However, it was appropriate for me to draw it to the attention of the House. I shall withdraw it, but I hope that the Government will give it serious consideration.

Baroness Farrington of Ribbleton

My Lords, before the noble Baroness formally seeks to withdraw the amendment, perhaps I may draw her attention yet again to the fact that, if landlords feel strongly about the basis of water charging on their property, particularly in the circumstance of someone posted abroad for a short time, it is open to them to arrange to pay the charges themselves and charging the tenants for that. In such circumstances, the tenants would not be expected to have an interest in seeking to change the basis—

Baroness Miller of Hendon

My Lords, I heard the noble Baroness say that previously. I also noted carefully what was said by the noble Baroness, Lady Hamwee, about people throwing away Bills and bits of information. It may well be that someone posted abroad would not know about the change. I am saying to the Minister that I do not believe that that is an excuse for the Government to interfere with the property rights of a landlord beyond the extension of the lease he has granted. That might be a way out, but it is not right. The situation is embarrassing for me and I certainly shall not divide the House. I am looking around at my colleagues and at Members on the other Benches and I believe that it would be totally inappropriate to divide the House. I should not wish to, but I ask the Government urgently to reconsider the matter. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 8 not moved.]

8.45 p.m.

Clause 7 [Restriction on change in basis of charging]:

Baroness Hamwee moved Amendment No 9:

Page 5, line 45, at end insert (", and (d) such conditions as may be prescribed are satisfied in relation to the water resources available to the area in which the premises are sited").

The noble Baroness said: My Lords, following the comment of the noble Baroness, Lady Miller, perhaps I may make it clear that I was not saying that I throw away bills. I tend to pay bills, but it is the bits which come with them that I throw away—or rather put into a bag for recycling.

Baroness Miller of Hendon

My Lords, to suggest that the noble Baroness throws her bills away would be quite appalling!

Baroness Hamwee

My Lords, Amendment No. 9 is the environmental amendment. Its purpose is to allow water companies to require customers in areas of water stress to be metered. During earlier stages, particularly at Second Reading, we spoke about the variation in rainfall and water demand in different regions. The latter is closely related to density of population. In areas such as the south east of England, it is difficult to meet the rising demands for water while at the same time protecting the environment. Your Lordships will be aware of examples of environmental damage. Many have been reported in the press, particularly when rivers run very low. I understand that environmental damage has been caused to 50 nationally important rivers and wetlands.

The amendment seeks to allow demand management measures in order to ameliorate the environmental impact and to ensure that sufficient water is available for customers in future. Water metering can be regarded as an important component in demand management. In tabling the amendment, I suggest that water companies should be able to target water metering to areas of water stress.

Some companies already operate a policy of compulsory metering in such circumstances. I understand that in 1994 Folkestone and Dover water, as part of a scheme for demand management, included the compulsory metering of customers on a zone by zone basis. That reduced demands, or at any rate use, to levels experienced in the early 1980s. Your Lordships will immediately appreciate the environmental benefits of that. Incidentally, it helped the company to raise service standards. The concern is that the Bill prevents water companies from applying such an arrangement.

The Director General of Water Services, responding to the recent government consultation on charging, stated that where appropriate he is in favour of companies retaining a general right to meter customers where water resources are scarce. The Environment Agency, responding to the same consultation, has supported compulsory metering for sprinkler users and swimming pool owners and for areas of water resource stress.

The amendment proposes a further subsection to the clause to allow conditions to be set in regulations regarding the water resources situation in the area where the premises are located. If they are within an area of water stress, the consumer would not benefit from the right to refuse a meter. I have proposed that as an enabling power. Likewise, if water companies decided to make use of the option, they could introduce metering in a phased way.

I appreciate that areas of water stress would be defined in regulations. In order to pre-empt the point that the Minister has made three or four times during the course of this and other legislation—picking me up whenever I suggest that the Secretary of State has an additional power—one must sometimes accept that powers will be given to the Secretary of State to achieve a greater good. If the Minister continues to make that point he will find extremely long amendments tabled from these Benches to constrain what the Secretary of State can do and to flesh out our amendments. That may be a considerable temptation in the next large piece of legislation that will face your Lordships. I accept that the Secretary of State will have additional powers that will be required to identify the areas.

I understand that there are recent government proposals for abstraction licensing that would be helpful. Those require the Environment Agency to develop abstraction management strategies for each river catchment, so that there are local strategies. The agency could define areas of water stress using the information from those strategies, which I understand have to be reviewed on a six-yearly basis.

This amendment is not designed to override the provisions in the Bill to protect vulnerable households from metering. They would still be available for the special protection measures that have been identified. However, I hope that the Government will recognise—returning to this elusive objective of balance—that that is an appropriate balancing provision. I beg to move.

Baroness Miller of Hendon

My Lords, although I was happy for my amendments to be grouped with Amendment No. 9, Amendments Nos. 10 and 11 relate to a completely different point. I tabled these two amendments in Committee, but in view of the shortage of time that evening I did not move them. At that stage, they were intended to be probing amendments, but I believe that they require substantive consideration by the Minister, who has had more than a month to think about them.

As at present drafted, subsection (2) prohibits an undertaker from installing a meter unless the consumer has requested it, or has consented to it, or unless there has been a change in the occupation of the premises and the new occupier has not yet received a bill on a non-metered basis.

Another set of circumstances where the continuation of an unmetered charge would be inappropriate, because a continuation of the use of the rateable value would be inappropriate, is in cases where the premises have been so substantially altered that the rateable value should have been increased, and would have been increased, but for the repeal of Part V of the General Rate Act 1967.

