PARLIAMENTARY DEBATES HOUSE OF COMMONS OFFICIAL REPORT GENERAL COMMITTEES

Public Bill Committee

WATER BILL

Eighth Sitting Tuesday 17 December 2013 (Morning)

CONTENTS

NEW CLAUSES under consideration when the Committee adjourned till this day at Two o’clock. Written evidence reported to the House.

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The Committee consisted of the following Members:

Chairs: †MR JAMES GRAY,MRS LINDA RIORDAN

† Burrowes, Mr David (Enfield, Southgate) (Con) † Penrose, John (Weston-super-Mare) (Con) † Cryer, John (Leyton and Wanstead) (Lab) † Percy, Andrew (Brigg and Goole) (Con) † Docherty, Thomas (Dunfermline and West Fife) † Phillipson, Bridget (Houghton and Sunderland (Lab) South) (Lab) † Evans, Chris (Islwyn) (Lab/Co-op) † Rogerson, Dan (Parliamentary Under-Secretary of † Glass, Pat (North West Durham) (Lab) State for Environment, Food and Rural Affairs) † Glindon, Mrs Mary (North Tyneside) (Lab) † Spencer, Mr Mark (Sherwood) (Con) † Hollingbery, George (Meon Valley) (Con) † Williams, Hywel (Arfon) (PC) † Lewell-Buck, Mrs Emma (South Shields) (Lab) † Williams, Roger (Brecon and Radnorshire) (LD) † Morris, Anne Marie (Newton Abbot) (Con) † Murray, Sheryll (South East Cornwall) (Con) John-Paul Flaherty, Committee Clerk † Offord, Dr Matthew (Hendon) (Con) † Parish, Neil (Tiverton and Honiton) (Con) † attended the Committee 313 Public Bill CommitteeHOUSE OF COMMONS Water Bill 314

Economically, water companies are rather peculiar Public Bill Committee creatures in some ways. They are monopolies, or near monopolies, and they depend on historical investments such as reservoirs and sewage works. The cost of many Tuesday 17 December 2013 of those investments has been written off, because of age or privatisation. Nevertheless, those investments (Morning) have been made and continuing investments need to be made in the future. I see the hon. Member for Arfon in his place, and it [MR JAMES GRAY in the Chair] would not be appropriate to miss an opportunity, in looking at water from a Welsh perspective, to say, Water Bill “Cofiwch Dreweryn”, which means, “Remember Treweryn”. I am sure the Minister heard that many times when he was in Aberystwyth. Treweryn was the New Clause 23 village that was flooded in the 1950s to provide water for the people of Liverpool. The decisions on that PRIMARY DUTY OF SUSTAINABLE DEVELOPMENT matter were made here in Westminster, not at a local level. I believe that all but one of the Welsh MPs sitting ‘(1) Section 2(3)(e) of the Water Industry Act 1991 is omitted. at the time voted against that proposal. (2) In section 2(2A) of the Water Industry Act 1991, there is inserted— Some of these issues have a historical context as well, “(e) to contribute to the achievement of sustainable but they are primarily economic. The Elan valley in my development”.’.—(Roger Williams.) constituency was flooded 100 years ago to provide Brought up, and read the First time. water for Birmingham. I am told that, such is the fineness of the engineering, the water goes from the Elan valley to Birmingham without any pumping at all. 8.55 am The sole force moving that water is gravity. Roger Williams (Brecon and Radnorshire) (LD): I Huge investment needs to be made to provide water, beg to move, That the clause be read a Second time. to deal with sewage and to upgrade the water quality of our rivers, lakes and coastal areas. For that reason, The Chair: With this it will be convenient to discuss most water companies for most of the time are cash- new clause 32—Primary duty of sustainable development negative. They require continuous investment and the (No. 2)— cost of that depends on interest rates and the credit rating of those companies seeking to attract that investment. ‘(1) Section 2 of the Water Industry Act 1991 (General duties with respect to water industry) is amended as follows. Ofwat has to take into account a lot of environmental (2) In subsection (2A)— duties as well. We have heard about over-abstraction. (a) omit the “and” at the end of paragraph (c); Some elements in this Bill will help there, in that it will be able to revoke or vary abstraction licences without (b) after paragraph (d) insert “; and paying compensation to the people who held those (e) to contribute to the achievement of sustainable licences. I hope that those powers will be used, because development.”. they are important if we are to improve the quality of (3) In subsection (3) omit paragraph (e).’. our waters and rivers. There is the even larger environmental Elevates Ofwat’s sustainable development duty from a secondary duty aspect of how we deal with our sewage; how we ensure to a primary duty. that it is treated in a way that all the water that comes out of the sewage works is of a high enough quality not Roger Williams: It is always a pleasure to serve under to damage our environment. Then there is the social your chairmanship, Mr Gray. As we come to the close aspect of water companies and the provision of drinkable of our consideration of the Bill in Committee, we have water at a cost that is affordable to those who need it. a few remaining new clauses to consider, including new clause 23, which would promote Ofwat’s duty of sustainable development to a primary duty. Ofwat has a difficult 9am job. It has three primary duties: to protect the interests Water is not an unregulated business. Some would of the consumer by promoting competition—that say that it is almost over- regulated. It has three regulators. competition will hopefully be greater after the Bill is Ofwat is the overarching environmental regulator. The passed—wherever appropriate, to ensure that the companies Environment Agency is the overarching environment properly carry out their functions and to ensure that the regulator and the Drinking Water Inspectorate is in companies can finance their functions. some ways a social regulator which ensures that what is The term “sustainable development” is misconstrued delivered through people’s taps is of good enough quality in some ways. People believe that if Ofwat had a to keep people healthy. The greatest advances in public primary duty of sustainable development, environmental health have come about as a result of providing decent considerations would trump all other considerations, drinking water and sewerage systems. That investment but it is far from that. The classic definition of sustainable has been very worth while for a very long time. development is something that ensures that the economic, What holds those three regulators together and gives social and environmental aspects are considered together them coherence is sustainable development. I recently and that there is balance in determining how developments picked up a briefing note from the Department for take place and how operations are carried out. The Environment, Food and Rural Affairs entitled, “Sustainable water industry is very involved in all those aspects. Development and Resilience Duties”. I appreciate that 315 Public Bill Committee17 DECEMBER 2013 Water Bill 316 resilience is another duty that is being introduced in the ensure that sufficient care is given to making sure that Bill. I should like to read a little bit of the document as when we are planning long-term requirements for water it makes as good a case for sustainable development use we think about not just economic criteria and and for Ofwat having that as a primary purpose as I resilience but how sustainable our water use is. have heard. It states: One or two Members in the margins have asked me “The founding principle of sustainable development is that the what is the difference between resilience and sustainability, three ‘pillars’ of the economy, society and the environment are all so I would like to clarify that. If I can oversimplify it interconnected. In the context of the water sector, this makes slightly, resilience is about ensuring that the system can sustainable development equally central to the work of the economic survive a shock, such as a flood that overwhelms the regulator as it is to the work of the environmental and quality regulators. Our long-term economic growth relies on protecting infrastructure, whereas sustainability is about the long-term and enhancing the environmental resources that underpin it, and vitality of how we abstract water from the ground, paying due regard to social needs.” process it and make it available to customers. Those are The key sentence is this: important nuances. “Sustainable development is central to everything that Ofwat does and must be fully embedded throughout its regulatory John Cryer (Leyton and Wanstead) (Lab): I am interested decision making.” to hear my hon. Friend’s thoughts on whether increasing That is a really good case for making sustainable sustainability is compatible with increased competition. development a primary duty for Ofwat. It will bring Should there be increased competition within the water coherence between it and the other regulators. I believe industry? that it will serve to provide water not only for now but for the future as well. Thomas Docherty: I am most grateful to my hon. Friend for his pertinent question, which he is right to ask. They are compatible. In fact, non-domestic competition Thomas Docherty (Dunfermline and West Fife) (Lab): should ease the burden slightly on sustainability, as we Like other members of the Committee, I am suffering have seen in Scotland. I referred to the figures last week. from a slight cold, so I do not intend to delay proceedings A huge saving on the amount of water used has come for long. about through competition in Scotland. It should make I welcome the excellent and thoughtful remarks made our jobs slightly easier in England and the parts of by the hon. Member for Brecon and Radnorshire. It is Wales that will benefit from retail competition. probably worth explaining to those members of the My hon. Friend leads me neatly on to the heart of the Committee who have not had a chance to read all the issue. We have a water crisis in the United Kingdom. new clauses that new clause 32, which I have tabled, is You would not have thought that yesterday, Mr Gray, almost word for the word the same as the hon. Gentleman’s when you saw the rain pouring down and the rivers new clause 23. My new clause would simply re-badge rising. However, in reality, every year for the past few some of the details in a slightly different way—I suspect years the Minister, his predecessors, civil servants and that the difference is purely semantic. We will therefore people who work in the water industry have become be supporting the hon. Gentleman’s new clause if the more and more nervous about the lack of rainfall in Minister finds himself unable to do so for whatever winter. Those of us who are a bit nerdy—unlike you, reason. I would be surprised if he did not support it Mr Gray—know that it is important to have sufficient because the EFRA Select Committee, of which the rainfall in the winter in the right places to build up our Minister was a member, unanimously agreed with the reservoirs and other reserves such as streams and rivers hon. Gentleman and me that sustainability should be a so that there is sufficient water in the summer months. primary duty. The Minister is a man of great consistency, As we discussed at length last week, the problem is so I know that he will support the views he has previously that there is increased draw from our rivers and reservoirs, espoused and vote for new clause 23, as will, I am sure, and not enough work is being done to make that the hon. Member for Tiverton and Honiton, whom I sustainable in the long term. Therefore, it is crucially welcome and whose name is also on the Select Committee important that Ofwat considers how to ensure that we report. do not have hosepipe bans and that some parts of the Now that I have taken my tongue out of my cheek, I country do not have drought warnings, which would be would like to add to the remarks made by the hon. bizarre, given the weather we are enjoying at the moment. Member for Brecon and Radnorshire. A plethora of I hope that the Minister will look at the new clause organisations support the new clauses. The hon. Gentleman carefully, given that he agrees with the principle and has already mentioned some of them, but it is worth that a range of NGOs, including WWF, is championing noting that just yesterday we received a written submission the issue. from the Food and Drink Federation. When one thinks I suspect that the Minister will cite the Gray review about the great environmental champions, one obviously from 2009 or 2010—I think that is correct; my memory thinks about the World Wide Fund for Nature or the may be failing me at this time of year—which said that Royal Society for the Protection of Birds, but one it was not critical that sustainable development was would not necessarily think that the Food and Drink promoted to a primary duty. I will pre-empt him and Federation, with its 400,000 members, and representing get in my rebuttal first. He is in danger of picking and one of the most vibrant and important parts of the choosing. He has consistently tried to ignore reports British economy, would necessarily be a champion of and recommendations from all the other experts our proposals. The reality is, however, that our proposals commissioned by the Department, such as Walker and do not represent a tree-hugger’s charter—they are not Cave, yet he suddenly does not wish to—[Interruption.] about keeping the sandal-wearing brigade happy, although The Minister is chuntering from a sedentary position. I there is support from Liberal Democrats. We want to am happy to give way if he wants to say something. 317 Public Bill CommitteeHOUSE OF COMMONS Water Bill 318

