I am of course interested to hear the views of the hon. Gentleman who was, until recently, a well-liked Minister in the Department. [Interruption.] Well, he is still well liked, but no longer a Minister. I am not wishing to rub it in, but he decided to return to the Back Benches. [Interruption.] I am trying to be nice to him, although I know that that is unusual. It is interesting to hear his point of view. Water companies have changed their structures since privatisation, and I view it as normal in a functioning market for organisations to be able to exit it. I am sure that this can be considered in greater detail in Committee. I do not know whether he will have the honour of serving on the Committee—we will wait to see—but we will have an opportunity, as I say, to debate the issue in more detail in Committee. It is odd to open up a market and then to prevent certain companies from leaving it.
I was moving on to my fifth point about the detail of the Bill. We have serious concerns about the Government’s disjointed and, frankly, botched plans to introduce upstream competition. We support the principle of upstream competition and acknowledge the benefits that it could bring, but even a slimmed-down version of the Government’s plans would not adequately address the potential consequences of not taking forward abstraction reform in parallel.
The Government’s White Paper, “Water for Life” set out a strong case for abstraction reform, yet the target date for a new regime is now 2022. The fact is that, historically, we have seen the over-allocation of water resources. Competition in advance of abstraction reform risks increasing the total amount of water taken from the environment—not least as those with unused or part-used abstraction licences seek new ways to realise their value.
The Government are asking the House to support these reforms, although their sustainability is dependent on a further piece of legislation. The Secretary of State knows full well that this is a promise that he cannot guarantee to deliver. Regretfully, I have say that, unless he is able to offer some very convincing remedies on this issue, our instinct will be to seek to remove this entire part of the legislation. It would be better for the Government to bring back a properly integrated set of reforms in the future.
We support the measures on flood reinsurance—however belated they may be. It was disappointing that the Government were adding clauses to the Bill at such a late stage, but they are welcome, and we will scrutinise them carefully in Committee. The Government’s climate change risk assessment states that floods are the greatest threat that climate change poses to our country. That is one of the reasons why the Secretary of State should take the issue far more seriously, and why it is, frankly, incredible that he has talked of the benefits that could come to the UK from climate change.
There are real risks and far-reaching consequences for the UK from climate change, yet the Secretary of State’s complacent approach, combined with severe cuts to investment in flood defences, is deeply worrying.
I hope that he has seen the letter that he has been sent in the past week by Professor Lord Krebs, chairman of the adaptation sub-committee of the Committee on Climate Change. In that letter, Professor Krebs raises serious concerns about the failure of the Government’s proposals to strengthen incentives for the uptake of household flood protection measures. He warns that the consequences will be
“that Flood Re costs will be higher than they need to be, at the expense of householders funding the programme through the industry levy.”
The Committee on Climate Change has therefore made five proposals that it believes believe would reduce Flood Re costs and improve value for money, and I hope that the Secretary of State will consider those proposals carefully.
The Bill contains a number of important measures that the Opposition will support. On the back of three important reviews commissioned and published by the previous Government, it builds on the reforms and legislation that we introduced when in office. However, the weakness that lies at its heart is the Government’s inability to stand up to vested interests and their failure to take anything approaching a tough approach to the water companies.
Ministers continue to defend the need for a voluntary approach—a voluntary approach to whether help should be provided to those who struggle with their bills, and a voluntary approach to whether customers are offered relief from rising bills, even where companies are benefiting from financial circumstances beyond their control. Let me tell the Secretary of State that it is now 20 years since privatisation, and the voluntary approach has had more than enough time to be tried and tested. It has failed, so it is time not for more letters from him, but for action.
It is time for a new deal with the water companies: a new deal on the contribution that the water companies make through taxation and investment; a new deal on the steps that the water companies must take to tackle the affordability of water for households that are struggling; and a new deal on the extent to which the water companies are regulated. The Bill could and should have been an important step forward in delivering such a new deal. Instead, it is a wasted opportunity. I hope that the Secretary of State will work with us to improve the Bill, particularly in respect of the need to tackle the rising cost of water for struggling households. If he continues to refuse to act, I can assure him that the next Labour Government will act.
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