My Lords, I hope noble Lords are not leaving because Amendment 1 is such a complicated amendment. It is one of the most straightforward amendments on the Marshalled List today.
As the House will know, we on this side have supported the objective of introducing a degree of competition into the retail end of water supply for the non-domestic sector. However, our support for that—and I think a lot of people’s support for that—was on the clear understanding that there would be safeguards to ensure that there was no disadvantage or detriment to domestic consumers as a result of the competition
operating within the business or non-domestic sector. That has of course proved to be the case in Scotland, but the Scottish structure is not exactly the same as the English structure, and we felt that it was necessary to make explicit that there should be no disadvantage. In principle, the Government appeared to agree. We therefore asked the Government to make that proviso clear in the Bill but the Minister said that that was not necessary.
Since Committee, we have pressed the department on how the existing safeguards would work and where those existing safeguards appear. According to replies from the department, the safeguards that it is relying on are twofold. First, they can be found in the Water Industry Act 1991. There is a similar reference there but that is in the context of a piece of legislation in which no competition was envisaged. It was in the context of monopoly regional supply and is therefore not completely effective in dealing with the entirely changed situation that the Bill would introduce.
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The second place where the department says the safeguards are is in Ofwat’s regulatory methods on not allowing cross-costing with the domestic sector. That is true, but regulatory conventions and the way the regulator does its work are not as clear or as legally watertight as stipulations in statute. In any case, the Ofwat position appears to relate to cross-charging on pricing and not to other aspects, such as the level of service to the domestic consumer. The existing legislative and regulatory protection is not sufficient, so why not make it unequivocally clear in the Bill that the introduction of retail competition will bring no disadvantage to the millions of household consumers in England and Wales?
The Government sometimes say that the problem is not going to arise and point to the situation in Scotland, where there have clearly been benefits to business consumers, including those that did not actually switch from the incumbent provider, and domestic consumers. But the market is different in England and Wales. It is more complex and over time will become even more complicated. There are therefore unforeseeable consequences if no safeguards are built in. Consumers need to be reassured in this legislation that they have that protection. That is what my amendment is about.
I note that the Government have tabled two amendments in this group that give a clear role for the Consumer Council for Water in the charging regime. I welcome those government amendments, not least because they are very similar to the ones that I tabled in Committee. I therefore commend the Government on bringing them forward today.
The introduction of competition in the business market should not be detrimental to ordinary households in any way. The engagement of the Consumer Council for Water will help to ensure that is not the case but that is not as clear as the adoption of my amendment would be. The Government need to go a bit further and state that “no detriment to householders” will be clearly and unequivocally in the Bill and will apply to the new market situation that will arise as a result of the passage of the Bill, the relevant provisions of which, in general, we support. I beg to move.