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The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Dr Thérèse Coffey)
It is a pleasure to respond to my right hon. Friend the Member for Wantage (Mr Vaizey), who secured the debate, and to the other Members who contributed.
Water is essential for everything we do. It is also essential for a healthy environment and a prosperous economy. A reliable water supply is taken for granted but, despite its reputation for rain, which has been mentioned many times, England risks water shortages, in particular in certain areas. Climate change and increasing population, especially in the drier south and east, as well as the need to protect the environment—including chalk streams—bring further challenges. A water company’s job is to take account of those factors and to provide a reliable supply of safe drinking water. The Government and the water regulator’s job is to check that they are doing that effectively.
Thames Water supplies water to about 10 million household customers and 215,000 businesses in London and across the Thames valley. Its existing plan shows a one-in-four chance over the next 25 years that large numbers of households and businesses will have water supplies cut off for extended periods because of drought. That is a lower protection than most other water companies provide. We must expect Thames Water to act on customers’ need for a more resilient supply, to manage other pressures of a growing population and changing climate, and to protect the environment that we treasure and on which we rely.
Thames Water has engaged with regulators, stakeholders and customers throughout the development of its draft water resources management plan. In February 2018, Thames Water published its draft plan for consultation, which explains how the company plans to provide a secure and sustainable supply of water for its customers for the next 80 years, from 2020 to 2100. In October and November this year, Thames Water provided a further opportunity for comment on the changes and revisions made to the draft plan as a result of the first consultation. That further consultation closed on 28 November. Thames Water sought stakeholder and customer views on its draft plan through a variety of channels, including public meetings, an online survey and written submissions.
I hope that my right hon. Friend appreciates that, as Thames Water has just completed its consultation process on the draft plan, it is now preparing its statement of response to the consultation, which the Environment Agency will assess in due course. It will provide advice to the Department for Environment, Food and Rural Affairs in the new year. That process is ongoing, so officials and Ministers at DEFRA have not yet had the opportunity to consider the advice from the Environment Agency. As such, the Government cannot comment on any proposals suggested through the water resources management plan process.
The Government and the water regulator issue detailed guidance to water companies that sets out the Government’s expectations that companies should: first, take a long-term strategic approach to protecting and enhancing resilient water supplies; secondly, consider every option to meet future public water supply needs; thirdly, protect and enhance our environment and act collaboratively; and, fourthly, promote efficient water use and reduce leakage.
If a water company forecasts a water supply deficit, it should appraise all the options available to it and should justify its preferred solution in its water resources management plan. The Environment Agency and Ofwat are both statutory consultees to the water resources management plans. As I mentioned, the Environment Agency will also advise the Secretary of State on the draft plan. As part of its current price review, Ofwat has set out clear measures to ensure that the proposals companies bring forward, and the costs of delivering them, are subject to appropriate scrutiny to protect customers’ interests in the long term.
In the business plan that Thames Water submitted to Ofwat, it proposed costs for work to develop the reservoir proposals further, rather than the infrastructure costs themselves. If the proposals go forward, the infrastructure costs will come forward in future plans, which will be scrutinised, possibly at the price review in 2024 if construction were to start in 2025 or 2026. In the plans as they stand, the reservoir is expected to come online for use in 2037. I hope hon. Members have been assured that there are processes in place to assess whether water company plans are robust.
Leakage and other options were mentioned. The National Infrastructure Commission estimates that by 2050, around an additional 3.5 billion litres of water per day will be required to maintain current levels of resilience to drought in England. At least a third of that—1 billion litres—needs to come from new infrastructure, and the other two thirds from water efficiency and leakage reduction. To put that in context, 3.5 billion litres per day is almost enough water to fill Wembley stadium every day. Thames Water’s proposed reservoir would provide about 300 million litres per day.
The Government recognise that to meet our future water needs, we require a twin-track approach that combines demand reduction, including leakage reduction, with long-term investment in supply infrastructure. With respect to leakage, the Government have made their view clear and the industry has responded. The water companies’ business plans are on track to meet Ofwat’s challenge to reduce leaks by at least 15% by 2025. Over the long term, the industry has committed to working to an ambitious target to reduce leaks by 50% by 2050. We will hold it to account on that.
The need for new infrastructure is set out in the draft national policy statement for water resources infrastructure, which was recently laid under the Planning Act 2008. That statement sets out that, alongside demand reduction and tackling leakage, a mix of water infrastructure schemes will be required to meet our future water supply needs, including reservoirs, water transfers, desalination and reuse. The statement applies to nationally significant infrastructure projects, and I expect that the proposed Abingdon scheme would qualify as such a project.
I assure my right hon. Friend that extensive pre-application consultation and engagement will need to be undertaken by applicants using the Planning Act 2008 regime. Members of the public can participate in the examination process by registering their interest, thus ensuring that local views can be heard. I think it is fair to say that the planning process will be different from last time, because in the past month Parliament has voted in favour of a new process for infrastructure projects that are deemed nationally significant. Consideration of a development consent order application at a public inquiry would start on the basis that the most appropriate option for meeting water supply needs had been selected through the resource management plans. As I pointed out, Ofwat will also scrutinise the proposed costs for the full project if they come forward in future plans.
Hon. Members asked whether the water would be used just for the Thames Water area. It is fair to say that Thames Water has been working with Water Resources in the South East—an alliance of the six south-east water companies—to ensure that a more collaborative approach is taken to water resources planning, and its reservoir proposals would benefit other companies in the south-east. The Government and regulators expect water companies to collaborate at a regional level with other companies and sectors to produce plans that work for that region. That allows water companies to consider the most efficient and economically, socially and environmentally beneficial solution for the whole region, allowing customers, business, society and the environment to benefit from economies of scale. We expect such collaboration to be reflected in companies’ water resources management plans.
The preferred programme that Thames Water has set out for full consultation includes water transfers. I believe considerations will be made for desalination, and there are elements of water trading, with things such as Didcot power station. I understand that Thames Water considered more than 50 sites for a new large reservoir and considered that only one of those sites was viable. As I said, other water companies may be involved. It has been brought to my attention that Affinity Water is considering and working alongside Thames Water on this matter.
On demand reduction, targets are already set for water companies. I hope hon. Members are aware that planning regulations require a target of 125 litres per day for new developments, but councils can, in planning permissions, reduce that to 110 litres per day if the development is in a water-stressed area.
On the flood alleviation scheme in Oxford, I say gently to the hon. Member for Oxford West and Abingdon (Layla Moran) that I recognise that people would like additional cycle paths and so on, but if the costs of the scheme have gone up, it is fundamental that taxpayers’ money needs to be spent on delivering the scheme. I am conscious that there may be other opportunities to develop the additional benefits to which she referred.
The good Feargal Sharkey is a friend of many people in Parliament. He used to be chief executive of UK Music, but now pushes passionately for chalk streams, to which the hon. Member for Dagenham and Rainham (Jon Cruddas) in particular referred. He also mentioned the pollution challenges at Thames Water. He will be aware that Thames Water received a record fine after being prosecuted by the Environment Agency. This is exactly the kind of project we need to reduce the pressure on other sources of water. Although I am conscious of the scale of this reservoir, it appears at least to be a viable option. However, it needs to be considered carefully.
I appreciate that the hon. Member for Plymouth, Sutton and Devonport (Luke Pollard) raised a number of issues. I hope that I have been able to cover Members’ key questions. Overall, I really hope that my right hon. Friend the Member for Wantage sees that there are transparent and robust processes in place to ensure that water companies continue to provide reliable water supplies efficiently and economically, and that any plans that are put forward will be scrutinised appropriately and decided on objectively.