TUESDAY 13 FEBRUARY 2001

MR ADAM SCORER AND MS SHARON DARCY

  400. But it is the case that it will remain for the Council to take that decision so if it, in effect, decides that public disclosure is the overwhelming requirement, it can say, "Well, we are doing this and we do not believe it is going to seriously prejudice the interests of the company". In other words, what is the external constraint on them seeking to publish where they decide that that is what they want to do?
  (Ms Darcy) We are concerned that the Council may effectively exercise self-censorship and be concerned that its relationship with the regulatory body will be put in jeopardy or damaged by publication.

  401. How would that work in practice, given that the whole purpose of the Council is to protect consumers and, therefore, is the whole reason for its existence? What sanction could the regulator have?
  (Ms Darcy) A relationship between the regulatory body and the Consumer Council which, by its very nature, must be fundamental to the success of either body, could suffer because of, perhaps, the regulator in the future not sharing as much data with the Council.

  402. So you are concerned that, if the regulator feels that information has been inappropriately published by the Council, they might decide in future not to give the Consumer Council as much information as they have done in the past?
  (Mr Scorer) Or even where the disclosure of the information is a reflection of competing policy priorities between the regulator and the Consumer Council.

  403. Although the very nature of the Consumer Council is that it is there to take an independent view on behalf of consumers, which may not be exactly the same view as the regulator. Does it not depend on the extent to which the Consumer Council is vigorous in defending the issue of consumers?
  (Mr Scorer) You could have a situation where the Consumer Council says, "We have this information; it belongs in the public domain to lie with the consumer; we acknowledge it will have an impact on the company but it will not be substantial or serious". It is not about proportionality or reasonableness here; it is the significant impact on the interests of the company. If there is a comeback to the Council when it publishes information knowing the impact it may have, the Council members will feel constrained that they need to ensure they are not stepping knowingly beyond their remit by publishing information. We think it will act as an inhibitor to information which they believe should be out there for the benefit of consumers but which puts that corporate body in jeopardy, particularly in terms of its long-term relationship with the companies with whom it does not have a right to get information from directly. Are you, therefore, prejudicing your access to information in generality by publishing a particular piece of information to make it available to consumers? Because the balance is so finely drawn—and, we think, incorrectly—in the Bill, it could jeopardise the life-blood of the Council which is access to information from the companies.

  404. Is not the answer to this that the Council should have all information directly, and then it would not be so frightened of getting it wrong with the regulator?
  (Mr Scorer) You are hearing evidence from ONCC and they are the people who can give you the firm line on that—

  405. We want to know if you would support that view?
  (Mr Scorer) We would support the view that the Consumer Council should not be dependent on the regulator as the broker of the information.

  406. And that it should have it directly from—
  (Mr Scorer) It should have a right to access directly from the companies, yes.

  407. And it should have the same information as a regulator or anybody else would have or could have?
  (Mr Scorer) There will be issues about the costs of duplicating certain pieces of information which goes to the Regulator in one form and to the consumer council in another, but we think there should be a right of access to information from the companies held by the Consumer Council and by the regulator.

  408. It seems to make sense.
  (Mr Scorer) It would seem to us to be an important change to the clauses in the Bill as it stands.

  409. Do you want any provisions on competition in this Bill?
  (Mr Scorer) Importantly, we think there must be clauses on competition in the Bill. We were not happy that the regulatory clauses in the Utilities Bill were taken out, but the one seed of comfort we had was that we would get a Bill that would be a proper proportionate response to the pressures of competition and restructure. We have not got that in this Bill; it is inadequate in that regard. We think this is a time-critical issue and we do not want to see a Bill go forward without the clauses in competition. We want to see settled government policy on competition—the parameters to forms of competition that should go forward—and for that settled government policy to inform the drafting of a Bill that is still required as a matter of urgency.

  410. Do you think there are too many different regulators involved in the water industry at the moment?
  (Mr Scorer) No. There are issues about how the number of regulators, if you include English Nature, work together and whether the hope of joint regulation would be furthered by this Bill. We do not think there are too many; we think there are regulators with clear duties but there should be procedural process issues on the face of the Bill which would enable better joint working between those regulators. It was a disappointment that we did not have, on the face of the Bill as it stands, proper thought out memorandum of understandings and working relationships between the regulators between price determinations, and lines of accountability from the joint regulators, maybe to this Committee but certainly to DETR, to report on how the object of regulation has been furthered by the joint working between the regulators as they stand. For us it is an issue not so much about the number of regulators or the clarity of duties that they hold but about the process issues which would enable joint regulation to be seen as working, as being joined-up regulation.

