Last week the Government held its third drought ‘summit’ since May 2010. It’s been one of the driest winters on record raising the prospect of water restrictions over the coming months. Yet behind the headlines about hosepipe bans and another dry summer, there is an emerging crisis of water affordability.
The Government has failed to bring forward any plans to help families feeling the squeeze from rising water bills, despite Labour passing legislation before the election to enable the extension of social tariffs. Instead, Ministers have rushed forward a short bill to deal with the specific issue of water bills in the South West and to allow for the construction of the Thames sewage tunnel.
We were debating the Second Reading of the Water (Financial Assistance) Bill yesterday in Parliament. The bill will enable the Government to make a £50 annual payment to households in the South West to reduce their water bills. The South West is a classic case study of what happens when privatization goes wrong. When the last Tory government introduced the Water Bill in 1989 it was supposed to be a new start for the water industry. But in the South West it created a water company responsible for 30% of England’s coastline, but with a customer base of just 3% of the population. There had been no investment in sewage infrastructure and so the £2 billion needed to clean up the coastline was paid by South West water customers, through their bills, leaving them with the highest average unmetered bill in the country.
We welcome this £50 a year for households in the South West, but the Bill will do nothing for households in other areas. The Tory-led Government are out of touch with families struggling to make ends meet against a backdrop of rising living costs and falling income. From April this year, water bills will rise on average by 5.7% or about £20 per year. The Government has taken a hands-off approach, and is considering leaving it to water companies to decide whether to introduce social tariffs or not. Ofwat, the independent water regulator, estimates that one in ten households currently spend more than 5% of their income on water and sewage. That is 2.26 million households across England and Wales – 990,000 single adults, 73,000 pensioners and 540,000 families with children.
The Government had promised a draft Water Bill in the spring bringing together affordability and sustainability issues. The Water White Paper, published in December, was six months late. It is now widely accepted that Defra have failed again and lost their slot for the Water Bill in the Queen’s Speech. This means we will see no action on water reform until 2013 at the earliest.
We need leadership from government to set basic standards for social tariffs in the water sector to ensure that people don’t fall through the gaps. The Flood and Water Management Act (2010) introduced by Labour allowed for both national social tariffs (set by government) and company social tariffs (introduced by water companies) to help households facing difficulty paying their water bills. We think it’s unfair to extend a situation where a postcode lottery dictates whether you may or may not be able to afford your water bill. We will table amendments to the Water Industry (Financial Assistance) Bill to introduce minimum standards for a national affordability scheme. We will oblige water companies to deliver a social tariff scheme which meets clear, uniform criteria. We also want strong action on tackling bad debt which adds £15 a year onto everyone’s bill. Getting landlords to share their tenants’ details with the water companies would be a start.
Even when there is less money around, we can still make Britain fairer, standing up for the squeezed middle and offering help to those most in need. In these tough times, fairness matters. It is not good enough for the Government to bring forward legislation to help just one region. We will use the opportunity of the Water Industry Bill to tackle the rising cost of water.
Mary Creagh is Shadow Environment Secretary and the Labour MP for Wakefield.