The Parliamentary Under-Secretary of State for carefully at the national planning policy framework. We Environment, Food and Rural Affairs (Dan Rogerson): struggled a great deal to work out what we meant by The hon. Gentleman is correct that the Government sustainable development and, indeed, what the NPPF will consider and respond to any report that came to the meant by sustainable development. That is important in previous Labour Government or this Government. this context. However, we have built many recommendations from We know what Ofwat does currently. We know that it those reports into the Bill and wider regulations and is basically responsible for the economic regulation of a policy. monopoly market. The Government propose that resilience becomes a much more important part of what it does as Thomas Docherty: I am most grateful to the Minister well. That is important because, without resilience in for that point. He is right to say that he should not be the system, it does not matter how cheap water is. If wedded to a recommendation just because it comes there is no water, however much it costs really does not from an independent expert. We agree. We think that it matter. That is very important. There is a great deal of was a worthy point several years ago, but events have other advice set out by the Government about what we overtaken it. mean by sustainability as a secondary duty, and there will be guarantees put in place to ensure that Ofwat Last Tuesday, we had a debate about pricing and the looks very carefully at what happens to the environment fact that we will no longer impose penalties for ending in considering any further developments. abstraction, which must be considered as part of Ofwat’s five-yearly price review. I made the point that, if we are To return to why I believe a primary duty of sustainable going to make that kind of change, it is even more development might be dangerous, I am intrigued by the important that we elevate sustainability to a primary words of the hon. Member for Dunfermline and West function of Ofwat. Fife, who described how many different groups are backing the new clause. I am curious and I wonder The new clause is supported by a huge range of whether there is not a parallel with the development organisations. Clause 41, which the Government propose, sector. The duty for sustainable economic development makes that even more imperative. It is even more critical is being used by developers across the piece in planning, than before as we go forward and face ever greater especially with respect to housing developments that water stress in many parts of the country. may not be what local councils and local people want—they propose developments because they have that economic 9.15 am development aspect. If the regulator—Ofwat, WICS or George Hollingbery (Meon Valley) (Con): I know the whatever—has a primary duty for sustainable development hon. Gentleman wants to bring his remarks to a close and somebody comes forward with an idea for a new and I apologise for leaving this so late, but I sat on the factory, what factors does the regulator consider? Communities and Local Government Committee that In considering sustainable development, the regulator discussed the national planning policy framework at would not just look at environmental factors, which is length and the meaning of sustainable development. one part. It would also consider sustainable economic There is no agreed view of what sustainable development development, sustainable social development, sustainable is, but there are many learned papers and learned journals, environmental development and now even sustainable and many professors have talked about it a great deal. cultural development—I would be very happy about At the moment, we know what Ofwat does—we know it that, because fishing is part of our culture, and no does resilience and that it is an economic regulator. doubt we would have to build reservoirs just so people What slightly worries me is what happens if we give it a could go fishing. I am being flippant, obviously. primary duty of judging sustainable development. Where If I were sitting in Ofwat’s chair, I would ask myself does it put economic development and what do we which of those pillars of sustainable development I mean by economic development? should consider. What representations is the food and drink industry likely to make? I suspect I would be as Thomas Docherty: I am grateful to the hon. Gentleman likely to hear about sustainable economic development and I hope he will make some short remarks in a as about environmental matters. I am therefore slightly moment. He is right to raise the definition of sustainability, worried that the broad definition, which is not an but he went on to answer his own question by pointing agreed definition, of sustainable development might out that there is no such thing as a clearly agreed come back, in due course, to bite us, and create confusion definition of economic growth. The Treasury certainly about the role of Ofwat. has no such agreed definition. The point of making sustainability a primary duty is that it allows Ofwat to The Chair: I call Mr Murdoch. My brain has gone consider it in the round. Perhaps we can come back to soggy this morning; I mean Mr Docherty. Why did I say that after the Minister has spoken—I am genuinely Murdoch? keen to hear what he has to say. I pose a question back to the hon. Gentleman as I close: just because we do not Thomas Docherty: It is a good Scottish name, Mr Gray. have one very narrowly defined definition of sustainability, I have lost my train of thought now. I am used to being why should we not make it one of the key focuses for sledged by Government Members, but it is a new thing Ofwat? for the Chair to do it. The hon. Member for Meon Valley referred to a lack George Hollingbery: I shall be very brief and try to of definition, but if the words mean so many things to do a slightly better job of explaining what I was trying so many people, is it not even more important to put to explain just then. As I have said, I sat on the Communities things on a primary footing, enabling Ofwat to consider and Local Government Committee that looked very the range of views before taking its decision? 319 Public Bill Committee17 DECEMBER 2013 Water Bill 320

George Hollingbery: No. I disagree fundamentally. and then bring in a long-term system of treatment built We know what Ofwat does. We have a monopolistic in the national park. It is a wonderful building, consistent market and know exactly what we need from Ofwat. In with the local environment and the obvious need for my view, that is the regulation of pricing mechanisms drinking water. and of the economy of the water market. That is the What I am saying is also reflected in how Dwr Cymru thing it should concentrate on most, because otherwise, Welsh Water has invested in and improved the sewage in a monopolistic market, those in the market can price treatment, which has led to vast improvements in beaches improperly. in Wales. That is a positive move and I hope that the Part of its duty relates to resilience, because, as I said Government will consider and act on it. I will certainly earlier, supply is as important as anything else. In future, support the hon. Member for Brecon and Radnorshire we may not be able to guarantee supply, so that duty if he chooses to press his new clause to a Division. should sit with the regulator. However, I have a strong feeling that, with such a diffuse duty as the hon. Gentleman proposes, on whose definition there is no agreement, Dan Rogerson: I am sorry to hear that so many Ofwat and WICS might encounter considerable difficulty members of the Committee are suffering from winter over what they should be deciding on in any given colds; it is a measure of their resilience that they have application or circumstance. managed to turn up for the debate this morning. I particularly thank my hon. Friend the Member for As long as there is a clear acknowledgement from the Brecon and Radnorshire for prompting this debate and Government—in advice and guidance, or perhaps in the hon. Member for Dunfermline and West Fife for Committee—that the resilience duty is at least partly setting out the case, which has been made, it is fair to defined by an environmental duty, which is set with say, by a number of organisations. I take this opportunity advice from the Government, that would be sufficient. I to place on the record the Government’s position. understand why we might, taking things a step further, want to proceed with the idea. My hon. Friend the The Government are committed to reforming the Member for Brecon and Radnorshire has made a persuasive aspects of the current system that can result in short-term case, but we need clarity on Ofwat’s duties, and the new thinking and to ensuring that their long-term priorities clause would probably cloud it beyond what is reasonable. for the water sector and the water environment are properly reflected in regulatory decision making. Real progress has already been made through the current Hywel Williams (Arfon) (PC): I apologise to you and price review—for example, in removing the bias towards the Committee, Mr Gray, for my absence last week, capital investment and in achieving a better balance which was due to illness. I regret it not least because between capital and operational solutions. I had tabled provisions to be considered, but perhaps, if I am committed to tackling unsustainable abstraction I am fortunate, they can be considered on Report. I and protecting the water environment. During the want briefly to speak in support of the hon. Member discussions, a number of hon. Members have raised for Brecon and Radnorshire. the progress on consulting on abstraction reform. I can Sustainability is a contested issue, as hon. Members place on the record that I have launched a consultation have noted. The hon. Member for Brecon and Radnorshire on our proposals for abstraction reform and I will write mentioned Treweryn. An operational definition of to the Committee to make sure that members have sustainability can be got by talking to people who used access to the link. The hon. Member for Dunfermline to live there, including relatives of mine, who have a and West Fife will check quickly to make sure that it is clear idea of it. Treweryn was not sustainable for them, there for members to check. as they had to move away to make way for things that might be economically desirable for others. That is a stark reminder for anyone who thinks that local, Thomas Docherty: I take the Minister at his word, but environmental and social considerations can be ignored. I am sure that he will accept that it is slightly disappointing We had a grim and eerie experience in the 1970s and that we read about the issue in the media this morning. 1980s when there was a long period of drought, and the His officials, I am sure, forgot to circulate the same remains of the village of Treweryn actually appeared information to the Bill Committee. Will the Minister out of the water. I went to have a look and it was ask them as a matter of urgency to send to the Committee certainly a spine-chilling experience. what they sent to the media last night? The hon. Gentleman might have mentioned that the National Assembly for Wales is, I believe, the first Dan Rogerson: This is my first opportunity on the legislative body in the world to have sustainability written day of the launch to raise the issue, and I am doing it. in as its prime purpose. Again, I would suggest to hon. As I said, I will write to the Committee to make clear Members who have worries about the duty to look at what our proposals are and where members can find the way the National Assembly for Wales carries it out them so that they and relevant organisations can comment. in practice and, latterly, the Welsh Government. Ofwat I am in no doubt that environmental damage undermines would not operate in a vacuum—there is experience. the long-term resilience of the water industry by threatening Dwr Cymru Welsh Water, operating in Wales, is the natural services on which the whole system relies. cognisant of that duty of sustainability. The hon. That is why we have developed a duty of resilience Member for Brecon and Radnorshire mentioned specifically designed to address the legitimate concerns drinking water. My constituency is partly supplied by raised by hon. Members about the need for long-term Llyn Cwellyn, outside Caernarfon. We had an outbreak investment that will address the pressures caused by of cryptosporidium there a couple of years ago and climate change and population growth, and protect the Welsh Water moved very quickly to improve the treatment, natural environment on which our water sector relies. 321 Public Bill CommitteeHOUSE OF COMMONS Water Bill 322

[Dan Rogerson] Dan Rogerson: A number of bodies have duties of sustainable development. They operate as part of their The hon. Member for Dunfermline and West Fife regulatory framework. Ofwat already has in place a sought to define resilience fairly narrowly, in terms of duty to have regard to sustainable development. the ability to withstand shock to the system. He then My hon. Friend the Member for Brecon and Radnorshire went on to talk about the need for sustainability in the reminded us about the bodies with regulatory functions system and gave the example of dealing with droughts. with regard to the water industry. There is the Drinking He was, perhaps, looking at similar issues in respect of Water Inspectorate, and, particularly important in this both potential duties. We do not define resilience so case, the Environment Agency, which makes sure that narrowly. The drafting of the new duty makes it clear we have a sustainable water resource that meets the that it is long-term resilience to a range of pressures on needs of the natural environment as well as those of which the regulator must focus. society. That is an important safeguard that we must not forget. 9.30 am However, given Committee members’ stated desire to Thomas Docherty: Perhaps it might speed things up if make sure that we are giving Ofwat adequate scope I were to remind the Minister that I said I was over- to take account of environmental concerns, and given simplifying the benefits of this debate. the evidence that we received at an early stage of this Committee, I am keen to ensure that the resilience duty Dan Rogerson: I am grateful to the hon. Gentleman is defined in the correct way. As I said at the time, I am for repeating that helpful point of clarification. open to looking at whether we can improve it to provide reassurance. If we feel that we can improve it, I will On the points made by my hon. Friends the Members bring forward something at a later stage. for Brecon and Radnorshire and for Meon Valley and by the hon. Member for Arfon, I should say that Ofwat As a Government, we remain fully committed to has had a statutory duty to contribute to the achievement sustainable development, and Ofwat has a duty to take of sustainable development since 2005. We have reinforced account of it. However, we do not believe that a simple that by providing statutory guidance that sustainable change in the order of Ofwat’s duties is the best response development is central to everything that Ofwat does to the long-term environmental challenge. I urge my and must be fully embedded throughout its regulatory hon. Friend the Member for Brecon and Radnorshire decision making. Ofwat must achieve a balance between to withdraw his new clause and consider how my remarks the needs of customers, stable investment and environmental on improving or strengthening that resilience, and clarifying outcome; it will always need to strike a balance between the role of resilience, may help him. its duties. Thomas Docherty: I am grateful for this opportunity The Government commissioned the Ofwat review to for a second bite at the cherry. Perhaps I could correct consider these matters. Having looked carefully at the the record on my own behalf. I said earlier that I was case for change in the status of the sustainable development not quite certain of the date of the Gray review. If it is duty, David Gray concluded that he did not believe that helpful to the Committee, I should say that the report such a change would have the effect that its proponents was published in 2011, although I think that the work were looking for. was undertaken slightly earlier than that. I wanted to In terms of the changing situation that the hon. make sure that that was set straight. Gentlemen pointed out, it was not related to the situation I begin by taking the Minister back to the evidence of the industry or the environment at the time; it was sessions that he himself referred to. I am not going to that the Gray review felt that changing the sustainable try to pronounce the acronym, but the Chartered Institution development duty would not achieve the results that of Water and Environmental Management is one of the some of the proponents were looking for. The Government organisations that the Minister himself recommended concur. as being worth listening to, both in his remarks today and previously. It believes that the economic regulator John Cryer: I am interested in the Minister’s view of should have a statutory duty to protect water conservation the points raised by his hon. Friend the Member for and efficiency, and that the existing governance and Meon Valley. Is the problem the difficulty of coming up operational structures are not fit for the future and will with a definition of sustainability rather than any other not be effective going forward. reason? That is particularly true given the fact that, with our support, the Government adopted clause 41 last week. I Dan Rogerson: The key is that we want duties that are would argue, and I think the hon. Member for Brecon clear for Ofwat, so that it can apply them in its regulatory and Radnorshire would as well, that the point is made role simply and in a straightforward way that achieves even more compelling as the Government are not minded the outcome that we want—resilience for customers in at this stage to accept the need for abstraction reform to terms of water supply and economic impact, but also be moved on to a priority footing. environmental resilience. A clearly defined resilience It is disappointing—I am sure the Procedure Committee duty achieves the objectives that we are seeking. would have a view on this—that yesterday the Minister chose to provide information about the review of abstraction Hywel Williams: I referred in my brief remarks to the in some detail to the media, but not to Parliament. It is duty placed on the National Assembly for Wales. Has Christmas and we all have a spirit of bonhomie at this the Minister had any discussions with Welsh Ministers time of year, but I am not convinced by the Minister’s as to how that is carried out—the operational definition assurances that the information will be made available of utility sustainability in practice? at the earliest opportunity. 323 Public Bill Committee17 DECEMBER 2013 Water Bill 324

