Lord Roborough (Con)

My Lords, Clause 10 risks unfairly burdening consumers with costs likely stemming from earlier regulatory and management failures. Involving consumers to compensate for governmental losses would turn customers into de facto guarantors for companies, which contradicts consumer protection principles. As my noble friend Lord Remnant argued earlier in Committee: “Clause 10 gives the Secretary of State the power to modify a water company licence in order to recover any shortfall in costs for the Government from its consumers. New subsection (4) extends this recourse to all other companies in the sector”.—[Official Report, 28/10/24; col. 1000.] My noble friend addressed his comments to concerns over the impact on other companies in the sector, with which we agree. My concerns today are with the impact on consumers. The clause provides no substantial safeguards to prevent excessive or unjustified charge increases. It grants broad powers to the Secretary of State to implement “such amounts as may be determined”, without clearly defined criteria or caps on those amounts. This vagueness opens the door to unlimited increases in bills for consumers at a time when cost of living pressures are high. Consumers rely on water services as a fundamental utility and trust is paramount in sectors with limited provider choice. By involving consumers in recovering losses associated with government interventions, the clause risks eroding public trust in the water industry. Why should the Government be able to depart from a consumer pricing model that the regulator has determined to be adequate for providing the service? Why should the consumer face surcharges due to the fault of others? Clause 10 lacks clarity on how funds raised from consumers will be used or justified beyond the broad purpose of offsetting special administration order loss. Consumers have a right to transparency in any additional costs that they face, particularly when those costs arise from governmental action rather than direct service improvements. Without a clear, transparent breakdown of how these funds will be applied, consumers may view these measures as an arbitrary tax rather than a justified expense. Permitting the Secretary of State to intervene in pricing to recoup government-incurred costs sets a disturbing precedent. It also highlights the importance of this debate in that the Government feel able to set themselves undefined and unaccountable pricing powers that are not available to the private sector. Is this not why the sector must remain privately owned and accountable rather than in the hands of government or some mysterious public benefit structure?