Independent Water Commission

Baroness Bakewell of Hardington Mandeville Excerpts

Wednesday 23rd July 2025 Lords Chamber

[Lord Blencathra (Con)]

My Lords, first, I congratulate Sir Jon Cunliffe and his team on this thoroughly detailed review of the water industry. There are many of his 88 recommendations we support, including the replacement of Ofwat.

In the other place and on the airwaves last weekend, the Secretary of State for Defra tried to demonise the last Government for lack of progress on water improvement. Will the noble Baroness the Minister acknowledge that £93 billion of the £104 billion the Government boast they have raised was raised by the last Government and that the target to cut 50% of sewage discharges is less than the target of cutting phosphates by 80% set by my noble friend Lady Coffey in the last Government? The Government are able to set meaningful targets now only because the last Conservative Government increased monitoring of storm overflows from 7% under Labour to 100% in 2023.

We welcome the new regulator. Does the Minister agree that it should be independent of the water industry but completely answerable to the Secretary of State and, through that, to Parliament, so we get proper parliamentary scrutiny for the first time?

I note there is a recommendation for metering for all and for a social tariff system. While metering and paying for usage is a legitimate aim which would benefit low water users, a social tariff system is just a euphemism or another term for a tax based on income or wealth. Does she accept that turning water charges into a tax to make some people pay more, such as retired pensioners, even if they use little water, is regressive and unacceptable?

[Baroness Bakewell of Hardington Mandeville (LD)]

My Lords, I thank the Government for making time for the repeat of this Statement. I also thank my noble friend Lady Grender for having another critical engagement at this time, thus allowing me to speak on the subject which had become routine for me over the preceding years. The noble Baroness the Minister and I have made many contributions on this subject in the years running up to the general election, both of us vehement about the lack of control Ofwat was exercising.

Sir Jon Cunliffe’s report is lengthy, robust and to be welcomed. We look forward to knowing exactly how many of his recommendations the Government will take forward.

Since 2022, Liberal Democrats have called for the abolition of Ofwat. It is an organisation that is completely out of its depth. It had no real way of dealing with water companies, which seemed to have forgotten that their real remit was to provide a plentiful supply of clean water and dispose of sewage in an efficient and environmentally friendly way. Although some water companies were fined by Ofwat, their sanctions bore no relationship to the number of bonuses and dividends that the executives and shareholders received for doing an abysmal job.

Like others, I welcomed the Government’s ban on bonuses for water company executives who oversaw sewage discharges. However, at least one chief executive and his colleagues got round this by receiving a 100% increase in their pay by way of compensation for the absence of a bonus. It is ordinary water users and taxpayers who have to foot the bill for this, just as they have to contribute to the bill for the increases which will be needed to repair the creaking and dilapidated sewerage system and to build new reservoirs.

The Government have stated that they will cut water companies’ sewage pollution by half by the end of the decade. This is to be welcomed, but how exactly will this be achieved? Bringing the oversight of the water industry under a single regulator which has the means to ensure high standards is essential, but I have some concerns. Previously, we have seen a rotation of officers from the water companies into Ofwat and from Ofwat into the water companies—a merry-go-round of incompetence. Is the Minister able to give the House reassurance that no existing or previous officer of Ofwat or any of the failing water companies will have a role in the new regulator once established? It is essential that the incompetent are not rewarded with having a role in the new regulator. A fresh start has to be just that, and not tainted with previous failure.

We look forward to the interim strategy policy statement giving directions to Ofwat and the Environment Agency on how to move forwards towards the transition plan. The Environment Agency is not without involvement in the sewage discharge debacle. While the EA has been underfunded over recent years, and with ever more responsibilities thrust upon it, a radical rethink of the way it operates has to be part of the solution going forward.

Since Liberal Democrats have been raising the issue of sewage spills in this Chamber and the other place, the EA has found that last year alone, there was a 60% increase in serious pollution incidents. We are at the start of the school summer holidays. Children and their families will be going to beaches and rivers to enjoy relaxation and at least a paddle, as well as swimming to cool down in the heat—which we hope will return.

So many of these children will be in water that is polluted with raw sewage spills, discoloured and stinking. Certainly, I would not want my grandchildren to swim in such waters. Families should be able to take their children for a day out at the beach without having to worry about whether the water is contaminated. The sooner the Government can bring the water companies to book, the better. The lackadaisical approach to sewage discharges has to stop, and quickly.