Since rateable values were last set in the late 1970s, many properties, especially houses, have been substantially modified. Extensions and garages have been built, attics have been converted into extra rooms, and so on. In most cases the ever-vigilant district surveyor will have caught up with the owner of the property and the rateable value will have been increased, thereby triggering an increase in the water rates. However, in cases where the rateable value has not been increased, and in future cases where there are substantial alterations to a property, the owner could be paying an unduly low water bill because the rateable value has not been increased to reflect the enhancement of the property. The addition to sub-clause (2) removes that anomaly by allowing the supplier to switch to a metered supply.

It is logical that, if a newly built property is automatically to have its supply metered under the terms of this Bill, to all intents and purposes what is a newly converted or substantially altered property should be dealt with in the same way.

That is also consistent with the Government's acknowledgement that eventually all properties will be on a metered charge basis, as was made clear by the Minister for the Environment, Transport and the Regions in Committee in the other place when subsection (2)(b) was debated at some length.

The purpose of this amendment is to ensure that persons whose properties have increased in value because of substantial alterations do not pay a disproportionately low amount of water charges because there is no longer any machinery to increase their rateable value. That casts an unfair burden on the other customers, as both Ministers have mentioned in other instances.

Amendment No. 11 provides for disputes under this clause to be referred to the director under the appeals procedure set up by new Section 30A. Of course, disputes can arise, especially when the water company claims to have discovered that a substantial alteration which would have resulted in an increase in the rateable value has been made to the property whereas the owner will doubtless want to argue that the alteration is so insignificant that there has been no increase.

How big is substantial? I do not believe that we have to trouble ourselves by trying to define how big substantial is. The director can puzzle that one out. After all, that is part of his job.

As I said, this amendment draws attention to an anomaly. If this group of amendments is not acceptable to the Government, perhaps the Minister will not only tell your Lordships why not, but also tell us what alternative solution the Government have to resolve the problem.

Lord Whitty

My Lords, one of the main purposes of the Bill is to provide a right to customers to remain on the unmetered charges. This slightly disparate group of amendments is brought together because they all attempt to restrict that right.

The first question is whether we need any change to the face of the Bill to allow the kind of circumstances to which both noble Baronesses have referred. At present, the position is that the right to remain on unmetered charges has to meet the criteria specified within the Bill. We have already indicated that, through regulations, we propose to allow water companies to require metering for certain purposes, for example, commercial use, garden sprinklers, swimming pools and so on.

We could use the powers on the face of the Bill to extend the provisions of the Bill to some of the areas to which both noble Baronesses have referred. Therefore, I do not believe that we need a change to the Bill. No doubt the noble Baronesses will wish to know the Government's intention in this area.

On Amendment No. 9, clearly there is a problem about demand and conserving water in cases where water resources are under stress. The proposal to allow more widespread metering in those areas is, to some extent, an extension of the principle to which I have already referred. The arguments are fairly finely balanced. It could be argued that water companies already have the power to require meters for those using significant amounts of water for discretionary purposes, and that we do not need to do anything further on that. However, we recognise that in some areas of the country, particularly in parts of the South East, the demand for water is rising above its provision and that there could be danger to the local environment.

Therefore, in principle, we are prepared to consider allowing water metering in the kind of circumstances that the noble Baroness, Lady Hamwee, described. We need to be careful how we do that. My colleague, Michael Meacher, has invited the director general to develop proposals that will give effect to the aims that lie behind the amendment of the noble Baroness. Organisations such as the RSPB are pursuing that. We can already do that under the provisions for regulations. Therefore, I do not think that it is necessary for the noble Baroness to pursue her amendment.

On Amendments Nos. 10 and 11, I understand that water companies are reluctant, in some circumstances, to continue charging at the pre-1990 rateable value when the property has been significantly amended, There is nothing in our proposals that require water companies to stick to the rateable value assessment for those properties, but that does not mean that, if they move to a different system, that overturns the right of the customer to remain on an unmetered charge.

Amendment No. 9 indicates that there is an argument that metering is justified because of the conservation and environmental benefits. That does not apply to all altered premises and we cannot provide for it on that blanket basis. The fact of adding a garage, for example, does not of itself mean that water consumption increases. There is a fair amount of correspondence from customers saying that it would be unfair for a meter to be imposed upon them because of relatively minor changes to their houses which had no real effect on water use.

While we do not want water companies to be tied to outdated rateable values for properties where that is not appropriate, the fairer system is to allow water companies to update the basis of their charges, but without taking away customer choice. Under the Bill, as it stands, water companies would be able to use licence fees or to assess rateable value, provided that the basis of such charges is set out in the company's own charges schemes. As I expect the noble Baroness is aware, some companies already adopt that approach. Therefore, I do not consider that the right to remain on an unmeasured charge should be overridden by reference to an alteration in property. It should relate to specifics which will be set out in regulations of the same order. We have already indicated that we are prepared to allow water companies to impose meters, as I said at the beginning of my reply. As we can already do that under regulations, I hope that that will convince both noble Baronesses that it is unnecessary to pursue these amendments.

9 p.m.

Baroness Hamwee

My Lords, I thank the Minister for his reply. I accept that, since the amendment is not prescriptive as regards the detail of dealing with water stress areas, it may not add anything to the powers which are already available. As the Minister anticipated, it is the Government's intention which is of particular interest rather than the words on the face of the Bill. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 10 and 11 not moved.]

Lord Addington moved Amendment No. 12:

After Clause 9, insert the following new clause—

cc1395-401
1. RESELLING OF WATER 3,201 words