Pollution in Rivers and Regulation of Private Water Companies
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The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Douglas-Miller) (Con)
My Lords, I declare my interests as set out in the register. I congratulate the noble Baroness, Lady Bakewell, on securing this debate and thank noble Lords for their valuable contributions.
It might be helpful to remind noble Lords that the combined water and wastewater infrastructure that is managed by water companies is a system designed by our Victorian ancestors and allows, as it has for more than 150 years, for sewage to be spilt into our rivers at certain times and under certain circumstances—as the noble Baroness, Lady Pinnock, described so well. This may not be deemed desirable or even acceptable today, but it is a reality from which we cannot escape. In heavy rainfall events, of which we have more and more, there is a binary choice between sewage going into our rivers or backing up into our homes. I make reference to this to differentiate between what water companies are legally allowed to do and what I suspect the noble Baroness, Lady Bakewell, and many other noble Lords are mainly seeking to address, which is the illegal spilling of sewage into our rivers, as well as how to address reducing sewage spills altogether.
I think we can all agree with the comments that the noble Viscount, Lord Stansgate, made last week in a similar debate: the volume of sewage going into our waters is not what any Government, any Member of this House or the public would wish. We rightly expect to see the quality of our water improve and water companies to play their part.
In tackling this challenge, it is really important to be clear that there are both legal and illegal discharges of sewage, as I have already explained, and that the Government are taking action to reduce both. However, I will heed the advice of the noble Baronesses, Lady Jones and Lady Hayman, and spend my weekend rereading the speech by the noble Lord, Lord Sikka, and preparing to write to him on his detailed accountancy questions, and to the noble Baroness, Lady Jones, on the number of water companies operating illegally and blocking developers.
In April last year, the Government published the Plan for Water. We are delivering this with tighter regulation, tougher enforcement and more investment. We committed in the 25-year environment plan to restore three-quarters of our water bodies to be close to their natural state, and this plan will help us to achieve that by directing £2.2 billion of new, accelerated investment into vital infrastructure to improve water quality and secure water supplies. This includes £1.7 billion of funding to tackle storm overflows.
This is on top of the water companies investing £7.1 billion in environmental improvements between 2020 and 2025, including £3.1 billion invested in 800 storm overflow improvements, such as the Thames Tideway super sewer. Storm overflows causing the most harm are being addressed first, so that we can make the biggest difference as quickly as possible. We are the first Government to address and implement 100% storm overflow discharge monitoring, so that the public and our regulators can see exactly what the water companies are doing and set clear targets for them to significantly reduce legal storm sewage discharges. We expect water companies to use the next five-year price review period—PR24—to set bold and ambitious plans that deliver on this plan for people and the environment. This means cleaner rivers and beaches, fewer leaks and supply interruptions, and substantial improvements to tackle storm overflows.
In addition, the Storm Overflows Discharge Reduction Plan, published in September last year, will see the toughest ever crackdown on sewage spills, driving the largest infrastructure programme in water company history, with around £60 billion of capital investment over 25 years. Companies will upgrade storm overflows individually, depending on how they impact the targets set out in the plan.
Meeting these targets will result in hundreds of thousands fewer sewage discharges. By 2035, we will have protected all our designated bathing waters and the vast majority of our most sensitive and protected habitats from storm sewage discharges, and by 2050 there will be an 80% reduction in all storm sewage discharges.
This Government are the first to face up to the fact that, as a country, we need to fundamentally change how we deal with sewage. That cannot change overnight and will come with some cost. Eliminating all discharges could cost up to £600 billion, increasing annual water bills to an unacceptable level. The Government are committed to reviewing the targets in the storm overflow discharge plan in 2027 to establish whether companies can go further and faster to achieve the storm overflow targets without hiking up bills to unaffordable levels. If they can go further, the Government are clear that they must.
