Water firms 'ripping off' public

Water companies are second only to energy firms in ripping off the public, a Labour MP told the Commons.

Labour MP John McDonnell says water companies are second only to energy firms in ripping off the public

Water companies are second only to energy firms in ripping off the public, a Labour MP told the Commons.

John McDonnell said a full investigation into the impact of privatisation since 1989 should be carried out before Government reforms to open up the water industry more widely are allowed to proceed.

The Hayes and Harlington MP moved an amendment to this effect during report stage debate on the Water Bill in the Commons.

He said: "I'm not part of what seems to be a common agreement across some parties in the House that privatisation and competition has been a success and that it is the way forward.

"In fact, I deeply regret what has happened since privatisation and therefore I've set out a suggestion. I think the Government should be required to bring forward a report which looks at some of the key issues affecting the water supply industry and affecting the consumer in particular before we go further.

"I think the water industry is only seconded by the energy industry for ripping off the British public. I think since privatisation the British public, the average consumer of water in this country, has been stolen from by the privatised water companies.

"I think that needs to be exposed by a comprehensive assessment by the Government that this House can debate before we look at the future structure of the water industry."

The Bill also looks at regulation of the water industry and includes new rules on insurance for flood-threatened properties.

Tory MP Anne McIntosh (Thirsk and Malton) said the Government needed to introduce changes so the water companies knew when some customers could not pay their bill, rather than when they were refusing to pay.

Unlike with heating and electricity bills, water companies were not allowed to cut suppliers off. Miss McIntosh said water companies could be given information about whether customers were receiving benefits to help them make the distinction.

The MP said: "This new clause would enable companies to determine customers who cannot pay against who will not pay. Those who can pay but won't pay are costing £15 per household.

"But for those who cannot afford to pay, it would allow water companies to target information about the charitable funds they operate, the social funds they operate, to those most vulnerable customers and allow them to make arrangements."

Environment Minister Dan Rogerson said the pricing structure was about to change and water companies had benefited from cheap borrowing.

Mr Rogerson stressed the Government wants consumers to get a fair deal from water companies.

He said: "You are referring to the situation under the current price review period. We are about to enter a new one and the measures which I am setting out have been set out by Ofwat as their preparations and part of the changes in the industry which they are bringing in, their aspirations for better performance by the industry and also recognition of the low cost of borrowing which companies have benefited from in the latter years of the current pricing.

"I do think it's fair for MPs across the House to express their views quite clearly on this subject, that they want to see water companies offering a fairer deal to consumers, that's certainly what the Government want to see as well and that's why I'm pleased that water companies are coming forward as part of this process and responding to that positively."

Mr McDonnell's amendment was not put to a vote.

Mr Rogerson thanked Ms McIntosh, Chair of the Commons Environment, Food and Rural Affairs Committee, for her suggestions but said the department could not support the proposals because they would not achieve the objectives effectively.

"Its practical effect would be to require the Department for Work and Pensions to supply water companies with personal information about their customers. The clause focuses solely on the subset of customers that are both in receipt of benefits and that are living in rented accommodation," he said.

"We think that there is more that companies can do to collect their debts and we want them to focus on this rather than looking to government to solve that problem for them."

Miss McIntosh said she was also concerned about exclusions to the new not-for-profit scheme between the insurance industry and the Government, which will make sure home insurance is affordable to those living in areas where there is a high risk of flooding.

She said the coalition had continued with the arbitrary cut-off date of January 1, 2009, after which any home built would not be covered, while there was also concern blocks of flats and small businesses such as farms would be excluded.

Under an amendment tabled by the MP any property on which council tax is paid would benefit from the scheme.

She said: "There is great concern amongst the farming community that farms may be excluded but the farmhouse may be included.

"We need to know - are farms going be to included, are people working from their own homes going to be included? What will be the position relating to small businesses because this could put them out of business in some of the areas that we have seen flooded?

"It has also been brought to my attention... that it is alleged that blocks of flats may be excluded. I just think that it is extremely important that we understand these issues."

Conservative former environment minister Richard Benyon said it was right the flood insurance proposal, known as Flood Re, is examined but he cautioned against unpicking the negotiations that led to its creation.

He warned adding in more factors to the scheme would leave people in flood risk areas facing the "terrifying prospect" of not being able to get insurance.

Mr Benyon told MPs: "If we were, for example, to start to try and introduce a wide range of businesses into the scheme it completely changes the complex mathematical - probably algorithmic - calculations that make it viable or not viable.

"And while I want to see as many properties included in this scheme as possible, if we start saying, 'Well we want to see band H houses in, we want to see different types of businesses included, we want to see houses built after a certain date included,' as long as MPs understand that comes at a cost.

"And that cost could be that the industry walks and we have nothing and our constituents who live in flood risk face the really terrifying prospect of when we have the kind of weather we're currently under going that they are not going to be able to get insurance and the affordability factor that we have managed which we have managed to build into this would be gone."