Baroness Hayman of Ullock (Lab)
My Lords, we have had discussions about sewage discharges over a number of years now, including several extensive sessions during the relatively recent passage of the Environment Act 2021. Everybody is clear that, under the law, sewage should be discharged only in exceptional circumstances—everybody it seems but the Government, the arm’s-length bodies their Ministers are responsible for and the water companies those bodies regulate. In the OEP’s view, Ministers and regulators are guilty of
“misinterpretations of some key points of law”.
That is extremely worrying. We also think it is worrying that the Environment Secretary has chosen to disagree with her own environmental body, in one of its first major investigations of government conduct.
During the passage of the Environment Act, colleagues across your Lordships’ House voiced concern about the OEP’s lack of enforcement powers. Regardless of one’s views on the European Court of Justice and the European Commission, the previous situation was clear: if the Government were found to have acted unlawfully, there could be fines or other enforcement action. Could the Minister confirm today that, if the OEP recommends legislative or regulatory changes, or seeks to take enforcement action against Defra, his department will comply? Does he regret that this question even needs to be asked, following the adversarial approach adopted by his Secretary of State?
The Minister of State, Department for Environment, Food and Rural Affairs (Lord Benyon) (Con)
I thank the noble Baroness for her question. I suggest I have a different understanding of how an OEP investigation works. Let me be absolutely clear about this: the OEP has not satisfied itself, on the balance of probabilities, that Defra has failed to comply with environmental law; rather, the OEP believes it has reasonable grounds for suspecting the Defra has failed to comply with environmental law and has asked us for more information to help it make its decision, and of course we are complying with this process. Her allegation is that this is a done deal; the OEP’s concerns that the Government have somehow broken the law is under discussion. We now have two months to reply, and the OEP then has two months to adjudicate.
The aims of the OEP investigation are to clarify the roles and responsibilities of the public authorities—Defra, Ofwat and the Environment Agency—and to determine whether they have failed to comply with their respective duties. The OEP will consider the responses from all three public authorities in detail before deciding next steps. We should not prejudge its conclusions. The OEP’s press release clearly states that:
“If the response changes the OEP’s view on whether there has been a failure to comply with the law, or sets out steps the public authority intends to take to rectify the failure, then the OEP may decide not to take any further action in relation to the alleged failure(s).”
My answer to her final question is: yes, of course we will comply. We have created the OEP to try to find the best possible way to hold government to account on environmental policy following our leaving the European Union, where we were subject to infraction fines if we had broken the law. Through the Environment Act, we wanted to create something that held government departments to account. We believe in the OEP and what it does, and we will certainly comply with its findings.
Baroness Bakewell of Hardington Mandeville (LD)
My Lords, in its statement on Tuesday, the OEP identified serious breaches of environmental law. Despite what appears to be heavy investment to combat combined sewer overflows, Defra is accused of breaking Sections 18 and 94 of the Water Industry Act 1991 and other water regulations in deliberately allowing sewage overflows to continue when there has been no rain. Given yesterday’s debate on nutrients, are the Government really serious about protecting the environment as set out in the Environment Act, or are they only paying lip service?
Lord Benyon (Con)
I know the noble Baroness well enough to know that she does not really believe that. We sat through hours and hours of debate on the Environment Act, the Agriculture Act and the Fisheries Act. She knows that this Government have done more to protect the environment and deal with the unacceptable problem, which has existed for centuries, of sewage going into our rivers. She knows that we are investing in monitoring. The previous Government did not have a clue: they knew of 7% of sewage outflows. I started that change in 2012, and we now know of 91%; by the end of this year, we will know of 100%. That light of transparency is helping resolve this problem.
We have a record investment programme of £56 billion to deal with the problem. We have tougher regulation: there was a debate on nutrients yesterday and a debate in the Grand Committee on increasing penalties for breaches of rules from £250,000, where they are capped, to unlimited amounts. That is an example of tougher regulation that we are bringing in. At the moment, we have the largest ever criminal investigation by the Environment Agency into this matter, and we have a very serious civil investigation by the regulator Ofwat. We are absolutely committed to dealing with this, and we are doing more than any other Government have done previously.
Baroness McIntosh of Pickering (Con)
My Lords, I will focus on the positive going forward, which is that the water companies are going to find the money to tackle combined sewer overflows. Is my noble friend confident that the level of expenditure can be found in the context of the current price review, which becomes effective on 1 January 2024? Also, does he not think that it is grossly unfair on water companies to be expected to connect to inadequate Victorian pipes that cannot take the effluent coming from these new housing developments? They are being forced to because of the current legislation.
Lord Benyon (Con)
My noble friend knows that there is a major investment in infrastructure, the largest ever, which is seeing many of those thousands of miles of Victorian pipes being replaced by modern ones. It is absolutely vital that any developments take into account the sewage infrastructure. That is why we are insisting on the entire impact of those, and any, developments being reflected in investment, and why we are front-loading a lot of the expenditure. We are requiring water companies to do a lot, but that is what their customers and the people of this country want. We have the right system by which to make that happen, and we want to encourage that expenditure to happen as quickly as possible.
Baroness Bennett of Manor Castle (GP)
My Lords, the current system of private monopolies dates back to 1989, when Margaret Thatcher sold off the publicly owned water and sewage industry for £7.6 billion, debt free. Since then, average household bills have risen 40% above inflation, the companies are now £54 billion in debt and have since paid out £66 billion in dividends to shareholders. Of the bills that people are paying today, 20p in the pound is going to shareholders or to cover that debt. Given that the regulation of these companies and the economic situation are clearly failing, surely it is now time for the Government to at least set up the process of looking into how we can bring these companies back into public hands and run them for public good.
Lord Benyon (Con)
I may have misunderstood the noble Baroness, but I have certainly had it put to me in this Chamber that, when this system of private ownership was put in place, it was somehow an ideological Conservative Government that was doing it. Nothing could be further from the truth. It was done because we were the dirty man of Europe: our rivers were stinking, and a very small percentage of our beaches were compliant. Now, we have nearly 93% of our bathing waters in good or improving conditions. I am not naive; I know that there are serious problems. But if the noble Baroness is really suggesting that the way of dealing with this is to completely change it and require the taxpayer to pay billions of pounds to purchase these companies back, which would see investment in this country into the regulated utility sector fall off a cliff, that is very dangerous not just for our water industry but our energy companies and every other regulated utility.
Lord Cormack (Con)
My Lords, while entirely accepting the thrust of what my noble friend just said, there is continuing concern, as he well knows, not just about sewage but, as I have raised many times before, the terrible state of one of the loveliest rivers in the kingdom, the Wye. When can we expect to see proper improvement in those ghastly situations?
Lord Benyon (Con)
I thank my noble friend. The Secretary of State held a meeting in the Wye Valley with all partners concerned. Out of that have come a number of actions. What is frustrating is when local authorities, for example, do not allow planning permission for measures such as biodigesters, which would deal with the chicken manure that is causing the nutrients to flow into the river, which results in large parts of the River Wye effectively becoming ecologically dead at certain times of the year. We need joined-up thinking not just between government and regulators but between local planners and farmers, and an understanding that, when a producer company vertically integrates its supply chain and we do not understand its impact in planning, it takes years to get right—but we are absolutely determined to do it.