The earliest opportunity was this morning, before the proposed amendment earlier in Committee, but, as he Committee met. The Minister did not make available, in will probably agree, resilience and sustainability are not electronic form, a copy of the briefing that has been quite the same, even after stretching resilience to its provided to The Guardian and other newspapers. I hope broadest definition. For that reason, we will support the that he will get some inspiration in the very near future hon. Member for Brecon and Radnorshire if he presses and provide that information to the Committee, particularly his new clause to a vote. As the Minister said, in clause before we get to the vote on the new clauses regarding 22, resilience is confined to economic resilience, to abstraction; otherwise, I think, there would be a clear reduce the frequency of restrictions on supply and to breach of procedure. try to tackle the more severe impacts of flooding; it does not look at the long term. I give way to the The Chair: Order. It would not be a clear breach of Minister. procedure, but as the hon. Gentleman has raised the matter, I should say that Mr Speaker has made his view Dan Rogerson: I was not seeking to intervene, but consistently known that the Government should take indicating that I will respond to that. steps to make all information available to Parliament before the media. I am sure that, if he were apprised of Thomas Docherty: I am grateful. Resilience still has the particular details of this case, he would very much quite a narrow definition and the Government risk sympathise with the point that the hon. Gentleman is creating trade-offs with environmental outcomes. It would making. None the less, the Government are not, of be relatively easy, for example, to increase the resilience course, in breach of any procedures. I am certain that of water companies by lifting restrictions on abstractions the Minister, having heard this exchange, will seek to during droughts to avoid interruptions to public water provide the information in question to the Committee supplies, but that would have the perverse outcome of as soon as he possibly can. doing more damage to the chalk streams that we have in Hertfordshire among other places. Thomas Docherty: I am sure that inspiration will be forthcoming in the very near future. John Cryer: It occurs to me that one thing that was The economic regulator of the water industry needs established—I think during the evidence sessions—was to be empowered to address the problems of the future that this is a broad framework Bill, with the intention, of the water industry. The current arrangements, put in as I understand from the Minister, to use secondary place 25 years ago, are simply not fit for purpose. The legislation to fill in the details, as is often the case, challenges that we face in the 21st century—climate particularly nowadays. Could not secondary legislation change, population growth, economic constraints—are be used for the definition of sustainability and the other very different and perhaps more complex than those elements that my hon. Friend talks about? facing our predecessors when they considered the paving Bill in the late 1980s. Thomas Docherty: My hon. Friend makes an important To give one practical and simple example that even and useful observation. I hope that the Minister was the officials could understand, at the last price review a paying attention and that he will address that when he number of schemes for leakage reduction and widespread replies. The problem that the Opposition and, indeed, metering put forward by water companies were stuck the hon. Member for Brecon and Radnorshire have is down because they were not compatible with Ofwat’s that, although I will not say that the Government want duties. I am thinking of the proposal in the Hertfordshire to have their cake and eat it, they do seem to be in a area in particular. I do not know which water company slightly contradictory position. Since coming to office was involved—I suspect it was Welsh Water. three and a half years ago, the Government have been very clear that they do not believe policy should be set Dan Rogerson: In Hertfordshire? by agencies. They believe policy should be set by the Department in Nobel house, and it is up to the regulator— Thomas Docherty: My English geography is probably particularly the Environment Agency—to implement as good as the Minister’s Scottish geography. Inspiration the policy decisions taken by the Department. from the Minister when he replies would be helpful. I suppose that the Welsh are everywhere, anyway. 9.45 am In Hertfordshire, a water company proposed water The Minister will recall from his time on the Select metering and various schemes. We freely acknowledge Committee that the Environment Agency told it more that those schemes would have cost money, but, as than once, both publicly and in private, that it does not Ofwat deemed that the area was in water surplus, it do policy and that policy is done by central Government. struck them down. There was nothing wrong with them. The Minister nods, and he would accept that that is the They would have helped the local environment and case. Yet if I understood him correctly, he is arguing wider water problems and local residents thought that that we should simply trust Ofwat to get on with it. He they were sensible, but, because sustainability was not a shakes his head. I assume that he wants to cover that primary duty, Ofwat did not believe that it could give point when he responds. that the same weighting as the schemes’ economic cost If I have understood the Minister correctly, he seems and benefit. That is, therefore, a clear and present to be saying that he will give some assurances today in example of where the current system needs reform. his thoughtful remarks and that Ofwat will then be able I hear the Minister’s comments about promoting to interpret those remarks when it considers the importance resilience to be a primary duty, and the Opposition of sustainability in the next price review and, indeed, welcome that. He will recall that we supported that in a the one after. However, as we have just covered and as 325 Public Bill CommitteeHOUSE OF COMMONS Water Bill 326 the Minister agreed, Ofwat does not do policy any more The hon. Member for Dunfermline and West Fife and the Environment Agency does not do policy. The prompted me to respond to the hon. Member for Leyton Government do policy, and therefore the only way to set and Wanstead on the further definition of sustainable policy is by elevating sustainability. With that, I will sit development and the possibility of doing so through down, and I very much welcome hearing what the secondary legislation. We have been clear what the role Minister says in response. of the Government is through the strategic policy statement, which already sets out what the Government are seeking Dan Rogerson: Thank you, Mr Gray, for giving me a with respect to sustainable development and with respect second bite of the cherry, too. Possibly it is a different to resilience. That is where the Government set out their cherry to that of the hon. Gentleman, as I do not want aims and the framework. It is then for the regulators to to catch his cold. I am grateful to him for giving us an implement that in their decision making. On that basis, example of a past case. Although I am proud of my I hope that my hon. Friend the Member for Brecon and Celtic ancestry, I think that a few battles would have Radnorshire will feel able to withdraw his new clause, so had to have gone a little bit differently for the Anglo-Saxon that we can make progress on securing that resilience in incursion to have stopped just north of London and for a way that covers all those aspects of resilience that we Welsh Water to have stretched their boundaries that far, intend to introduce. but there we go. That would be a different reality, which I am sure that the hon. Member for Arfon, who is no Thomas Docherty: I am more confused than I was at longer in his place, would have welcomed. the start. Earlier, I confused Hertfordshire and In citing that case, the hon. Member for Dunfermline Herefordshire—my sincere apologies to those good and West Fife set out the position as it was, not the counties—but the Minister seems to be giving ground position as it is now. In my earlier contribution, I before our eyes. Perhaps my cold is blurring my vision, explained that the Government were clear in the statement but he seems to be indicating that he wants to go away about long-term resilience and long-term investment and have another think about the resilience duty. For that we need to take account of alternative ways to the benefit of the Committee and the watching stakeholders, invest. We not only need short-term or hardware solutions, will he clarify exactly what he proposes? but to look at how we manage water as a resource in general. Dan Rogerson: I said on Second Reading when my The Government have therefore been clear and have hon. Friend and others raised these issues that I believe set the policy. The hon. Gentleman is quite right to that the resilience duty, as drafted, covers all the aspects point out that the Environment Agency would not see that are being raised here under people’s aspirations for that as its role, but its role is to be the regulator of issues an elevated sustainable development duty. However, if such as abstraction. That is the key difference. Through on looking at the clause and the way that the duty is set the policy that we set and Ofwat’s duty of resilience, the out, there is anything that I can do to reassure people, I Government are putting in place the framework that would be happy to do so. I propose to reflect over the the regulators—the Environment Agency and Ofwat—will coming weeks and to see whether it might be possible to then implement. introduce something at a later stage to make that absolutely clear. But it is my belief and our legal advice that the Thomas Docherty: So that we do not have to keep sustainable development duty in its current place must going backwards and forwards, perhaps the Minister be taken into account by the regulator. Our resilience will clarify this point. As we understand it, Ofwat will duty also achieves that emphasis on environmental have a primary duty on economic issues and a primary resilience. duty on resilience. Surely, those duties will greatly outweigh a secondary duty on sustainability. Does the Minister I would make one other point to the hon. Gentleman. accept that concern? He has been very generous to me and other members of the Committee in his remarks. On occasion, however, he Dan Rogerson: I understand what is behind that has mentioned officials who are not present in the concern. The key issue is that we must be sure that the Committee or who cannot speak for themselves. I urge duties placed on Ofwat are to consider the economic him to reflect on the language that he uses when describing impacts of its interventions and decisions, and to consider people who have been working on the Bill and who have the social impacts but also the environmental ones. I been very active in consultation to ensure that they want to be clear on that. As I undertook earlier, I will frame it fairly and helpfully. consider the resilience duty to make sure that it is absolutely clear that it takes into account those long-term Thomas Docherty: I draw the Minister’s attention to environmental considerations. We believe that it does, our remarks last Thursday, when I was quite effusive. I but clearly other people are concerned, so I want to believe in giving credit where credit is due at all times. make it absolutely clear that we will seek to do that. I shall be brief, as I am conscious that the hon. Member In summing up, I hope that hon. Members will see for Brecon and Radnorshire wants to press the new that the existing sustainability duty remains in place clause to a vote. Although we welcome the Minister’s and that we will have a new resilience duty, under which intention and I hope that he will meet some of the all aspects of managing water resources, which are so stakeholders early in the new year, does he realise what vital to our future, will be considered. We can see that he has just committed himself to do? Our problem is Ofwat is already taking account of the different ways that, apparently, the Bill will be considered on Report that companies invest their resources to do things effectively. on the first day back after Christmas. There was no That will inform what Ofwat does. I will look at resilience consultation with the Opposition on that. We are most to ensure that it is clear to everybody that the environmental unhappy, as the Minister knows. Although I believe aspects are considered as part of that duty. that he is an honourable individual, both personally 327 Public Bill Committee17 DECEMBER 2013 Water Bill 328 and in his ministerial role, we cannot take his assurances Hon. Members: No. at face value because of the time scale involved in getting the Bill through. Therefore, it is with some 10 am regret that we will support the hon. Gentleman in the Question put, That the clause be read a Second time. vote on his new clause. The Committee divided: Ayes 8, Noes 10. Division No. 9] Roger Williams: I thank all hon. Members for their contributions to this important debate, which has obviously AYES created a great deal of interest. A large number of organisations from various interests support the concept Cryer, John Glindon, Mrs Mary of Ofwat having sustainable development as a primary Docherty, Thomas Lewell-Buck, Mrs Emma Evans, Chris Phillipson, Bridget duty. Glass, Pat Williams, Hywel We have debated the hierarchy of duties for Ofwat. I remain convinced that there is value in promoting NOES sustainable development. We have had a wide-ranging debate. Those of us who live in east Wales have looked Burrowes, Mr David Penrose, John at the fertile pastures of Herefordshire and Shropshire, Hollingbery, George Percy, Andrew Morris, Anne Marie Rogerson, Dan but we have not yet extended that avarice to Hertfordshire. Murray, Sheryll Spencer, Mr Mark I thank the hon. Member for Dunfermline and West Offord, Dr Matthew Williams, Roger Fife for giving us that greater ambition. Question accordingly negatived. Thomas Docherty: Once again, I offer my apologies to both counties involved. I think my confusion came because we Scots went as far as Derbyshire, so we New Clause 24 assumed that the Welsh had gone equally as far eastwards.

