I thank my hon. Friend for his intervention. He is absolutely right to point out that what is proposed is a new bold national scheme built on profits that might or might not go up or down in accordance with the markets and through the price review process. Although I accept that the intention of the hon. Member for Dunfermline and West Fife is, as always, to be helpful, I feel that his scheme could use a little work and I therefore urge my hon. Friends to resist it should he seek to press it to a vote.
Let me move next to new clause 8, also tabled by the hon. Gentleman. It would place a legal requirement on water companies to include information in their bills about the WaterSure scheme, but, as I have said—I provided information to this effect to the Committee—all water companies already do so voluntarily. He made a point based on anecdotal evidence. I would be happy to see that evidence and I am sure that he will want to share it with us, but I think we should base our policy making on the evidence provided to us and the Consumer Council for Water has been quite clear that companies provide such information to customers.
In addition, new clause 8 would place requirements on water companies to provide information about tariff structures and the lowest available tariff, a point picked up on by my hon. Friend the Member for Sherwood (Mr Spencer). The proposals simply fail to reflect the realities of the water sector as opposed, for example, to the energy sector. Water companies do not have complex
tariff structures. The sole choice for the majority of household customers is whether to pay according to the amount of water they use through a metered tariff, which is particularly prevalent in areas such as my own, or according to the rateable value of their home through an unmetered tariff. The cheapest option for each household will therefore depend on the location of the property and the amount of water used by the household.
Many smaller households with low water use can benefit from a meter. Water companies are required to fit a water meter free of charge on request and they also advise customers on whether they might benefit financially from the installation of a water meter. A further point to bear in mind about the operation of WaterSure is that it caps the bills of eligible customers at the average of the metered and unmetered bill for the area. That could, in effect, put the bills of some eligible customers up and it is therefore not surprising that they have chosen not to apply for WaterSure.
There is no evidence, in my view, that further regulation is required in this area. As I have noted, all companies already include details of WaterSure in their household bills and they also all provide details of the support available to any customer struggling to pay their bill. Legislation to require the companies to do something that they are already doing voluntarily would be redundant.
The Consumer Council for Water works closely with the companies on the format of their bills. Its expert advice, as we discussed in Committee, is that one of the biggest risks in using water bills as a means of communication with customers is information overload. I do not, therefore, consider the new clause to be necessary.
Let me turn next to new clause 9, also tabled by the hon. Gentleman. We discussed an identical clause that he tabled in Committee. Section 45 of the Flood and Water Management Act 2010 already enables Ministers to introduce secondary legislation that would require landlords to provide water companies with personal details about their tenants or become liable for paying the bill. That was a point that the Chairman of the Environment, Food and Rural Affairs Committee was keen to emphasise, given her involvement with the passage of that Act.
Following extensive consultation with the industry and with landlords’ organisations the Government took the decision that a voluntary approach would be more suitable. During consultation, landlords argued that the additional regulatory burden would be disproportionate as they are not the source of the problem we are trying to tackle. At the same time, the evidence provided by the water sector to support the case for additional regulation was not sufficient to make the case for additional regulation of millions of small and micro-businesses.
The Government simply do not believe that more regulation is always the answer. As we discussed in Committee, good practice in tackling bad debt is not applied consistently across the water sector. The hon. Gentleman quite rightly took great pains to point that out. The significant variation in performance between companies tells us that the focus should be on driving better standards across the sector rather than regulating landlords.
One reason we do not propose to bring forward the bad debt regulations on landlords is that we do not wish to endorse the argument that performance on bad debt is not within the control of water companies. We think there is more that the companies can do to collect their debts and we want them to focus on that rather than look to the Government to solve the problem for them.
Of course, the real drivers of company performance are the incentives and penalties set by the regulator so I am pleased to be able to report that Ofwat has changed its approach to bad debt in the methodology it is using for the 2014 price review. The new approach will enable it more effectively to bear down on the costs of bad debt. It is doing so by insisting that the companies demonstrate that any increase in bad debt is genuinely beyond their control and that they have taken all available steps to control it. Unless they can prove that that is the case they will not be allowed to include it in customer charges. We are already seeing our focus on the industry’s taking responsibility for tackling bad debt bear fruit. As I mentioned in Committee, the industry is working with landlords’ organisations to establish a new voluntary scheme that will enable landlords to provide information about their tenants direct to water companies swiftly and easily.