We should at least allow the database to be set up and give it a chance to operate. That would seem to be a fair approach and it is certainly the one I seek to take. I understand the hon. Gentleman’s keenness to see progress but I believe that the voluntary approach will have some effect and we should give it time to do so.
Let me turn now, as the hon. Gentleman uncannily predicts, to new clause 10, which he has tabled in his efforts to make some changes to the Bill, and in Committee we discussed a similar clause that he tabled. The new clause will provide a new power for Ministers and Ofwat to disallow companies from recovering the cost of unpaid bills from their paying customers. The hon. Gentleman
has argued that there is no incentive for companies to collect bad debt. During our previous discussions, I made it clear that Ofwat has the power to decide which costs may be recovered through the price review. Ofwat is already using the price review process to bear down on the costs of bad debt and requiring companies to demonstrate high performance in debt collection and to show that any increase in bad debt is beyond their control before they are allowed to include it in customer charges. The price review will challenge poor performers to raise their game.
The new clause proposes a power for a future Secretary of State to intervene in the setting and recovery of charges. That is exactly the kind of political interference that concerns the investors who are critical to the water industry. I have stated before that the stability of the regulatory regime is vital to keeping the cost of borrowing low. An increase in that cost will have the direct result of putting up customers’ bills and I am firmly of the view that it is for the regulator and not the Government to make detailed decisions about charges. New clauses 9 and 10 intend to incentivise companies to improve their debt collection performance and I absolutely support that objective. I cannot, however, support the approach that has been proposed and I am sorry to disappoint the hon. Gentleman—and, I am sure, to surprise him.
Let me turn finally to new clause 3, tabled by my hon. Friend the Member for Thirsk and Malton (Miss McIntosh), the hon. Members for Poplar and Limehouse (Jim Fitzpatrick) and for North Tyneside (Mrs Glindon) and my hon. Friend the Member for Brecon and Radnorshire (Roger Williams). The proposed clause targets a number of points that we have already discussed in some detail, including bad debt and social tariffs.
The practical effect of the new clause 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 living in rented accommodation. Amendment 9 would simply include the proposed new clause in the list of measures to be commenced two months following Royal Assent.
I am grateful to my hon. Friend the Member for Thirsk and Malton for her clarification that the clause is intended both to help water companies to collect their debts and to target social tariffs at customers in rented accommodation who are also in receipt of benefits. However, I am afraid that I do not believe that the clause is likely to achieve either objective effectively.
As I have already set out, the Government’s position on bad debt among water customers is that there is a great deal more that the industry can do for itself. We think, therefore, that there is more companies can do to collect their debts and we want them to focus on that rather than to look to the Government to solve the problem for them.
I am pleased, as I have said, that the industry is already taking more responsibility, by working on a voluntary approach to sharing information on customers in rented accommodation, using the landlord database, as we have discussed in response to new clause 9, tabled by the hon. Member for Dunfermline and West Fife.
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Benefits data, like all personal data, are highly sensitive. We must therefore take their security extremely seriously. The circumstances in which any personal data can be
shared are tightly controlled by law. No legislative gateway permits data sharing for the purposes of collecting debt. Therefore, simply passing on the details of all those who are on benefits to water companies without the appropriate consents would be illegal.
Moving on to the objective of targeting social tariffs, new clause 3 would focus support on a very specific subsection of water customers: those who both receive benefits and live in rented accommodation. The problem with that approach is that it would target help at many people who do not need it and exclude many who do need it. It is important that we do not over-simplify. Benefit recipients are a very diverse group of people, including, for example, pensioners and those in receipt of child benefit, disability benefits and a range of both in and out-of-work benefits.
Evidence from Ofwat shows that the majority—60%—of households at risk of water affordability problems do not receive means-tested benefits. Additionally, when universal credit is fully rolled out, it will replace all the existing wide-range of income-related social security benefits and tax credits. Many of its recipients will be in work and have reasonable earnings. So receipt of universal credit alone is not a suitable indicator of possible eligibility for access to a social tariff. Similarly, no evidence suggests that living in rented accommodation is a reliable indicator of affordability problems.
Furthermore, many customers, whether or not in receipt of benefits, own their own property but nevertheless suffer real affordability problems. Precisely because water affordability problems are not simple, we have resisted a simplistic, top-down approach to social tariffs.
My hon. Friend the Member for Thirsk and Malton asked why water companies could not simply use a tick-box to ascertain whether people were happy to share their data. Anyone can agree to have their personal information shared, but that is quite different from the effect of new clause 3, which would require the Government to share personal information. That is perhaps the problem that we would have with new clause 3.
We must not forget that all social tariffs are cross-subsidised by increasing the bills of ineligible customers.