  411. And how would you see the Consumer Council fitting in to all these different regulators?
  (Mr Scorer) There is an issue, I think there may be a presumption, that the Consumer Council should only have regard to Ofwat as being the economic consumer focus. That would be difficult. There needs to be proper memorandum of understandings between the Consumer Council and all the regulators to ensure it is able to look across the scope of the industry and concern itself with consumer issues as they are taken forward by DWI. We cannot pretend that water quality issues are not of concern to consumers—they self-evidently are and every survey the Consumers' Association has done has put that at the top below price. So the Consumer Council needs to have a 360 degrees focus around the industry.

  412. Presumably you would want access to information that was held by all these different regulatory bodies?
  (Mr Scorer) There would need to be a memorandum of understanding which had that at its heart. The life-blood of this Consumer Council is going to be information. Some will get it through complaint handling and that will be a very valid source of information for its policy; others will depend on bilateral relationships with the different regulators and companies so that the memorandum of understanding will have to identify how that sharing of information happens at an early stage and happens with some predictability.

  413. You do talk about the need for mechanisms, though. A memorandum of understanding is not my idea of a mechanism?
  (Mr Scorer) Absolutely, and a memorandum of understanding may well be a broad-brush document saying, "Of course, we should get together"—

  414. Forgive me, but if we are going to be precise you cannot have a broad brush and a mechanism. What is it we are after?
  (Mr Scorer) I think we need the memorandum of understanding to set the tone and the purpose of the relationship between the two bodies, and flowing out of that you need much more detailed work on how papers are shared, what sort of access to information is required, when the Consumer Council can comment on documents that may not be public consultation documents. You are absolutely right—the mechanisms need to spin out of the memorandum of understanding otherwise it would be enormous, and they need to be updated but the face of the Bill needs to take account of the need for memorandum of understandings between all the different bodies associated with the regulation and representation of consumer interest.

  415. Why do you want to see the Bill promote demand management?
  (Mr Scorer) We always start from the position that demand management can help reduce consumer bills fundamentally and further the more efficient use of water. We are particularly concerned that the Bill should have a duty on the regulators to promote demand management.

  416. Not the water companies?
  (Mr Scorer) We feel that what is required would be regulatory and, in some ways, political dynamism, drive.

  417. "Political dynamism"? Are we going to define that?
  (Mr Scorer) Perhaps I should avoid trying to define "political dynamism" and stick to regulatory dynamism! What we would like to see is the responsibility being held by the regulator—and it could be either or both the EA and Ofwat—to ensure that different forms of demand management of water information and water efficiency measures are taken forward, that the water companies take them seriously, they have proper thought-out plans, they are delivering on those plans and meeting targets. We do not think that leaving it to the water companies without some firm regulatory oversight or even back-stop powers to deliver on demand management would give us the sort of confidence that we would see effective demand management in the water industry. An example could be, under the 1996 Act, that companies have to provide information on water efficiency to their customers but who is going to oversee the content of that, the form, the dissemination, whether it has impact on water efficiency measures at the end of the day? We think, without a regulator pushing forward the agenda, monitoring performance against targets and, at the end of the day, holding some regulatory back-stop power to make sure that companies live up to their promises and their plans—

  418. There are already some sanctions, are there not? Leakage targets are a case in point?
  (Mr Scorer) Absolutely, and we would like to see much wider regulatory powers; a duty on the regulator to have regard to companies fulfilling demand management plans and targets for water efficiency. Our concern is that, without the duty on the regulator, we would not see effective demand management but just see a paper exercise.

  419. The Environmental Agency will not give access to new water unless it is satisfied the company is using all its demand management tools properly, will it?
  (Ms Darcy) That is right, but we are looking at the whole gamut of different demand management initiatives. We appreciate that some of them are currently covered under legislation and regulations more than others. What we are concerned with is that, under a competitive environment, these softer issues might be swept under the carpet. We think in a competitive environment it would be more difficult to cover these sorts of issues and make sure the companies do fulfil their obligations, because the different regulators involved could lead to these issues falling between stools.

  Mrs Dunwoody: Thank you very much indeed. You have been very helpful.