Last year, water companies breached their permits more than 3,100 times, at the same time as paying out a total of £9.3 million in executive bonuses. No single stretch of river in England or Northern Ireland is in good overall health; no English river is in good chemical health; and just 14% of English rivers are in good ecological health. This is a far cry from my childhood, when the babbling brook ran with clear, transparent water and I could see the minnows swimming along, trying to escape my small fishing net. I am confident that the Minister is as concerned about these issues as the rest of us.

What is needed is: more access for communities and citizens to hold water companies to account, including representation on water company boards; improvements in how pollution is measured and strict targets set, using volume flow meters and penalties for missing targets; an urgent implementation of a social tariff on water bills to help eliminate water poverty; and legally binding targets on the quantity and quality of bathing waters and sensitive nature sites, with independent and transparent testing of water quality. Local authorities, although already overstretched, should have strengthened powers to monitor the health of our rivers, lakes and coastlines in order to restore our natural environment and help tackle climate change.

I look forward to the Minister’s response on this vital issue, which affects every single water user in the country.

[The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Baroness Hayman of Ullock) (Lab)]

I thank noble Lords for their broad support for the recommendations that have come out of the Cunliffe report. This is a very important step forward in cleaning up our waterways.

The Statement talks about the five recommendations that we are taking forward immediately, including: the new statutory water ombudsman, ending operator self-monitoring, and the new single water regulator— I think there is consensus that Ofwat has not done its job effectively. The noble Baroness, Lady Bakewell, makes an important point when she says that we should not reward incompetence, and I am sure that will be fed through. There will also be greater local involvement. The noble Baroness talked about communities; we want them to be more involved, and customers to be right at the heart of how we move forward with these changes. That is one of the reasons for bringing forward the regional element: to enable communities and consumers to be more central in water planning and how we manage pollution going forward. There will also be an improved strategic direction, because water strategy has failed abysmally over the last few years.

Of course, this is not the limit of our ambition. We will respond in the autumn in full to the recommendations in the Cunliffe report. We will publish a White Paper, which will be open for consultation, and we intend to follow that up with a water reform Bill. So, many of the questions that the noble Lords asked, and I assume will continue to be asked, will be able to be addressed once we see that White Paper, and that consultation will be available for people to take part in.

The noble Lord, Lord Blencathra, asked a few questions, which I will address. First, he talked about funding. I stress that it is actually this Government who secured the £104 billion of investment, which is so needed because of the lack of investment in the water industry over many years. That is going to be critical to improving leakage, for example, and providing better service for customers. He asked whether the regulator would be independent of the water industry but also answerable to the Secretary of State and to Parliament. We have said in the White Paper that we are going to have this new, single water regulator. Those are the kinds of questions that will be debated as we move through that process in order to inform our further legislation when it comes forward.

Social tariffs were mentioned by both noble Lords. As I said, we want to put customers at the heart of the new model that we are developing. The recommendations made by the Independent Water Commission talk about national social tariffs and the introduction of compulsory smart meters. These will be considered alongside all the other recommendations as we move forward. As I said, further information will come out this autumn, when we have developed the White Paper.

The noble Lord, Lord Blencathra, also talked about the monitoring of overflows and mentioned that in 2010, 7% were monitored, and by 2023, at the end of the previous Government, it was 100%. In answer to that, a lot of this monitoring came in because of public pressure and because of the absolute horror at the amount of pollution that was going into our waterways. People had not been aware of that before. While we are very pleased that the previous Government increased monitoring, there is responsibility to be taken for the amount of pollution that had gone into our waterways and the complete incompetence of the regulators at the time, which is what we are now trying to address.

The noble Baroness, Lady Bakewell, asked about the target to reduce pollution—50% by 2030—and how that was going to be delivered. We have combined this with the existing commitment in the environmental improvement plan to reduce phosphorus from treated wastewater by 50% by 2028. Together, those two targets form the pledge that we are making on this commitment. Ofwat and water companies previously agreed a commitment for water companies on the PR24 agreement for storm overflow spills to be reduced by 45%, based on a 2021 baseline. To be clear, the data between 2021 and 2024 does not compare, because in 2021, only 88% of storm overflows were monitored. Although it looks less, the amount has increased, as has our knowledge. Our target for storm overflows is based on the 50% reduction in spills from storm overflows by the end of 2029, compared with 2024 levels. We can do that because we now have 100% of storm overflows monitored.

More broadly on communities, we are engaging for the first time on entire river catchment systems. As part of that, we want to bring local people, local authorities —which have an important voice—businesses, and farming communities, of course, into the work that we are doing to improve pollution systems in their local area. As I said, that will be done on a regional basis and then into the catchment model system. That will be more effective, I hope.