These initiatives work alongside a raft of other measures to improve the quality of our rivers and seas. As a result of our work, 90% of designated bathing waters in England met the highest standards of “good” or “excellent” in 2023, up from just 76% in 2010, despite stricter standards being introduced in 2015. Last week, we announced that we would consult on 27 potential designated bathing sites in England, the largest number we have ever consulted on, and encourage all interested individuals, businesses and organisations to respond to the consultation by 10 March this year.
Both the noble Baroness, Lady Jones, and the noble Earl, Lord Russell, referred to nutrient neutrality. On 25 January this year, we designated catchments in which water companies will be required to upgrade wastewater treatment works to reduce nutrient pollution by 2030. This will help unlock the homes that communities need, while also reducing pollution at source.
This Government are committed to increasing the quantity and quality of sustainable drainage systems—usually referred to as SUDS—in new developments, as my noble friend Lady McIntosh mentioned. SUDS reduce the pressure on our traditional infrastructure by slowing down the overall amount of water that ends up in the sewers and storm overflow discharges. The review and decision for making SUDS mandatory in new developments was published on 10 January last year. A public consultation on the implementation proposals will take place shortly, and I am encouraging my department to progress this as quickly as possible.
My noble friend Lady McIntosh and the noble Baroness, Lady Hayman, raised points about roads. In the Plan for Water, we committed to reducing pollution from roads by improving water quality through the road investment strategy for 2020 to 2025. So far, National Highways has delivered over 30 water quality initiatives. It is important to make it clear that National Highways is not responsible for pollution from roads, which are managed by local highway authorities.
My noble friend is also right that we must improve water efficiency. She will be pleased to hear that we have a new legally binding target under the Environment Act 2021 to reduce the use of public water supply in England per head by 20% by 2037-38. To help meet this, in our 2021 Written Ministerial Statement the Government set out our approach for a range of water efficiency measures, including our mandatory water efficiency label, leakage and metering.
As for fixing misconnections, water companies have the power to lay, inspect, maintain and repair or alter pipes falling on private land. I will write to the noble Baroness about access to government land.
I commend my noble friend for her tireless campaigning for farming and its part in storing floodwater. Since 2015, we have protected over 900,000 acres of agricultural land, along with thousands of businesses, communities and major infrastructure via our flood investment programmes. In addition, there will be measures that benefit flood risk mitigation in all three environmental land management schemes, the sustainable farming incentive, Countryside Stewardship and landscape recovery, which will include payments that relate to floodwater storage.
I move on to the issues raised about the Environment Agency. The Government’s work is backed by enforcement action from the regulators. Where there is evidence of wrongdoing, the Environment Agency and Ofwat will not hesitate to hold water companies to account. In 2013, the Government directed water companies to increase their storm overflow monitoring. In 2010, only 7% of storm overflows were monitored. As of December last year, we are at 100%. This has given us a clear sense of all discharges, which we never had before. In answer to the question from the noble Baroness, Lady Bakewell, on who is responsible for monitoring storm overflows, it is the Environment Agency.
The Environment Act requires water companies to monitor the operation of storm overflows and the water quality upstream and downstream of their assets. This is helping regulators to identify and enforce storm overflow discharge offences and permit breaches. We are providing an extra £2.2 million per year in this spending period for the Environment Agency, specifically for water company enforcement activity. We have legislated to introduce unlimited penalties on water companies that breach their environmental permits and expand the range of offences to which they can be applied.
Last week, we announced that we are significantly increasing our oversight of the water industry. Every water company should expect their wastewater treatment sites to be regularly inspected. The number of inspections, including unannounced inspections, will rise to 4,000 by the end of March 2025—a fourfold increase. Our consultation on increasing permit charges for water companies to enable these inspections is under way and due to close shortly. This will be backed by around £55 million per year. More inspections will allow the Environment Agency to conduct more in-depth audits to get to the root cause of incidents, reducing the reliance on operator self-monitoring.
Since 2015, the Environment Agency has concluded prosecutions against water and sewerage companies, securing £150 million in fines, including a record £90 million fine for Southern Water. These will go into the water restoration fund to protect and enhance the water environment. As the noble Baroness, Lady Hayman, mentioned, I will report on that date shortly.