CONSUMER REDRESS Roger Williams: I will not pursue that debate, as I ‘(1) The Water Services Regulation Authority may modify the understand the Chairman is getting slightly tired of it. conditions of— However, the hon. Gentleman did raise the issue of (a) a pre-commencement appointment of a water or demand control, which is fundamental to sustainability, sewerage undertaker, or and how a number of projects were struck out in the (b) a pre-commencement water supply licence, previous price review undertaken by Ofwat. so as to include conditions relating to the provision of a I am taken with the words used by the Minister this consumer redress scheme. morning and his commitment to look again at this—in (2) In subsection (1)— particular, to try to unpick the relationship between (a) “pre-commencement appointment of a water or resilience and sustainability. That is very important. sewerage undertaker” means an appointment of a New clause 23, in my name, and new clause 32, in the company under Chapter 1 of Part 2 of the Water name of the shadow Minister, are perhaps intended to Industry Act 1991 to be a water or sewerage achieve the same thing. We have not yet had a debate undertaker which is made before the day on which this section comes into force, and about the wording of which would be more appropriate to pursue our intention to elevate the duty of sustainability (b) “pre-commencement water supply licence” means a licence under Chapter 1A of Part 2 of the Water to the first order for Ofwat. Industry Act 1991 granted before that day. (3) In this section, “consumer redress scheme” means a scheme Thomas Docherty: Referring back to my opening or other arrangements for unresolved complaints to be remarks, I understand that the new clauses use the same investigated and determined by an independent person. wording, but we have included some extra lettering. We (4) The conditions that may under subsection (1) be included will support the hon. Gentleman’s new clause, because in an appointment or licence include in particular conditions requiring the company holding the appointment or the person there is no substantial difference between the two. holding the licence— (a) to secure the provision of a consumer redress scheme, Roger Williams: I thank the hon. Gentleman for that. or Mention has been made that progress in considering the (b) to secure the provision of a consumer redress scheme Bill will be quite quick. When the Minister returns to which is of a description specified in the conditions his beloved Cornwall and sits down after his Christmas or which meets requirements so specified. lunch of turkey and all the trimmings, will he reflect on (5) Where under subsection (1) the Authority modifies the fact that people outside are looking at this important conditions of an appointment or licence, it may make such debate and want him to propose something more incidental or consequential modifications of other conditions of the appointment or, as the case may be, other conditions of the substantial? licence as it considers necessary or expedient. My faith in the Minister is good. I have commented (6) The power of the Authority under subsection (1) to modify on his fine defensive capabilities during earlier discussions the conditions of an appointment or licence may not be exercised on these matters. I hope that those defensive capabilities after the end of the period of two years beginning with the day will not overcome his natural inclination to be a good on which this section comes into force. friend to sustainability. On that basis, I beg to ask leave (7) Before making a modification under this section the to withdraw the motion. Authority must consult— 329 Public Bill CommitteeHOUSE OF COMMONS Water Bill 330

(a) the company holding the appointment or the person Government new clause 24 will allow Ofwat to make holding the licence; changes to water company licences to include conditions (b) the Secretary of State; relating to the provisions of such a consumer redress (c) the Welsh Ministers; scheme. Together, the changes will enable the creation (d) the Consumer Council for Water; of an improved statutory framework for complaints (e) such other persons as the Authority thinks it and consumer redress. appropriate to consult. On new clause 34, I can confirm that the Consumer (8) The Minister may direct the Authority not to make a Council for Water is already routinely consulted by modification that it proposes to make under this section; and the water companies on their charging schemes. I am happy Authority must comply with such a direction. to make a commitment to the Committee that the (9) In subsection (8) “the Minister” means— charging guidance produced by the Government will (a) the Secretary of State, in relation to— ensure that consumer groups continue to be properly (i) a water or sewerage undertaker whose area is wholly consulted on charging schemes in the future. or mainly in England; (ii) a person who holds a licence under Chapter 1A of Part 2 of the Water Industry Act 1991; Thomas Docherty: To speed things up, will the Minister (b) the Welsh Ministers, in relation to a water or sewerage set out why he does not think consumer groups should undertaker whose area is wholly or mainly in be a statutory consultee? Wales.’.—(Dan Rogerson.) Brought up, and read the First time. Dan Rogerson: In our previous debate about sustainable Dan Rogerson: I beg to move, That the clause be read development, I was seeking to say that things have a Second time. moved on since the case cited by the hon. Gentleman. As I have set out, the work is now being undertaken, The Chair: With this it will be convenient to discuss and we are making progress on it. The charging guidance new clause 34—Consumer redress— produced by the Government will ensure that consumer ‘(1) Section 29 of the Water Industry Act 1991 (Consumer groups continue to be properly consulted on company complaints) is amended as follows. charges. We will do that through guidance, which has been our approach to a number of other issues, rather (2) After subsection (11) there is inserted— than including it in the Bill. “(11A) Following the production of a report under subsection (10), the Council will have the right to— Hon. Members will note that new clause 24 includes (a) be consulted on a water company’s charging scheme, the Consumer Council for Water as a statutory consultee. and any changes to it, and I am pleased to note that complaints to water companies (b) investigate and resolve matters as it sees fit.”.’. have gone down again this year; we all want to see Enables the Consumer Council for Water to be consulted on the complaints handled swiftly and effectively by the companies charging schemes of water companies and, if necessary, to investigate themselves. Their focus should always be on getting it and resolve customer complaints. right first time. For the most difficult cases, we want customers to have access to high-quality independent Dan Rogerson: New clauses 24 and 34 both relate to arbitration. The work already being undertaken by the consumer redress. Action is being taken in that area, industry in partnership with Ofwat and the Consumer and the Government’s role should be to facilitate rather Council for Water will ensure that that is the case. than to regulate. The industry is already working with I hope that I have been able to reassure the hon. Ofwat and the Consumer Council for Water to improve Gentleman and that he will not press his new clause to a its approach to consumer redress. Division. A new independent dispute resolution scheme is being established to give all customers an independent route to resolve their complaints without having to go to Thomas Docherty: I will not keep the Committee court. The new scheme will provide a transparent long, given the slightly longer than anticipated debate mechanism for resolving complaints that have reached that we have just had. First, I thank the Minister for a deadlock under the current arrangements. Work on circulating electronically the consultation document that the scheme is already well advanced, with all the incumbent we mentioned some moments ago. I know that hard water companies having signalled their support. That is copies will be on the way because I see that not every why new clause 34, tabled by the hon. Member for Member has an electronic device, and I welcome those Dunfermline and West Fife, is not necessary. copies arriving in the near future. The Consumer Council for Water has a central role in The issue underlying the debate is that of statutory the new scheme. It will continue to negotiate with versus voluntary consultation. We note what the Minister companies on behalf of customers and will be responsible has said, but although I have some sympathy with his for identifying when complaints cannot be resolved and remarks, he will understand that we want to put our need to be directed to the independent third party. concerns on the record by pressing our new clause to a To support the speedy resolution of disputes, the Bill vote. I suspect that we will come back to the issue as the already includes powers that will enable the Secretary of Bill proceeds through this place and another place. State to appoint an independent adjudicator to undertake Ofwat’s more routine adjudication functions, freeing Question put and agreed to. the regulator to concentrate on cases that will have the New clause 24 accordingly read a Second time, and most benefit to customers. added to the Bill. 331 Public Bill Committee17 DECEMBER 2013 Water Bill 332

New Clause 26 New Clause 28

SEPARATION OF RETAIL AND WHOLESALE ACTIVITIES STANDARDISED TERMS AND CONDITIONS FOR NEW ‘A company granted a water supply licence under section 17A ENTRANTS of the Water Industry Act 1991, prior to Royal Assent of this ‘Any company granted a water supply licence under section Act, must establish separate legal identities for its— 17A of the Water Industry Act 1991, following Royal Assent of (a) retail activities, and this Act, must be— (b) wholesale activities (a) offered comparable terms and conditions as any within one year of Royal Assent of this Act.’.—(Thomas company granted a water supply licence prior to Docherty.) Royal Assent of this Act; and Requires the wholesale and retail arms of the water companies to be (b) all terms and conditions must be subject to scrutiny by separate legal entities, within a year of Royal Assent. the regulator.’.—(Thomas Docherty.) Brought up, and read the First time. Ofwat would require each wholesaler to produce standardised terms and Question put, That the clause be read a Second time. conditions for new entrants. Brought up, and read the First time. The Committee divided: Ayes 8, Noes 9. Question put, That the clause be read a Second time. Division No. 10] The Committee divided: Ayes 8, Noes 9. AYES Division No. 12] Cryer, John Glindon, Mrs Mary AYES Docherty, Thomas Lewell-Buck, Mrs Emma Evans, Chris Phillipson, Bridget Cryer, John Glindon, Mrs Mary Glass, Pat Williams, Hywel Docherty, Thomas Lewell-Buck, Mrs Emma Evans, Chris Phillipson, Bridget Glass, Pat Williams, Hywel NOES Burrowes, Mr David Percy, Andrew NOES Hollingbery, George Rogerson, Dan Morris, Anne Marie Burrowes, Mr David Percy, Andrew Spencer, Mr Mark Murray, Sheryll Hollingbery, George Rogerson, Dan Penrose, John Williams, Roger Morris, Anne Marie Murray, Sheryll Spencer, Mr Mark Penrose, John Williams, Roger Question accordingly negatived.

New Clause 27 Question accordingly negatived. New Clause 29 ABSTRACTION REFORM ‘(1) The Secretary of State may by order (the “commencement order”) appoint a day on which section 1 is to come into force. BILLING INFORMATION: AFFORDABILITY (2) The Secretary of State may only make an order under ‘Any company providing water services to a residential subsection (1) if— household must include on its bills— (a) new primary legislation on the licensing of abstraction (a) details of any tariffs provided by that company; has been passed; and (b) a recommendation of the lowest possible tariff for (b) five years has expired since the passage of any each residential household; and legislation under paragraph (a).’.—(Thomas Docherty.) (c) information regarding eligibility criteria and how to The Secretary of State may not implement upstream reform as set out make an application for assistance under Water in the Water Bill, until new primary legislation on the licensing of Sure.’.—(Thomas Docherty.) abstraction has been passed, and five years has expired to allow for its Water companies are required to provide information regarding all implementation. tariffs and all affordability schemes alongside customer water bills. Brought up, and read the First time. Brought up, and read the First time. Question put, That the clause be read a Second time. Question put, That the clause be read a Second time. The Committee divided: Ayes 8, Noes 9. The Committee divided: Ayes 8, Noes 9. Division No. 11] Division No. 13]

AYES AYES Cryer, John Glindon, Mrs Mary Cryer, John Glindon, Mrs Mary Docherty, Thomas Lewell-Buck, Mrs Emma Docherty, Thomas Lewell-Buck, Mrs Emma Evans, Chris Phillipson, Bridget Evans, Chris Phillipson, Bridget Glass, Pat Williams, Hywel Glass, Pat Williams, Hywel

NOES NOES Burrowes, Mr David Percy, Andrew Burrowes, Mr David Percy, Andrew Hollingbery, George Rogerson, Dan Hollingbery, George Rogerson, Dan Morris, Anne Marie Morris, Anne Marie Murray, Sheryll Spencer, Mr Mark Murray, Sheryll Spencer, Mr Mark Penrose, John Williams, Roger Penrose, John Williams, Roger

Question accordingly negatived. Question accordingly negatived. 333 Public Bill CommitteeHOUSE OF COMMONS Water Bill 334

New Clause 30 NOES Burrowes, Mr David Penrose, John NATIONAL AFFORDABILITY SCHEME Hollingbery, George Percy, Andrew ‘(1) The Secretary of State must, by order, introduce a Morris, Anne Marie Rogerson, Dan National Affordability Scheme for water. Murray, Sheryll Spencer, Mr Mark (2) The National Affordability Scheme must include an Parish, Neil Williams, Roger eligibility criteria, determined by the Secretary of State, in consultation with— Question accordingly negatived. (a) the Water Services Regulation Authority; and (b) the Consumer Council for Water. New Clause 33 (3) An order under this section— (a) shall be made by statutory instrument, and DUTIES OF UNDERTAKERS TO FURNISH THE SECRETARY (b) may not be made unless a draft of the order has been OF STATE WITH INFORMATION: ANNUAL REVIEW laid before and approved by resolution of each House of Parliament.’.—(Thomas Docherty.) ‘(1) Section 202 of the Water Industry Act 1991 (duties of undertakers to furnish the Secretary of State with information) is The Secretary of State is required to bring forward a National amended as follows. Affordability Scheme, with an eligibility criteria prescribed by the Secretary of State in the form of a statutory instrument, subject to the (2) After subsection (1A) there is inserted— approval of both Houses. “(1B) Any company with a duty under subsections (1) and Brought up, and read the First time. (1A) must furnish the Secretary of State and the Authority with an annual review which provides information about— Question put, That the clause be read a Second time. (a) their performance; The Committee divided: Ayes 8, Noes 9. (b) the total amount of investment; Division No. 14] (c) their taxation structure; (d) their corporate structure; and AYES (e) the total amount of dividends paid to shareholders. Cryer, John Glindon, Mrs Mary (1C) Information under subsection (1B) must be provided Docherty, Thomas Lewell-Buck, Mrs Emma prior to the publication of the annual statement of the Secretary Evans, Chris Phillipson, Bridget of State under section 2A.”.’.—(Thomas Docherty.) Glass, Pat Williams, Hywel Water companies are required to provide information annually to the Secretary of State regarding their performance, investment, taxation NOES structure, corporate structure and total amount of dividends paid to shareholders. Burrowes, Mr David Percy, Andrew Brought up, and read the First time. Hollingbery, George Rogerson, Dan Morris, Anne Marie Murray, Sheryll Spencer, Mr Mark Thomas Docherty: I beg to move, That the clause be Penrose, John Williams, Roger read a Second time.

