Water Bills

Question

11:18:00

Asked by

To ask His Majesty’s Government what steps they are taking to reduce water bills for consumers.

My Lords, of course, no one wants to see bills rise. We are committed to tackling water poverty and holding the water sector accountable for its commitment to end water poverty by 2030. We are therefore pushing companies to ensure that sufficient support is available for customers who are struggling to pay their bills, while also challenging Ofwat to make sure that all company investments are affordable and that customers do not pay twice for upgrades.

My Lords, since privatisation, water companies have had 1,100 criminal convictions and have also paid out over £85 billion in dividends. They charge people for sewage disposal but dump millions of tonnes of sewage into our rivers and seas. This is fraud. Does the Minister agree that rather than hiking bills, these companies should give refunds to customers for making fraudulent charges?

My noble friend points out some of the disgraceful behaviour we have seen from water companies in recent years. We expect companies to invest their own money going forward. However, we recognise that new investment means that customer bills are likely to rise. It is Ofwat’s responsibility to independently scrutinise water company plans, ensuring that the prices companies charge their customers are fair and proportionate. Vital infrastructure investment funding is ring-fenced and can be spent only on upgrades benefiting customers and the environment. Ofwat must ensure that when money for investment is not spent, companies refund customers, with money never allowed to be diverted for bonuses, dividends or salary increases.

My Lords, can the Minister assure me on the recommendation in the Frontier Economics report of 2021, commissioned by Ofwat, to stop developers passing on the cost of incremental upgrades and treatment works for major new developments? The fact that the recommendation has not been introduced is bloating customer bills, which is unacceptable. Will she ensure that the recommendation by Ofwat is introduced to reduce customer bills and make developers pay for connections for major new developments and the upgrade of treatment works?

As I just said, when money for investment is not spent, it is important that customers are refunded. The department is having ongoing discussions with Ofwat, and I will certainly take back the noble Baroness’s question for the next discussions.

My Lords, water is an essential element in many businesses and industries, not least the farming and horticulture sectors. With ELMS not delivering in the way originally intended, farmers and growers are finding their incomes shrinking and costs rising. Can the Minister ensure that at least their water bills are not escalating?

As I said, we are working very closely with water companies to ensure that bills do not increase unnecessarily. There are many challenges in the farming industry, and the Farming Minister is working across the piece to try to support farmers. For example, the farming budget was not reduced in the Budget this year. On ability to pay bills, we know that all water companies have measures in place for people who struggle to pay for their water and waste services, and we encourage water companies to work with customers to apply for those whenever it is appropriate.

My Lords, this House debated the Water (Special Measures) Bill yesterday, and presumably the Government thought it might bring bills down for bill payers and taxpayers—yet it will not. Where is the justification for passing a Bill that makes it more difficult for people to pay bills?

I do not really understand the noble Baroness’s logic in thinking that it is going to increase bills. That piece of legislation is to ensure that water companies are better held to account and to drive behaviour change from what we have seen in recent years.

My Lords, I am pleased to say that in Scotland we have water in public ownership. Water rates are generally collected as part of the council tax, and the bands can vary from £155 to £465 per annum. Does the Minister agree that privatisation was the biggest mistake ever made about water? I hope that we can rationalise it throughout the UK in years to come.

There are different forms of water ownership around the world, some privatised, some nationalised and some slightly different. No one system is particularly shown to be efficient or to keep bills down—it depends on how it is run. We are determined to ensure that our water industry is run much better in future.

My Lords, I am disappointed that the Government voted against my amendment to the Water (Special Measures) Bill last night to prevent consumers being the funders of last resort to the water industry. Does the Minister instead wish to commit that consumers will never be called on to bail out losses in a water industry special administration regime?

As we discussed yesterday in the debate on the Bill, the special administration regime is very much a last resort. Of course, we do not want to see customers bailing out water companies, which is why we are working very closely with Ofwat and the water industry to do everything we can to ensure that does not happen.

My Lords, the cost of water is obviously important—but even more important is the quality of water. Can the Minister assure the House that the Government are taking all steps to put an end to sewage dumping, for example, assuring the cleanliness of the water that we drink?

The Drinking Water Inspectorate is responsible for the quality of the water we drink. Our water in this country is among the highest in quality in the world, along with 10 other countries, so the quality of our drinking water is absolutely immaculate. The issue we have is the quality of water in our waterways and watercourses—and that is the situation we are improving through the Bill that is going through at the moment and through the wider review that we will take part in shortly.

My Lords, is it not incredibly naive for people to believe that water prices are not going to go up when this House has almost unanimously said that there needs to be huge additional investment to deal with water quality? The difference between a privatised system in England and a state system in Scotland is that the money will come from the private sector as well as consumers and not take money from the health service and other public services.

Clearly, what we are aiming to do at the moment is to increase investment into our water companies. Without that increased investment, which will need to come from private sources, as the noble Lord says, we cannot make the infrastructure improvements that we so badly need.

The Minister has described the conduct of the water companies as “disgraceful”, but is it not the responsibility of Ofwat to sort out the water companies? In that case, what steps are the Government taking to make sure that Ofwat does its job as a regulator?

The noble Lord makes an important point. We are very concerned about regulation over the past few years, which is why we are shortly starting our review into the water industry, which will also look at regulation, Ofwat and the Environment Agency, and whether that is the appropriate way to move forward.

My Lords, I welcome the fact that the Government not only are taking immediate legislative steps to improve the water sector’s performance but have launched the biggest review of the sector’s operation since it was privatised.

I thank my noble friend for those supportive comments.

My Lords, all water companies have social tariffs to help reduce water poverty. I have relevant interests on the register. It would be extremely helpful in expanding the help to people who find it really difficult to pay their water bills if the Government could put pressure on Ofwat to ensure that water companies focus a greater proportion of their budget on helping people pay their water bills. Will the Minister do that?

As the noble Baroness says, there are measures in place for people who struggle to pay for their water and waste services. As a Government we are working closely with the water companies to encourage them to work with vulnerable customers and people who cannot pay their bills. It is very much the water industry’s responsibility to ensure that people can pay their bills, and as a Government we need to work with it to make sure that customers who need support actually apply for it. There are many ways in which water companies can do that, and we would work with them and with Ofwat to make sure that vulnerable customers are properly supported.