Lord Berkeley
To ask Her Majesty’s Government whether they have discussed with Thames Water the additional annual charge to its customers to fund the development and construction of the Thames Tideway Tunnel and the duration of this charge.
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord De Mauley) (Con)
My Lords, the Government have indeed been working closely with both Ofwat and Thames Water to ensure that the Thames tideway tunnel is delivered in a way which minimises the impact for customers and taxpayers.
Lord Berkeley (Lab)
I am grateful to the Minister for that Answer. Will he confirm that the latest figure for how much it will cost all Thames Water’s customers—from Swindon to Witney, and Newbury to London—is about £70 or £80 per year extra for the next 50 years? Is that reasonable, given the fact that the tunnel may become redundant in 20 years because of the Government’s own Flood and Water Management Act and the requirement for sustainable urban drainage systems? Is not the best thing now to abandon the tunnel completely and save all this taxpayer and government money?
Lord De Mauley
My Lords, of course not. Government estimates at 2011 prices were for a maximum bill impact range of between £70 and £80 per year. These figures remain valid as an upper bound and would take Thames Water customers’ sewerage bills to around the national average. The construction costs are currently out to tender with consortia of contractors. We also consulted last December on a competitive procurement approach for the financing costs, although no decision has yet been made.
Lord Smith of Finsbury (Non-Afl)
My Lords, the Minister will know that the Thames tideway tunnel is robustly supported by the Environment Agency, which I chair, and by the Mayor of London. It was also supported by a range of voices in your Lordships’ House when we last discussed the matter. Unhappily, cost and disruption will be involved, but does the Minister not agree that this is the only practical way of ensuring that we do not continue to discharge raw sewage into the Thames at least 50 times a year and of bringing an outdated Victorian drainage system, on which this city sits, up to the modern age?
Lord De Mauley
My Lords, yes. I am grateful to the noble Lord, not only for his question but for the very valuable work that he does, which we all know about. We are required to have a collecting and treatment system for London. Exceptions on grounds of cost have to be truly exceptional, and this project does not qualify as exceptional. The environmental standards that have been set are equivalent to those in other tidal estuaries. I am therefore confident that the tunnel is the right solution for London, and the only solution compliant with the urban wastewater treatment directive. However, I assure noble Lords that we remain completely focused on keeping costs to a minimum.
Baroness Parminter (LD)
My Lords, the Government have offered contingent financial support for exceptional risks on this project. Following discussions with Infrastructure UK, Thames Water and Ofwat, is the Minister in a position to say what those exceptional risks and the potential cost to the taxpayer are?
Lord De Mauley
My Lords, we are still working on that, but I thank my noble friend for the opportunity to say that independent financial advisers have confirmed that no water company—whatever its financial structure—would have been able to access sufficient finance at an acceptable cost for such an exceptionally large and complex project without some contingent support from government. It is important that, when offering contingent support, taxpayers’ interests remain a top priority and that the taxpayer is appropriately protected by measures that minimise the likelihood of these exceptional risks.
Lord Campbell-Savours (Lab)
My Lords, have the Government made concessions to the green environmental movement, which has, throughout the country, opposed the construction of this tunnel and come up with alternative solutions? Have any compromises been made with what it wants?
Lord De Mauley
My Lords, going back to the initial point made by the noble Lord, Lord Berkeley, who talked a bit about green infrastructure and science, we should not lose sight of the fact that these are important tools that will be used, but we cannot manage without the tunnel. In addition to the Environment Agency, a key supporter of the tunnel is a group called Thames Tunnel Now, which describes itself as a coalition of environmental, wildlife and amenity groups promoting the case for the tunnel. Its supporters include key groups such as RSPB, WWF, the London Wildlife Trust, and the Angling Trust.
The Earl of Courtown (Con)
My Lords, would my noble friend agree that in the past there has been some criticism of civil servants’ management of such contracts? I was wondering what will happen in the future, and what my noble friend aims to do to ensure that such contracts will now be managed in a professional manner.
Lord De Mauley
My Lords, I am pleased to say that an early initiative of this Government was to enhance our Civil Service’s ability to lead large projects, and indeed to render that ability on a level with the best of the private sector. We set up the Major Projects Leadership Academy, which is run by the Saïd Business School. I met Defra graduates and those undergoing the course there on Monday this week, and an impressive bunch they are.
Lord Grantchester (Lab)
Given the cost of living crisis, Ofwat rightly rejected Thames Water’s application to increase bills further. Given that Thames Water paid out £2.2 billion in dividends over the past six years and pays little or no corporation tax, what leadership are the Government showing to ensure the right vehicle for financing, managing and delivering the project is put in place, and that it will be subject to parliamentary oversight?
Lord De Mauley
My Lords, there is quite a lot in that question, but I should say to the noble Lord that Labour harps on about the cost of living, yet its own policies—spending commitments totalling £27.9 billion since 3 June last year, unworkable energy policies and increased borrowing—would increase it.
Lord Hylton (CB)
My Lords, when tenders are received, will the Government consider whether storm water and grey water can be separated, thus requiring a shorter tunnel and reduced charges?
Lord De Mauley
We have thought very carefully about that, my Lords, and we have concluded that it would be more expensive. However, as I said, green infrastructure and SUDS solutions are part of the long-term solution.
Baroness Farrington of Ribbleton (Lab)
My Lords, why did the Minister fail to answer the question put by my noble friend Lord Grantchester?
Lord De Mauley
My Lords, because there probably would not be time to do it justice. However, I assure noble Lords that the question of how we structure this project is complicated and we are being extremely careful about it.
Lord Kennedy of Southwark (Lab)
My Lords, can the noble Lord tell us a bit more about the consultation that has taken place with local residents affected by the route? Many people in the city are very unhappy about what is going on. He mentioned Ofwat and Thames Water. Not enough is being done there and people are very unhappy about this.
Lord De Mauley
My Lords, we are acutely conscious of the impact of the tunnel’s construction on local communities and on the tunnel’s surroundings. Local authorities and the public had the opportunity to make their views known during the Planning Inspectorate’s examination of Thames Water’s planning application. The Planning Inspectorate will take all views into account and make a recommendation to Ministers in June. Ministers are expected to make a final decision in September. However, because Ministers have a quasi-judicial role in the planning process, I am sure that noble Lords would not expect me to comment further.