Question accordingly negatived. The Chair: With this it will be convenient to discuss new clause 45—General duties with respect to water industry: consumer objective— New Clause 31 ‘In pursuit of its duty under section 2 (general duties with respect to water industry) of the Water Industry Act 1991 the OVERSIGHT OF CHARGES Authority must— ‘In section 2 of the Water Industry Act 1991 (general duties (a) take into account all information provided by section with respect of the water industry), after subsection (2C) there is [Duties of undertakers to furnish the Secretary of inserted— State with information: annual review]; and “(2CA) For the purposes of subsection (2A)(a) above the (b) may consider such information when determining Secretary of State or, as the case may be, the Authority shall have whether reopening a review of prices would further regard to the rates of charges to— the consumer objective, set out in paragraph (2A)(a) (a) household premises; and of the 1991 Act.’. (b) non-household premises.”.’.—(Thomas Docherty.) Ofwat are required to consider the rates of charges to household and Thomas Docherty: This new clause goes to the heart non-household premises. of what kind of water industry we want. We had an Brought up, and read the First time. excellent debate last week, with superb contributions Question put, That the clause be read a Second time. from my hon. Friends the Members for Leyton and Wanstead, for South Shields and for North West Durham The Committee divided: Ayes 8, Noes 10. about their water companies and matters such as tax Division No. 15] avoidance. I suspect that today we will have a slightly shorter but equally important debate about the water AYES industry. Cryer, John Glindon, Mrs Mary Docherty, Thomas Lewell-Buck, Mrs Emma 10.15 am Evans, Chris Phillipson, Bridget We could debate the successes and failures of 24 years Glass, Pat Williams, Hywel of water privatisation all day, although I am not sure you would let us, Mr Gray. I do not propose that we 335 Public Bill Committee17 DECEMBER 2013 Water Bill 336 rehearse those arguments this morning. However, the country. Opaque practices are being adopted by some Minister must surely accept—my hon. Friend the Member water companies. The headline figures are shocking to for Leyton and Wanstead made this point well last most of us: pre-tax profits of £1.9 billion and £1.8 week—that the public are clamouring for the industry billion paid out to shareholders. The water companies to be brought back into public ownership. I do not want are, of course, acting entirely within the law. No one to get drawn into the merits of public versus private would seek to suggest otherwise—privilege or not. It is ownership, but something has gone wrong with people’s a fact. However, that does not mean that the law is not confidence in the industry. We see it with banking an ass and that we do not need to work together to and—dare I say?—with energy companies and with improve it. politicians. Public faith has been battered over the past We need to restore public confidence in the chief decade or more by the bad practices of a small number executives. It is frankly astonishing that chief executives of individuals. of water companies are on seven-figure salaries. Let us Earlier on, the Minister accused me, slightly unfairly, just think about that for a second: some of these water of telling it as I saw it. In the spirit of openness, I have company chief executives are earning more than £1 million met a number of senior executives from the water a year. I do not think that that is acceptable when industry not only in the past few weeks since receiving constituents are struggling to pay bills. We had an my elevation but during my time on the Environment, excellent debate on affordability last week, and I Food and Rural Affairs Committee, on which I served congratulate my hon. Friends on their contributions. It with the Minister. The water industry includes many is simply unacceptable that fat cat chief executives and talented individuals who are making a real difference board directors are earning £1 million-plus salaries with for many of their customers and undertaking a number no recourse for their customers. of substantial and significant programmes. However, a There is a great debate about the water companies’ number of individuals and water companies are not performance. I believe that the issue is not just whether operating to the highest standards. we have clean and safe water coming out of our taps; Just a few weeks ago, there was an excellent debate in the Committee has had good debates about abstraction, the House, in which the hon. Member for Brigg and sustainability and corporate responsibility.The Opposition Goole participated and to which my hon. Friend the believe that, to restore public confidence—dare I say it, Member for Leyton and Wanstead referred last week, we are almost being helpful to the industry, shocking as that highlighted practices by Yorkshire Water, for example. that may be to the Minister—each water company If the hon. Member for Brigg and Goole has the figures should be required to produce an annual report that to hand and wants to correct me, I am more than happy sets out how it has performed. for him to inform me if I get them wrong. Yorkshire I would measure performance not just in terms of the Water has made huge, eye-watering profits over the past water coming out of taps, whether in Hertfordshire or few years. Its dividend payout jumped from, I think, Herefordshire; I would also take into account what £63 million three years ago to some £250 million last flood improvement measures have been taken. So far year. At the same time, Members on both sides of the we have not really debated surface water flooding, but House agree that it has not done enough to support frankly the water companies must do more to tackle the customers in Yorkshire. The hon. Gentleman referred part that they play in that. to some of his constituents who had been left out of pocket following thousands of pounds-worth of damage That leads to the question of investment. It is simply to their properties due to what he saw as the failure of unacceptable for water companies to use tax evasion Yorkshire Water adequately to secure its assets, causing and avoidance models to fund investment. I believe that flooding. I cannot recall which town was damaged. some of that £1.9 billion of pre-tax profit should be going back into funding the investments necessary for Andrew Percy (Brigg and Goole) (Con): I thank the abstraction, flood defences and making water more hon. Gentleman for his timely referral to my comments affordable. in the House. It was the town of Goole that was affected. Just last Monday, the East Riding of Yorkshire council’s flood report confirmed that the town flooded Dan Rogerson: Would the hon. Gentleman like to due to a failure to manage the Carr Lane pumping alter slightly what he just said to clarify that he was station appropriately. The hon. Gentleman’s comment talking about tax avoidance rather than tax evasion? I provides the perfect opportunity to repeat my call to would like it to be clear for the record that he is Yorkshire Water, which, as he pointed out, has made referring to tax avoidance schemes that are legal. huge profits, to compensate people in the town for its failure to protect us. Thomas Docherty: I refer to what I said earlier: I Thomas Docherty: I am most grateful. I suspect that believe that water companies are operating entirely we may hear more from the hon. Gentleman as this within the law. I am most grateful to the Minister for short debate continues. I cited that example because I catching my slip of the tongue—he is as helpful as ever. thought that we had a good debate on the water industry. However, we must have real transparency about how It was not the only reason why we tabled the new clause, much water companies are investing. Many of our but it certainly went through my mind and that of my constituents are baffled. I have nothing against the hon. Friend the shadow Secretary of State when we overseas territories—the Minister is aware that I have listened to that debate. taken a close interest in them over the years—but many There is genuine concern on both sides of the House. of our constituents are not quite clear about why places We heard it last week and before, from the Public such as the Cayman Islands seem to be such popular Accounts Committee and from MPs up and down the places for basing parent companies. 337 Public Bill CommitteeHOUSE OF COMMONS Water Bill 338

[Thomas Docherty] customers, one of the ridiculous briefings that we had from Water UK said that water companies do such I am happy to put on the record that I believe it is no good community works and give lots of money to longer acceptable for a water company to borrow against Citizens Advice and to corporate social responsibility itself and from itself as a way of avoiding tax. Since the activities. Given the low regard in which water companies Minister picked me up on it, let me make the distinction are held by the public and by Parliament, we believe clear for him: I believe that although such a practice that they need to set out their investments—not just in might legally be considered avoidance, morally it is infrastructure and concrete, but in staff and the communities evasion. I hope that that clarifies matters for the Minister. they serve. When water companies are making such outrageous profits, it is not morally acceptable that money is not George Hollingbery: The hon. Gentleman makes my being put back in, either to reduce the cost of household point for me. If the new clause is to be added to the Bill, bills or to make improvements necessary for the flood we need to know precisely what is meant by “performance” defence resilience and abstraction reform that both or the “total amount of investment”. What counts as an sides would like to see. investment? Does he not agree that the new clause needs We must also have a clearer understanding of water a great deal more precision? Otherwise, it is meaningless. companies’ corporate structures to understand not just why so many of them seem to have such an interest in 10.30 am tax havens, but how their structures work. Is it acceptable Thomas Docherty: I would be wrong if I suggested that water companies are giving such large salaries to that the hon. Gentleman had not read the Bill, but the their senior board members? It is right that we understand Bill is riddled with provisions that set a policy framework more about the dividends paid to shareholders. for the purposes of secondary legislation. It is not for George Hollingbery: Will the hon. Gentleman tell the the House to bind the Secretary of State on what he or Committee whether the new clause is probing, or whether she believes is a satisfactory report, which might change he intends to press it to a vote? over a period of time. I go back to the debate on the water industry that we had at the start of November, Thomas Docherty: I always struggle with the idea of where a wide-ranging set of issues was raised. Those probing new clauses, because we have not heard what issues might change over time. the Minister has to say. I have some form on pressing The new clause is absolutely clear. The hon. Gentleman new clauses, however, so let us see what happens. is hiding behind semantics if he does not think that— George Hollingbery: If I may, I will take it that the George Hollingbery: The hon. Gentleman has to give hon. Gentleman intends to press the new clause to a way on that point. vote. I understand his sentiments, and I have some sympathy with some of the profitability and pay issues, but if the new clause is to be added to the Bill—he has Thomas Docherty: I will give way in a moment. given personal explanations on what “performance” Performance, investment, taxation and corporate structure, means and what “total amount of investment” means—it and the total amount of dividends paid to shareholders, needs to be precise about what those words mean. should be clear specifics.

The Chair: Order. The hon. Gentleman must be brief. George Hollingbery: Every other part of the Bill refers to schedules and/or the right of the Secretary of Thomas Docherty: I am not sure what the hon. State to define through secondary legislation what is Gentleman does not understand about the phrase “total meant by x, y or z. I am afraid that the hon. Gentleman amount of investment”. himself is hiding behind obfuscation. Three of the items on his list of five are already publicly available George Hollingbery: It is a small, trivial example information. The first two, in proposed new paragraphs perhaps, but it is nevertheless an example: is the training (a) and (b), are simply so vague that they cannot be of staff an investment? defined in the Bill in such a way. I submit to him that his Thomas Docherty: I am most grateful. I suggest that new clause is not viable. the companies do a section on investment in their own staff. The hon. Gentleman made a valid point about the Thomas Docherty: The hon. Gentleman contradicts lack of investment across the board. It is ridiculous that himself—he has a great future as a Lib Dem, because he chief executives are being paid seven-figure sums when has contradicted his own speech. He says that three of many of their employees are struggling on pay restraints. the things are available, so it should not be difficult for I mentioned workers, and in the interests of clarity I the water companies to pull the information together. It draw Members’ attention to the Register of Members’ will not be onerous. [Interruption.] I will happily give Financial Interests, so that the hon. Member for way if the hon. Gentleman wants to make a further Morecambe and Lunesdale (David Morris) does not intervention. He seems quite exercised this morning; I run off to complain about me. think he has had his oatmeal. The hon. Member for Meon Valley leads me on to a We are not asking the water companies to undertake serious point. We need to look at the investment in staff an onerous task. In a previous life, many years ago, I and communities as well as in infrastructure. When the used to work in a controversial industry—I helped to water lobbyists were running around trying to persuade write our corporate responsibility report. It is for each us not to champion social tariffs and not to try to make water company to take the opportunity to set out what water companies do a little bit to help their hard-pressed they are doing. 339 Public Bill Committee17 DECEMBER 2013 Water Bill 340