The noble Baronesses, Lady Bakewell and Lady Jones, and the noble Lord, Lord Sikka, questioned the effectiveness of Ofwat and the Environment Agency. The Environment Agency, with Ofwat, recently launched the largest criminal and civil investigation into water company illegal sewage discharges at over 2,200 treatment works, following new data coming to light as a result of increased monitoring introduced by this Government.
In May last year, Ofwat announced that its enforcement capacity would be trebled, following the approval of £11.3 million in additional funding by the Government. If water companies fail to meet their statutory or licence obligations, Ofwat can issue an enforcement order or financial penalty of up to 10% of a company’s turnover. Following the Water Company Performance Report 2022-23, Ofwat published the financial penalties and payments for all water companies. Ofwat has required 13 companies to return £193 million to customers for underperformance in 2022–23. This money will be returned to customers through bills over 2024-25. Ofwat has also required each lagging company to prepare service commitment plans outlining the actions they will take to deliver the levels of service that customers expect. Ofwat has reviewed these plans and is regularly engaging with companies over them.
This month, the Environment Secretary announced that Ofwat will be consulting on banning water company executives from receiving bonuses if a company has committed a serious criminal breach. The consultation will seek to define the criteria for a ban, which we expect to come into effect later this year. This could include successful prosecution for a category 1 or 2 pollution incident, such as causing significant pollution at a bathing site or conservation area, or where a company has been found guilty of serious management failings. I will, however, consider the suggestion from the noble Baroness, Lady Jones of Moulsecoomb, of community service for the chief executives. This builds on Ofwat’s announcements last year to tighten restrictions on bonuses using powers given to the regulator through the Environment Act.
The noble Baroness, Lady Harris, asked about open investigations into Yorkshire Water. I am afraid I am not able to comment on those or, indeed, on any open investigation.
The noble Lord, Lord Addington, brought up the issue of anglers. As the past chair of the Atlantic Salmon Trust, I have the greatest sympathy with him and with anglers. He also mentioned that they might start to bring pressure to bear on the Government. I can assure him that the Rivers Trust, WildFish and Fish Legal and many celebrity anglers are already applying considerable pressure. I should add that, as a keen angler, I am not against canoeists at all.
The noble Baroness, Lady Miller, asked about the testing of sludge. This is regulated by the Sewage Sludge in Agriculture code of practice.
The noble Lord, Lord Stoneham, referred to an investigation with Southern Water, and I will look into the speed of that response and what can be done to speed these things up in the future.
The noble Lord also commented on the chalk stream strategy. The Plan for Water recognises chalk streams as a priority for the Government and identifies action to protect and include them in the chalk stream recovery pack that is due to be published later this year—I hope by mid-summer. It will set out the Government’s policies that act together to address the key pressures on chalk streams from abstraction, agriculture and wastewater.
The noble Lord, Lord Teverson, raised the issue of Ofwat and the monitoring of water companies. The Government remain confident with Ofwat’s approach and have contingency plans in place in the event of any public service failing.
The noble Lord also brought up other points relating to farmers and farming. We are taking significant action to work with farmers to reduce diffuse pollution and deliver improved environmental outcomes. We have doubled our catchment-sensitive farming budget to £15 million per year, which enables farmers across England to receive face-to-face advice on recurring water and air pollution issues. We have also budgeted for an additional 50 Environment Agency farm inspectors to work with farmers to meet their legal obligations. Our environmental land management schemes are being rolled out to pay farmers for the delivery of environmental benefits that include activities to improve water.
The noble Baroness, Lady Hayman, asked again about the land use framework. I am afraid that the answer is the same: it will be published shortly. That is about all I can say on that at the moment.
As I have set out, this Government are going further and faster than any other to protect and enhance the health of our rivers and seas. We have set out clear targets for water companies and are holding them to account on a scale that has never been seen before, making sure that the Environment Agency and Ofwat are equipped to take enforcement action where there are failings. This Government are fully committed to addressing the historic issues that are causing pollution in our waterways, and we will continue to strive for healthy and thriving water environments.