My Lords, in moving Amendment 55 I will also refer to Amendment 56 in this group.
The Bill covers a wide range of dimensions of our water supply industry and its economic and environmental effects. However, it completely fails to address the social problems of those who face growing water bills and difficulty in facing growing pressures on their
low-income budgets or their family responsibilities. It is estimated that for 11% of our population water bills account for more than 5% of their income, and for 23% of the population they amount to 3% of their income. That is a pretty significant cost. We have to accept that how people pay for water in this country is singularly irrational but also singularly unprogressive.
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The report by Anna Walker a couple of years ago into the non-metered area—although it covered all consumers—where you pay according to your council tax band, found that 40% of low-income families were accommodated in the top four council tax bands, which effectively led to a cross-subsidy that was itself severely regressive. She identified a £600 million cross-subsidy going to more well off families and households and £180 million cross-subsidy going to less well off. We therefore have a net £420 million of the bills of the water industry moving in a severely regressive direction. Nor is all perfect in the metered area, because frequently in those areas subject to voluntary metering it has been those least likely to be dependent on large suppliers of water who have chosen to go for meters.
The totality means that there is a severely regressive structure in how people have to pay their water bills. That is why it was recognised that we need, as we did in energy, some form of social tariff to be introduced in the water sector. Since the 2010 Act, companies have been able to offer social tariffs, and Ofwat has encouraged social tariffs but, as from the beginning of this year, only three companies have introduced them and they have had a relatively small take-up. Even if you add on the WaterSure scheme, which is supposed to be national, for families with disabilities or large numbers of children, fewer than 150,000 at best have taken up social tariffs to mitigate the cost, as against 2 million plus who are paying more than 5% of their income.
Admittedly, the ability to set a social tariff has been relatively recent, but it is still true that only three companies have introduced one. It is claimed that another eight companies are working on social tariffs. The Government want to encourage companies down that road, as does Ofwat—and the companies claim, when you talk to them, that they are working hard to develop those tariffs. But when the current coverage is so small and the likely coverage of any new social tariffs looks like being similar, while we hope to see progress, it appears to be very slow—and it is not likely to be sufficiently inclusive. Companies will develop according to their own demography tariffs that suit their purposes, but will not necessarily corral all vulnerable and low-income families into the ability to choose a social tariff. So we need to speed this up.
My first amendment would set up a national affordability scheme for water, to set minimum standards of social tariffs and coverage of social tariffs. Companies can then within that framework develop their own tariffs, as they are claiming to do at the moment, as long as they meet those minimum standards. It does not require a uniformity of approach but it requires an inclusivity of approach. The details of that scheme will be left with the Secretary of State and officials to devise for secondary legislation, but it would drive
provision and take-up of social tariffs. If companies and Ofwat managed to achieve what they claim are their targets for bringing in social tariffs, it would mean no extra cost to anybody. So if the Government’s objective was achieved, the national affordability scheme would be there simply as a safety net but would not add anything to the cost of other consumers over and above what Ofwat and the Government are attempting to do anyway. However, we need to drive this faster and to see a faster timetable. If companies fall behind in introducing social tariffs, I am afraid that it sounds to me likely that we do need that safeguard—and that safeguard is a driver of an affordability scheme set by the Government.
I hope that the Government take this proposition seriously because it is odd that the Bill does not address the most important aspect of water supply after continuity and availability of supply—that is, cost. This is one way of doing that, the details of which can be left to secondary legislation. It would at least mean that the social dimension of the sustainability and resilience of the water industry is covered as well as the environmental and economic ones.
My second amendment requires companies to inform all consumers, both metered and unmetered, of the range of available tariffs and to advise them on the most appropriate tariff for their needs, as is now the situation with energy companies. That applies to all consumers, not simply the more vulnerable ones. As we develop new tariffs, clearly there will be more of a choice to be made by government, particularly as regards meters.
As I say, I hope that the Government take this proposition seriously because a growing number of people suffer from something close to water poverty in the same way as millions suffer from fuel poverty. Successive Governments have attempted to do something about fuel poverty in various ways but have never seriously pushed the water poverty dimension. However, a lot of people, particularly large families, those in water-stressed areas, people with disabilities, or elderly people in financial difficulties face very serious social problems.
A national affordability scheme is a limited measure which would, however, drive all companies to take up their responsibility to look after their more vulnerable consumers rather more than they have done hitherto. I beg to move.