The hard fact, however, is that the public have lost with bigger brains than mine to work out—but I want confidence in the water industry; they are sick and tired to say on behalf of my constituents that the information of seeing £1.9 billion in pre-tax profits, with £1.8 billion would be useful to us. of that heading out of the door to shareholders. The Since the massive, catastrophic failure of the Carr public have heard not only from the hon. Member for Lane pumping station last year, Yorkshire Water has Brigg and Goole, but from other Members from up and gone out and done much itself through its communications down the country that water companies are failing to strategy. It has spent £3.6 million in my town of Goole, meet their responsibilities, while getting richer and richer investing in new pumping facilities and increasing capacity at the expense of hard-pressed customers. The new by 20%. It has spent a lot of money and gone out of its clause is a small measure, which should not be onerous way since that time to explain to residents and consumers for the water companies, but would provide a real exactly how it has invested in the town and what its opportunity for us to hold those executives to account. performance has been. I am not sure it has communicated its taxation structure as clearly as some would like, but it has found that, by being more transparent and open Andrew Percy: It is a pleasure to serve under your about its investment in the town and what its failures chairmanship this morning, Mr Gray. The new clause have been, the public and consumers have more confidence has some merits, although I take the point made by my now than they did two or three years ago. hon. Friend the Member for Meon Valley about whether we might have to define more tightly some of the things I shall not say much more. I have some sympathy for it calls for. the new clause—requiring the information does not seem particularly onerous. The drafting could be made I want to speak a little about my own experience with better but I end by saying that we have had experience water companies. The 250 square miles of my constituency of a failure of investment in my own constituency. I are covered by three different companies: Yorkshire hope that Yorkshire Water will apologise, finally, and Water, in the area where I live; Anglian Water; and compensate my constituents who have been flooded Severn Trent Water. I have experience—in some cases, two years running. Perhaps my constituents would not bitter experience—of dealing with our water companies. need that if we had felt more able to assess adequately The shadow Minister tempted me to speak by referring the company’s performance, through access to all the to my experience with Yorkshire Water in Goole, the information. I look forward to hearing what the Minister town I live near. has to say. In the debate a couple of months ago, I highlighted the huge profits made by water companies, the failure to invest properly in our communities and the problems Mrs Emma Lewell-Buck (South Shields) (Lab): Mr Gray, that that failure had caused. I pointed out then, as I do it is a pleasure to serve under your chairmanship. My again for the record today, that in 2005 water bills where colleagues and I have spoken at length about putting I live were £264; by 2011-12, when my constituents and the consumer at the heart of the matter. These clauses I were stood in about 3 feet of water, they had risen to work along those lines, making sure that information £330. Nevertheless, the year after we stood in similar about providers is public, thereby making providers amounts of water yet again, because of a failure by accountable to the customers they serve. It would make Yorkshire Water to maintain its basic assets in the town, clear the principle that in the water market the bottom in spite of having made massive profits. line should be the level of service provided to customers and not the water company’s profits. Yorkshire Water’s profit-to-dividend ratio has improved Profit margins in the water industry are extremely since 2010, but some of the other water companies have high. Ofwat’s latest figures show that 30% of a household’s gone in a different direction. When I intervened on the water bill is profit. We may compare that to the energy shadow Minister, I cited a report from East Riding of sector, where operating profits are around 9%. Altogether, Yorkshire council, which under new powers has to therefore, water companies made £1.9 billion in profit investigate any flooding incident. This week, that report last year, yet as these profits have risen, so have bills. confirmed that the reason why thousands of homes in Some 2.6 million households now spend 5% or more of my constituency have been flooded for two years running, their income on water. Rising water bills are part of the in particular in 2012, was that there was a failure of the cost of living crisis that is affecting my constituents Carr Lane pumping station. badly. Many of them would be very angry to hear that As I explained before, my constituency is at threat almost a third of their bill goes into padding profits or not only from river flooding, which is why we have paying large dividends to shareholders. They would see massive defensive banks all around us, but also from it as evidence that the market is working for their surface water, due to the fact that we have to be pumped supplier, not for them, and they would be right. for most of the year because we are below high tide New clauses 33 and 45 would enable Ofwat to intervene levels and below sea levels in some places. There was a in the consumer’s interest and decide when prices are failure by Yorkshire Water despite the fact that all our not working for the average household, reopening a bills were going up and that it was continuing to make price review, if necessary, to address any unfairness. big profits against which I, as a consumer, was unable to These clauses would also require water companies to assess their performance. make their corporate structures and tax arrangements The town floods because of that failure and my bill available for scrutiny by Ofwat. Earlier this year, it was and the bills of my constituents continue to rise. I have revealed that Yorkshire Water had paid no corporation some sympathy for the new clause in that I cannot see tax on its £186 million profit. Thames Water made why we would not want the information to be reported. £127.7 of profit and paid no corporation tax. This story Some of it is publicly available. I am not sure whether wasbrokenbytheSunday Times. It should not be up to the new clause is technically perfect—that is for people the national press to reveal these figures. Companies 341 Public Bill CommitteeHOUSE OF COMMONS Water Bill 342

[Mrs Emma Lewell-Buck] they find it outrageous that water bills are increasing way faster than the rate of inflation and the dividends should have a duty to be absolutely up front about their being paid are enormous. What particularly sticks in tax arrangements. We should leave it to the regulator people’s craws is that the salaries in the water industry and the public to decide whether those arrangements are enormous, and we have executives—this is happening are fair. There can be little doubt that such arrangements on a fairly large scale—earning, or rather being paid, leave the consumer worse off. For example, some companies salaries of about £1 million a year. The hon. Member have taken to financing themselves with increasing levels for Brigg and Goole may secretly be a revolutionary of debt, which is borrowed through offshore tax havens socialist seeking to bring down the system from within, to ensure no tax is paid. The interest on the loans is but I suspect—[Interruption.] Perhaps he sells the Socialist estimated to add as much as a third to bills in some Worker outside his local railway station on a weekend, areas. but I doubt it. I suspect he is just being honest about The chair of Ofwat warned that many of the industry’s what his constituents face, and that applies to many business practices do not stand the public interest test hon. Members who have contributed to our debates, and will damage public trust in the industry, and I including the debate in Parliament on, I think, 5 November. agree. Customers see money being funnelled out of That has to be dealt with. To a degree, the new clause their bank accounts and into the coffers of water companies, would deal with the public perception, which is so at which award it to their shareholders, use it to bump up odds with the way the Government and those in the executive pay or take it out of the country altogether. industry itself see the water industry. People rightly call for Ofwat to take action, and the Last week I attacked the water industry in a fairly new clauses we have proposed would empower it to do visceral way, particularly the company that supplies my just that. area, Thames Water. It has not got a great reputation and is disliked, even detested. It is remarkable that since John Cryer: It is a pleasure to serve under your I made those speeches I have not heard from Thames chairmanship, Mr Gray. I want to speak briefly because, Water. I find it extraordinary that Thames Water has to some extent, we have had this discussion previously. not even bothered to get in touch. New clause 33 does not exactly go to the heart of the It cannot be that Thames Water is unaware that the problem with the water industry, but it deals with part Bill is going through and these debates are going on. It of it. The biggest problem for the industry and the must be aware that members of the Committee are Government is the yawning gap between their view and making critical speeches. Yet I have not heard a single the public view of the industry. There is a chasm between word from Thames Water trying to explain its case; the two: the Government are perfectly happy for the trying to explain the increase in bills and the dividends industry to continue under private ownership, and they and salaries being earned. are happy, to a degree, for it to continue under its present mode of operation, but the view among voters 10.45 am is that public ownership is the best solution. Thomas Docherty: That is fascinating. Is that not the I am more than happy to recognise that, in supporting problem? Water companies just do not care what the public ownership, I am in a minority on either side of public or even Parliament think of them, just as long as Parliament, but, out in the country, I would be part they keep making £1.9 billion profit. of the majority. The problem is that it is not sustainable to have such a chasm between the Government perception and the popular perception or to have, to some extent, a John Cryer: I am very grateful to my hon. Friend. divide between Parliament generally and the public, That is the impression that I get. I cannot imagine that with the public view at odds with Parliament’s view. Thames Water and the other big water companies do There are not that many issues on which there is such a not have a lobbying or PR operation. I would have sharp contradiction between the views of Parliament thought that any lobbying or PR operation on behalf of and the views of the people. I can think of only a those companies, whether in-house or third party, had handful, and one that springs to mind is our membership heard what we have said and thought that they ought to of the EU, where there is a clear contradiction between address it by getting in touch with the MPs on the the view of Parliament, including Conservative Members, Committee, MPs more widely, or those in the other and the view of the public. There are one or two other place. As far as I can make out, there has been no issues, and rail ownership springs to mind. A lot of the attempt to justify their behaviour over the past few public perception of the water companies springs from years or some of the planned increases. That is what I the view that they are owned and run on behalf of a find extraordinary. They do not feel any sense that they small wealthy and powerful elite, who, to a large extent, have to justify their position. are faceless and unaccountable. That is what the new clause is intended to deal with. We heard the speech from the hon. Member for Brigg Neil Parish (Tiverton and Honiton) (Con): Thank and Goole a few minutes ago. Last week, I mentioned you, Mr Gray, it is a pleasure to serve under your speeches by the hon. Members for Skipton and Ripon chairmanship. I am not normally the one to stand up (Julian Smith) and for Dover (Charlie Elphicke). I do and wholeheartedly support water companies. I have to not expect Conservative Members to find it particularly say that today we have heard a lot of information about easy to attack—perhaps that is a bit strong; let us say where the water companies are all wrong. South West “be highly critical of”—the private sector in the way Water has now pegged its prices for two to three years. certain hon. Members have been. However, those hon. The Government have given money to reduce bills and Members were moved to say what they have, because South West Water has delivered on that. 343 Public Bill Committee17 DECEMBER 2013 Water Bill 344

I do not think that profit should be considered a dirty Neil Parish: Indeed I do, Mr Docherty. I stand by word. It is what is done with that profit that matters, that entirely; we create greater competition between the and real investment in the industry. I get the impression water companies in order to deliver a private solution. I from the Labour Front Bench that it is Labour party was never one for renationalising the water companies policy to renationalise the water industry. Where precisely and always wanted to know where the money would would a Labour Government get the money from? come from. I want to see greater competition in the industry, bringing in more companies, and a much more Sheryll Murray (South East Cornwall) (Con): Does robust private system. That is my point. I have obviously my hon. Friend agree that South West Water has made stirred up a hornet’s nest. a lot of investment in its infrastructure, which was in quite a poor state? It is making headway. John Cryer: The hon. Gentleman is speaking very Neil Parish: As my hon. Friend knows, South West honestly and straightforwardly. I am not impugning Water has 33% to 35% of the beaches and about 2% or what he is saying. I want to make it clear that I am not 3% of the population. There are an awful lot of beaches responsible for Labour party policy—[HON.MEMBERS: to keep clean and where bathing water needs to be “Shame.”] Perhaps that will change, but I doubt it. improved, with a very small population to pay for it. There is no Labour party plan to renationalise the water Hence, the Government support for South West Water. industry. However, I should point out that it was never Perhaps you will explain to me how a new Labour nationalised in the way that we understand that term. It Government—God help us, if we got one—would was always broken into local water boards that owned renationalise the water industry. and operated the water industry. It was never centrally controlled in Westminster. Thomas Docherty: I am not sure the Chair of the Bill Committee has anything to do with what happens to Neil Parish: I was perhaps being unkind by asking the next Labour Government. whether renationalisation was Labour party policy, when I understood that it was the hon. Gentleman’s policy. I The Chair: Certainly not. do not think this point is going to shed too much Thomas Docherty: The hon. Gentleman said “God light—or heat or water, come to that. Clearly, we have help us”. I assumed he was referring to the Chair of the to look at the water companies, create greater competition, Bill Committee. To clarify for the benefit of the hon. and deliver a better deal through them. I look forward Gentleman, who I think was here last week when we to our Minister laying that out clearly. There is an idea had this discussion, I made the point that we had four that profit in itself is problem—it is not. The question is different corporate structures for four different nations what water companies do with those profits to reinvest. of the United Kingdom. It works for each of the four. I I accept that executive pay and all these things are too will give more detail when I come to respond, Mr Gray, high, but let us not target private companies for the sake as this is just an intervention. of it. They are an easy target and when they have done a good job, like South West Water has, and are pegging Neil Parish: I thank the shadow Minister for his bills, we should stand up and say so. intervention. We have seen £124 billion invested into the infrastructure of water, all provided by the private Dan Rogerson: We have had a wide-ranging debate sector. If we were to turn round and provide that via the from a range of perspectives from hon. Members, who, public sector, it would be totally wrong. I suspect, are suspicious of competition and whether it delivers benefits, to hon. Members such as my hon. Andrew Percy: I thank my hon. Friend for giving way. Friend the Member for Tiverton and Honiton who There is no doubt he is making a brave speech. When I want competition to go as far as possible to be reassured criticise Yorkshire Water, it is not because I want to that it will have the goals to which he aspires. This is an bring down the capitalist system or am against private important aspect of the way in which the water industry ownership—Yorkshire Water has made some major and the regulator operate. That is why I am delighted investment in our area, like all water companies—but with Ofwat’s approach on these matters. because I want to challenge it to fulfil its proper corporate New clause 33 will give water companies a duty to responsibility to its consumers. I do not want to see report every year to Ofwat and to the Secretary of State renationalisation—our pipes were leaking the worst in about their performance, investments, tax arrangements, Yorkshire under nationalisation. Yorkshire Water has corporate structure and dividends. As many hon. Members done some good things; this is about encouraging it to have pointed out, this information is already freely be more corporately responsible. available in the public domain. The only effect of this Neil Parish: I thank my hon. Friend for his intervention. amendment would be to duplicate existing reporting If he will allow me to continue a little further, I am sure requirements and increase the administrative burden on I can shed a little light on where I am taking this speech. water companies. That may be felt to be a small burden, My point is about profits and the way in which Ofwat but ultimately the cost of that is met by the customers. and Government guide water companies to reinvest the All companies are already required to report on money that they make, and to use it to look after many of these matters in their annual reports and customers and in some cases to keep water bills down. accounts. Additional water sector-specific reporting requirements are a matter for the regulator. Ofwat is Thomas Docherty: The hon. Gentleman will recall already taking action to improve standards of corporate that a very wise Member once said that the only thing governance across the sector. It recently consulted on worse than a state monopoly was a privatised monopoly. principles relating to board leadership, transparency Does he still agree with that? and corporate governance. Ofwat is putting pressure on 345 Public Bill CommitteeHOUSE OF COMMONS Water Bill 346

[Dan Rogerson] Thomas Docherty rose— water companies to strengthen audit arrangements, board Dan Rogerson: The hon. Gentleman is eager to jump member appointments and governance. The response to his feet, so I will give way to him. from water companies has been positive, which I welcome. Thomas Docherty: I think the Minister realised where The hon. Member for Dunfermline and West Fife he was going, so he suddenly skipped to other subjects. raises some important issues on the way the sector is If he truly believes that Ofwat already has those powers, run. I believe, however, that the regulator is taking will he remind the Committee on how many occasions action to address those issues. The proposed annual in the past 25 years Ofwat has chosen to exercise those review, therefore, would add an additional burden on powers? companies for little gain, which is why I resist the new clause. Dan Rogerson: The current price review period has New clause 45 would build on new clause 33 by been one of the more profitable periods for water placing a new duty on Ofwat to take account of the companies, which is perhaps why Ofwat has been consulting proposed annual report by companies to the Secretary on whether to use the powers in relation to Thames of State. New clause 45 would give Ofwat a further Water. Previously, the regulator set prices on the basis power to consider such information when determining that the industry needs to make huge investments. We whether to reopen a price review. have already heard from my hon. Friend the Member As I have noted in previous debates, Ofwat already for South East Cornwall on the level of investment that has the power to reopen a price review under the has been required in the south-west, where the water substantial beneficial effects clause of the water companies’ company has to consider the huge coastline when making licence. Furthermore, all of the information that the investments. new clause would require companies to report to the Secretary of State is already in the public domain, and 11 am much of it is already the subject of direct reporting to Having said that, thankfully for consumers we have Ofwat, which already has far-reaching information- now moved into a price review period under the coalition gathering powers and, within the scope of its duties, Government, rather than under the previous Government. already has complete discretion over how it takes account The Secretary of State’s direction has therefore been of such information. clear. He wants Ofwat to take account of the fact that companies can borrow cheaply. In response, companies Lastly, I emphasise that Ofwat is already required to are now coming back with proposals for the price consider all of its duties when taking any regulatory review period, which is a positive thing. Since 2009, decision. The question whether a particular action would water bills have increased by 0.5% above inflation. further the consumer objective will always inform Ofwat’s Water companies’ business plans indicate that in the decisions. next price review from 2015 their aspiration is that bills Ofwat has the powers necessary to revisit price will be kept flat or in some cases, decline. I think this is determinations. Given the importance of regulatory an indication that we have moved on. stability to keeping prices down for customers, however, I said to the hon. Member for Dunfermline and West Ofwat rightly utilises those powers with caution. In that Fife in regard to previous debates that he is perhaps way, Ofwat already gives full consideration to whether seeking to react to situations that applied before rather such action would further the consumer objective. than the situation in which we find ourselves now. Several hon. Members have made a number of points Returning to the specifics of his new clauses, the information on water companies and their interaction with customers. that he is requesting to bring together is published in It is fair to say that the earlier history of water companies other sources, so the only thing that we would do if we was based on engineering solutions to engineering problems, passed this clause is bring together some of this information such as improving water quality, addressing leakages into some further glossy publication, involving more and all sorts of things, rather than necessarily a customer time from companies rather than getting on with and focus. That is one of the main reasons for our introducing dealing with things that we want to see them do. Ultimately the Bill. As well as considering how to achieve greater the cost of doing that will be borne by customers so I efficiencies, the Bill will, through bringing new people am certainly not persuaded by the hon. Gentleman that into the non-domestic retail sector, improve both customer his new clauses add anything of merit to the Bill. focus and responsiveness to the needs of consumers. We also want the lessons learned in that sector to be applied Thomas Docherty: This has probably been one of our to the domestic sector so that household customers may livelier debates. I am most grateful to the hon. Members also benefit. for Brigg and Goole and for Tiverton and Honiton for There is much further work to do on customer focus— their slightly different contributions. It is good to see interacting with and listening to customers—and I therefore blue-on-blue fights in this place. I am particularly grateful welcome the Bill. I also welcome what Ofwat is now for the contributions of my hon. Friends for Leyton doing on corporate governance and transparency, because, and Wanstead and for South Shields—they made two as hon. Members on both sides of the Committee have excellent speeches about their customers. pointed out, there are concerns on that. The hon. I will briefly address four points that were raised. The Member for Leyton and Wanstead is absolutely right to first is about this issue of excess profits. We were very say that customers are at times confused about the clear last week that we believe that these excess profits ownership of those companies and their arrangements. are simply unacceptable. We set out, in quite a lively People want to understand what those arrangements discussion, that those excess profits should be used mean for the profitability of companies, and so on. I to fund our national affordability scheme. If the welcome Ofwat’s move to take action on that. Government have not been prepared to accept that, 347 Public Bill Committee17 DECEMBER 2013 Water Bill 348 and it is disappointing that they do not believe in NOES universal social tariffs, greater public scrutiny of those Burrowes, Mr David Parish, Neil excess profits is required. This is quite a simple measure. Hollingbery, George Penrose, John Morris, Anne Marie Rogerson, Dan Dan Rogerson: I understand the spirit in which the Murray, Sheryll Spencer, Mr Mark hon. Gentleman makes his remarks. However, surely Offord, Dr Matthew Williams, Roger the key provision in that regard is the business plans and the plans that are already made public and consulted Question accordingly negatived. upon, rather than making an extra publication to the Secretary of State which, of course, is not necessarily New Clause 34 something that is directed at customers. I am just confused as where he is going with that. CONSUMER REDRESS ‘(1) Section 29 of the Water Industry Act 1991 (Consumer Thomas Docherty: I am grateful to the Minister as he complaints) is amended as follows. is leading me on to my next point about the reporting (2) After subsection (11) there is inserted— itself. As I say, we were very clear last week: we thought “(11A) Following the production of a report under subsection that excess profits were unacceptable and that the money (10), the Council will have the right to— should be used for social tariffs for our national affordability (a) be consulted on a water company’s charging scheme, scheme. That having been defeated, we think that greater and any changes to it, and public scrutiny is crucial. (b) investigate and resolve matters as it sees fit.”.’. There was some question raised by the Minister Enables the Consumer Council for Water to be consulted on the about the merits or practicalities of producing a report. charging schemes of water companies and, if necessary, to investigate I have to remind him as gently as I possibly can that for and resolve customer complaints.—(Thomas Docherty.) two reasons, doing reports is nothing new. First, Ofwat Brought up, and read the First time. used to ask the water companies to do it on a voluntary Question put, That the clause be read a Second time. basis, and many of them did, but they have got out of The Committee divided: Ayes 8, Noes 11. the habit. It would only be a cynical soul who would suggest that it is because they do not like public scrutiny Division No. 17] and they do not like having to point out that they made AYES hundreds of millions of pounds and paid none of it to the Treasury and gave none of it back to their customers. Cryer, John Glindon, Mrs Mary Docherty, Thomas Lewell-Buck, Mrs Emma In Scotland, and as ever, Scotland is the model for us Evans, Chris Phillipson, Bridget all—[Interruption.] I am sure that was not a heckle or Glass, Pat Williams, Hywel dissent from the hon. Member for Brigg and Goole towards the merits of Scotland. In Scotland, the regulator NOES requires Scottish Water—which, by the way, is a nationalised water company—to produce such an annual report Burrowes, Mr David Penrose, John showing its investments and its plan for the coming Hollingbery, George Percy, Andrew Morris, Anne Marie year. I am baffled that the Minister thinks that this is a Rogerson, Dan Murray, Sheryll great hardship or that it will somehow further drive up Offord, Dr Matthew Spencer, Mr Mark the costs of water bills. Given the excess sums that they Parish, Neil Williams, Roger made last year, it really should not add much. On new clause 45, which we did not really discuss, Question accordingly negatived. when we considered amendments 138 and 139 last week, the hon. Member for Meon Valley chided me at some length about giving the Secretary of State powers New Clause 37 to reopen the price review. He said it would politicise the process. I see as he masticates from his position that he nods assent; that is a fair reflection. We reflected RIGHT OF APPEAL FOR HOUSEHOLDS ON REMOVAL FROM upon his remarks. That is why we say that the regulator THE FLOOD REINSURANCE SCHEME should open the price review if companies are making ‘(1) The Secretary of State shall by order establish a right of excess profits and not delivering for their customers. I appeal for a household which has been removed from the Flood am surprised that the Minister is not keen on new clause Reinsurance Scheme. 45. I asked how many times in 24 years Ofwat had used (2) The Financial Conduct Authority shall be responsible for its powers. He gave a very long answer but failed to give the hearing and administration of appeals under subsection (1). the short answer, which is zero. (3) An order under subsection (1)— Question put, That the clause be read a Second time. (a) shall be made by statutory instrument; and The Committee divided: Ayes 9, Noes 10. (b) may not be made unless a draft has been laid before and approved by resolution of each House of Division No. 16] Parliament. AYES (4) An order under subsection (1) must be made before the Flood Reinsurance Scheme has been implemented.’.—(Thomas Cryer, John Lewell-Buck, Mrs Emma Docherty.) Docherty, Thomas Percy, Andrew Brought up, and read the First time. Evans, Chris Question put, That the clause be read a Second time. Glass, Pat Phillipson, Bridget Glindon, Mrs Mary Williams, Hywel The Committee divided: Ayes 9, Noes 10. 349 Public Bill CommitteeHOUSE OF COMMONS Water Bill 350

Division No. 18] (a) shall be made by statutory instrument; and (b) may not be made unless a draft has been laid before AYES and approved by resolution of each House of Cryer, John Lewell-Buck, Mrs Emma Parliament. Docherty, Thomas Percy, Andrew (4) An order under subsection (1) must be made before the Evans, Chris Flood Reinsurance Scheme has been implemented.’.—(Thomas Glass, Pat Phillipson, Bridget Docherty.) Glindon, Mrs Mary Williams, Hywel Brought up, and read the First time. Question put, That the clause be read a Second time. NOES Burrowes, Mr David Parish, Neil The Committee divided: Ayes 9, Noes 10. Hollingbery, George Penrose, John Division No. 20] Morris, Anne Marie Rogerson, Dan Murray, Sheryll Spencer, Mr Mark Offord, Dr Matthew Williams, Roger AYES Cryer, John Lewell-Buck, Mrs Emma Question accordingly negatived. Docherty, Thomas Percy, Andrew Evans, Chris Glass, Pat Phillipson, Bridget New Clause 38 Glindon, Mrs Mary Williams, Hywel

FLOOD REINSURANCE SCHEME: REPORT ON PROPERTIES ‘(1) The Secretary of State must prepare and publish a report NOES on— Burrowes, Mr David Parish, Neil (a) how many properties are not eligible for the Flood Hollingbery, George Penrose, John Reinsurance Scheme; and Morris, Anne Marie Rogerson, Dan (b) the cost of including properties under (a) in the FR Murray, Sheryll Spencer, Mr Mark scheme prior to it coming into effect, Offord, Dr Matthew Williams, Roger and must lay a copy of the report before Parliament. (2) The report shall include a breakdown of the cost of Question accordingly negatived. including properties that fall under the category— (a) Council Tax band H; New Clause 40 (b) built between 1 January 2009 and 31 December 2012; and (c) built after 1 January 2013.’.—(Thomas Docherty.) FLOOD REINSURANCE SCHEME NATIONAL DATABASE Brought up, and read the First time. ‘(1) The Secretary of State may by order (the “commencement Question put, That the clause be read a Second time. order”) appoint a day on which section [The Flood Reinsurance Scheme] is to come into force. The Committee divided: Ayes 8, Noes 11. (2) An order under subsection (1)— Division No. 19] (a) shall be made by statutory instrument; and (b) may not be made unless a draft has been laid before AYES and approved by resolution of each House of Cryer, John Glindon, Mrs Mary Parliament. Docherty, Thomas Lewell-Buck, Mrs Emma (3) The Secretary of State may only make an order under Evans, Chris Phillipson, Bridget subsection (1) if a Flood Reinsurance Scheme national database Glass, Pat Williams, Hywel has been established. (4) Any Flood Reinsurance Scheme national database must— NOES (a) be accessible by the public; Burrowes, Mr David Penrose, John (b) outline a property’s risk of flooding; and Hollingbery, George Percy, Andrew (c) indicate if the property is covered by the Flood Morris, Anne Marie Reinsurance Scheme.’.—(Thomas Docherty.) Rogerson, Dan Murray, Sheryll Brought up, and read the First time. Offord, Dr Matthew Spencer, Mr Mark Parish, Neil Williams, Roger Question put, That the clause be read a Second time:— The Committee divided: Ayes 8, Noes 11. Question accordingly negatived. Division No. 21]

AYES New Clause 39 Cryer, John Glindon, Mrs Mary Docherty, Thomas Lewell-Buck, Mrs Emma Evans, Chris Phillipson, Bridget FLOOD REINSURANCE SCHEME: COUNCIL TAX BAND Glass, Pat Williams, Hywel ‘(1) The Secretary of State shall by order enable low income households to qualify for the Flood Reinsurance Scheme, regardless of their Council Tax band. NOES (2) An order under subsection (1) shall contain a definition of Burrowes, Mr David Murray, Sheryll “low income households”. Hollingbery, George Offord, Dr Matthew (3) An order under subsection (1)— Morris, Anne Marie Parish, Neil 351 Public Bill Committee17 DECEMBER 2013 Water Bill 352

Penrose, John Spencer, Mr Mark (i) those provided for by a scheme made under section Percy, Andrew 63AE, or Rogerson, Dan Williams, Roger (ii) such other terms and conditions as may be agreed between the interim licensee and the owner or Question accordingly negatived. occupier of the premises, and (c) subject to subsection (12), the supply is to be made until it is discontinued in accordance with the terms New Clause 42 and conditions mentioned in paragraph (b). (8) A notice under subsection (6)(b)(iv) may not be served INTERIM DUTY: WATER SUPPLY before the end of the period of three months beginning with the day on which the supply by the previous licensee ceased. ‘For section 63AC of the Water Industry Act 1991 (interim duty of water undertaker: domestic and non-domestic supply) (9) Subsections (10) and (11) apply if, within a period of three there is substituted— months beginning with the date on which the previous licensee ceased to supply the premises with water, the owner or occupier “63AC Interim duty: domestic and non-domestic supply of the premises serves notice— (1) This section applies where— (a) under section 63AA or 63AB, on the water undertaker (a) a water supply licensee (“the previous licensee”) ceases continuing the supply under subsection (2), or to supply any premises with water, and (b) in accordance with the terms and conditions (b) the owner or occupier of the premises has not notified mentioned in subsection (7)(b), on the interim the water undertaker in whose area the premises are licensee continuing the supply by virtue of a direction that— given under subsection (3), (i) he has made arrangements for the continuation of that instead another water supply licensee (“the new licensee”) the supply of water to the premises, or is to continue the supply of water to the premises which was (ii) he intends any supply of water to the premises to made by the previous licensee. cease. (10) The notice must— (2) It is to be the duty of the water undertaker to continue the (a) specify the time from which the new licensee is to supply of water to the premises which was made by the previous continue the supply in question, and licensee. (3) But the Authority may give a direction to an eligible water (b) be served in accordance with the code issued under supply licensee (“an interim licensee”) providing that it is to be section 63AF. the duty of that licensee to continue the supply instead. (11) In the case of a notice served as mentioned in subsection (4) An “eligible water supply licensee” is a water supply (9)(a), the supply by the new licensee is to be treated as having licensee with a retail authorisation or a restricted retail begun on the date on which the previous licensee ceased to authorisation who has elected to be an eligible water supply supply the premises. licensee for the purposes of this section in accordance with the (12) Supplies of water under this section are subject to sections code issued under section 63AF. 60 to 63. (5) If the Authority proposes to give a direction under 63AD Interim duty: supplementary subsection (3) to an eligible water supply licensee— ‘(1) A water undertaker is not required by virtue of section (a) the Authority must give notice of the proposed 63AC to provide a supply of water to any premises if the direction to the licensee, and provision of the supply would— (b) the licensee may, in accordance with the code issued (a) require the undertaker, in order to meet all its existing under section 63AF, temporarily suspend the election obligations to supply water for domestic or other made by the licensee as mentioned in subsection (4), purposes, together with its probable future so that the proposed direction cannot be given to the obligations to supply buildings and parts of buildings licensee. with water for domestic purposes, to incur (6) Where a supply is made by an undertaker under subsection unreasonable expenditure in carrying out works, or (2)— (b) otherwise put at risk its ability to meet any of the (a) the charges payable in respect of the supply are to be existing or probable future obligations mentioned in fixed from time to time by a charges scheme under paragraph (a). section 143, and (2) The Authority may determine, in a case referred to it by the (b) subject to subsection (12), the supply is to be made owner or occupier of the premises in question, whether the until— condition in subsection (1) is satisfied in relation to a water (i) a supply is made by an interim licensee by virtue of undertaker. a direction under subsection (3), (3) Before the Authority determines whether that condition is (ii) a supply is made by a water supply licensee satisfied, it must consult— following the service of a notice under section 63AA or 63AB; (a) the Secretary of State, in the case of a water undertaker whose area is wholly or mainly in (iii) a supply is made under section 52 or 55, or England; (iv) a notice is served by the undertaker on the owner (b) the Welsh Ministers, in the case of a water undertaker or occupier of the premises stating that the supply whose area is wholly or mainly in Wales. is to be discontinued (subject to subsection (8)), (4) The supply of water to any premises by a water undertaker whichever is the earlier. under section 63AC does not prevent a proposed supply to those (7) Where a supply is made by an interim licensee by virtue of premises by that undertaker under section 55 from being a direction given under subsection (3)— regarded as a new supply for the purposes of that section. (a) the supply by the interim licensee is to be treated as (5) Where a duty is imposed by section 63AC(2), or by virtue having begun on the date on which the previous of a direction given under section 63AC(3), in respect of any licensee ceased to supply the premises, premises, any breach of the duty which causes the owner or (b) the terms and conditions in accordance with which the occupier of the premises to sustain loss or damage is actionable supply is to be made are to be— at the suit of that owner or occupier. 353 Public Bill CommitteeHOUSE OF COMMONS Water Bill 354

(6) But in any proceedings brought against a water undertaker (3) If the Authority considers that a water supply licensee is or water supply licensee in pursuance of subsection (5), it is a not acting as required by provision contained in a code as defence for the undertaker or licensee to show that the mentioned in subsection (2)(e) or (f), the Authority may give the undertaker or, as the case may be, the licensee took all reasonable licensee a direction to do, or not to do, a particular thing steps and exercised all due diligence to avoid the breach. specified in the direction. “63AE Interim licensees: schemes for terms and (4) It is the duty of a water supply licensee to comply with a conditions direction under subsection (3), and this duty is enforceable under section 18. (1) A person who is an eligible water supply licensee for the purposes of section 63AC must make, and from time to time (5) The Authority must from time to time review the code and, revise, a scheme containing the terms and conditions which, in if appropriate, issue a revised code. the absence of agreed terms and conditions, are to apply to a (6) References in section 63AC to the code issued under this supply of water made by the licensee by virtue of a direction section are to the code issued under this section that has effect at given under section 63AC(3). the time in question.”’.—(Dan Rogerson.) (2) A scheme under this section may make different provision Brought up, and read the First time. for different purposes, or for different areas. (3) As soon as practicable after a water supply licensee makes Dan Rogerson: I beg to move, That the clause be read or revises a scheme under this section the licensee is to— a Second time. (a) publish the scheme, or revised scheme, on the licensee’s website, and The Chair: With this it will be convenient to discuss (b) send a copy of the scheme, or revised scheme, to the Government new clause 43—Interim duty: sewerage Authority. services. (4) The Authority may give a direction that terms and conditions applying to a supply of water in accordance with a scheme under this section must be modified as specified in the Dan Rogerson: New clause 42 revises the so-called direction. “supplier of last resort” provisions in the existing water supply licensing regime. This is also known as the (5) A direction under subsection (4) may apply— “interim supply duty”. New clause 43 introduces the (a) generally to terms and conditions applying in equivalent for sewerage licensing and what a customer accordance with a scheme under this section, or must initially do to switch from an incumbent sewerage (b) to terms and conditions so applying in any particular company to a sewerage licensee. Currently, if a licensee case. were to withdraw from the market, its customers would (6) It is the duty of a water supply licensee to comply with a revert to the incumbent water company for their retail direction under subsection (4), and this duty is enforceable under services, for example billing. The incumbent would be section 18. under an obligation to continue supplying retail services 63AF Interim duty: code for at least three months, or until such time as the ‘(1) The Authority must issue a code in relation to— customer formalises the arrangement or switches to another licensee. (a) supplies of water under section 63AC, and This ensures that the customer is not left without a (b) its power of direction under section 63AC(3) (power to retail supplier because its chosen licensee becomes insolvent direct that eligible water supply licensee makes or otherwise decides to leave the water supply market. interim supply). As it stands, this might not be an ideal situation for (2) The code may, in particular, make provision about— multi-site customers that are located throughout England (a) the procedure for electing to be an eligible water supply and Wales. The customer could be with a single supplier licensee for the purposes of section 63AC; one day and find itself in arrangements with up to 21 (b) the procedure for temporarily suspending such an incumbent water suppliers the next. While the customer election under section 63AC(5)(b); could take steps to tender for a new licensee straight (c) the circumstances in which the Authority’s power of away, this may take some time and will put considerable direction under section 63AC(3) or 63AE(4) may or burdens on both the customers and the incumbents. may not be exercised; While these new clauses retain the default of a customer (d) how the Authority will determine the date on which a returning to the incumbent water company, Ofwat will water supply licensee ceased to supply premises with alternatively be able to direct other licensees to take water for the purposes of section 63AC; over responsibility for the customers, so that there is (e) terms and conditions contained in schemes made only one supplier for the customer to deal with until it under section 63AE; makes alternative arrangements. Licensees that feel they (f) eligible water supply licensees informing owners or cannot cope with the additional supply will be able to occupiers of premises of their schemes for terms and opt out at that point. Ofwat will be required to publish a conditions made under section 63AE, before agreeing code on how it will use its powers of direction and how any terms and conditions as mentioned in section the regime will work in practice. 63AC(7)(b)(ii); Where Ofwat directs that a supply will be made by a (g) the giving of notices as mentioned in section 63AC(9) licensee, the terms and charges that apply shall be the (that a new licensee is to continue the supply of water default terms provided by the licensee, but regulated by made by the previous licensee) including, in Ofwat. In the alternative, customers can negotiate terms particular, provision about— and conditions privately with the licensee, but Ofwat’s (i) the earliest time that a notice may specify as the time code should ensure that the licensee makes the customer from which a new licensee is to continue the aware of the default terms before this can happen. Both supply of water made by a previous licensee; the customer and the licensee can walk away at any time (ii) the procedure for serving a notice. provided for in the terms and conditions. 355 Public Bill Committee17 DECEMBER 2013 Water Bill 356

11.15 am Question put and agreed to. As is the case now, where the incumbent water company New clause 42 accordingly read a Second time, and provides the interim supply, it will do so in accordance added to the Bill. with its charges scheme. The incumbent will still be able to cancel the arrangement after three months so the Thomas Docherty: On a point of order, Mr Gray. I customer should choose to formalise the supply from understand that you will not be joining us this afternoon, the incumbent, re-negotiate it, or arrange to be supplied so I thank you for your service to this Committee and by a new licensee. The customer, on the other hand, can wish you a very happy Christmas. cancel the arrangement or seek to renegotiate terms at any time. We have added a new provision enabling any The Chair: That is, of course, an entirely bogus point supply by a new licensee in these circumstances to be of order and completely out of order. I am most grateful backdated so that the customer does not have to pay none the less for your kind remarks. several different bills for a short interim period. As is the case now, if the incumbent considers that Dan Rogerson: Further to that point of order, Mr making the supply puts at risk its other supply obligations, Gray, I would hate to pass up the opportunity to add it can refuse to provide the supply. We are adding a my best wishes for a happy and peaceful Christmas. power for the customer to challenge that decision, if it wants to remain with the incumbent water company, by The Chair: In answer to that entirely bogus ministerial asking Ofwat for a determination. Incumbents providing point of order, may I say what a great pleasure it has sewerage services will not have an equivalent opt-out been to chair this Committee? I have been amazed that due to their wider obligations to provide sewerage services you have all remained, remarkably, more or less in order in their areas of appointment. throughout. There shall be no more bogus points of To ensure transparency, the licensee’s default terms order. and conditions will be published in a scheme that will Ordered, That further consideration be now adjourned. determine how the default scheme terms and conditions —(John Penrose.) will be set. Under clause 16, Ofwat’s rules may also require the undertaker’s charter scheme to be published. 11.17 am I commend the new clauses to the Committee. Adjourned till this day at Two o’clock. 357 Public Bill CommitteeHOUSE OF COMMONS Water Bill 358

Written evidence reported to the House WB 27 Council of Mortgage Lenders WB 23 Bill Hollis WB 28 Council and members of the British Automatic Fire Sprinkler Association WB 24 Food and Drink Federation WB 29 Residential Landlords Association WB 25 The Environment Agency WB 30 British Property Federation WB 26 Wessex Water WB 31 London Fire and Emergency Planning Authority