Flood Prevention: Farmers

Baroness Hayman of Ullock Excerpts

Thursday 10th October 2024 Lords Chamber

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

My Lords, I thank the right reverend Prelate the Bishop of St Albans for securing this debate and welcome the opportunity to respond. This is a really important issue for farmers and rural communities, as well as for flood prevention. The Government recognise the right reverend Prelate’s commitment to these issues and to agriculture. He has made a long-standing commitment to supporting farmers, and we appreciate the work he does on that.

The noble Earl, Lord Devon, painted a pretty dramatic picture of what has happened in his locality in Devon because of flooding. I reassure him and other noble Lords that, although I do not have a magic wand and pots of cash, living in rural Cumbria I genuinely understand the devastating impact that floods can have on communities, homes and farmland.

The Government are mindful of the importance of farming to the country. British agriculture is fundamental to all of this Government’s missions. As we have heard, British farmers underpin our food and drink sector and support national food security. They create jobs and attract investment to our rural areas. They build economic resilience through nature-based solutions and play a crucial role in tackling biodiversity loss. They improve water and air quality and our resilience to climate change.

The Government also recognise the pressures that so many farmers are under. Climate issues have led to flooding in unprecedented ways, creating a real challenge for many farmers. A number of noble Lords mentioned climate change, particularly the noble Earl, Lord Russell. We are committed to maintaining food production and supporting thriving farm businesses, as well as protecting communities from flooding. As the right reverend Prelate clearly laid out, the impact of wet weather and flooding on farms is devastating and getting worse. It is becoming a real challenge for both farmers and government. Obviously, there were storms last year and this year, with a lot of wet weather—the summer was absolutely dreadful. In September, there was flooding, affecting properties right across the country.

Turning to some of the questions around this, I was asked by a number of noble Lords about the farming recovery fund and payments going forward from last winter and from spring this year. We are acutely aware of the challenges farmers have been facing because of this flooding. All farmers eligible for the initial farm recovery fund set up in April have been offered a payment. Unfortunately, further commitments around spending and the rollout of schemes is down to the spending review. I am sure that noble Lords will hear that an awful lot; I think we will all be very glad when it happens and we know where we stand on everything. I really appreciate the concerns that noble Lords have raised, including the right reverend Prelate, about the fact that this is an urgent issue, and we need to let people know what is what as soon as we can.

A number of noble Lords asked about the maintenance of existing flood defences. We are investing over £1.25 billion to build and maintain flood defences to scale up our national resilience. We will also review the programme with a view to ensure that flood risk management is fit for the challenges that we now face. Again, as part of the Government’s spending review we will look at this, but I can say that we have been spending over £200 million on maintenance, with an aim that our existing flood defences are kept in good order.

I want at this point to thank the people who work at the Environment Agency, local responders and many others, who work tirelessly to help communities when these incidents happen. We also sympathise very much with those whose homes and businesses have been damaged and who have faced so much disruption.

We also have to recognise that, as we adapt to climate change, farmers and land managers have an increasingly important role to play, and the Government very much welcome the willingness shown by farming communities to work together to better protect their local areas. I am aware of the project in Keswick—it is only up the road from me. We need to look at how we work with farmers to achieve these outcomes, because we want to support them to reduce the risk of flooding and coastal erosion through measures such as natural flood management. One way we could do this is through the ELM schemes, to provide payments to farmers to manage land and water in a way that can reduce flood risk to local communities. There are measures that benefit flood risk mitigation in all three components of ELMS: that is, the sustainable farming incentive, countryside stewardship and landscape recovery.

The floods investment programme was also mentioned. Under the current programme, the amount of funding a project can attract will depend on the damages it will avoid and the benefits that it will deliver. However, the impact of a project on agricultural land is included as part of the funding calculator and therefore is eligible for funding.

There are many actions within ELMS that farmers can apply for to protect and enhance the natural environment, and they can get payments for a range of actions to promote particularly flood management and prevention. These include support for water body buffering, soil health, farm woodland and hedgerows—all those things have been mentioned during the debate. The current Countryside Stewardship scheme offers payments, including the creation of small-scale run-off attenuation and storage, slowing flows in small watercourses, streams and on their flood plains, the creation of woodland and planting of hedges to slow flows, and the restoration of rivers and flood plains. We are expecting further flood risk benefits to arise when we roll out the updated higher-tier scheme; I hope that we will be able to provide more information on this fairly soon.

One of the two themes of the first wave of the landscape recovery pilot projects was restoring England’s streams and rivers, improving water quality, biodiversity and adapting to climate change. We hope that these will provide flood risk mitigation benefits to support farmers.

The right reverend Prelate mentioned the Minister, Daniel Zeichner, in his speech. It is a challenging time for budgets—it really is. However, I just want to assure noble Lords that the Minister is very serious about supporting farmers and looking to see the best way we can do that within the ELM scheme and other systems. I just wanted to reiterate that.

On the comments of the noble Earl, Lord Devon, on the importance of working together collaboratively, that will be incredibly important as we move forward, because the tighter the budgets, the more we can work together and the more you can actually achieve. We want to optimise the ELM scheme to produce the right outcomes for all farmers, and I thank the right reverend Prelate for his words of support for the work we are trying to do on this.

The noble Baroness, Lady McIntosh, mentioned reservoirs. We of course have a commitment to build new reservoirs—they are very much needed—so we will look very carefully at the suggestions that she made.

On the flood recovery framework and farming recovery fund that was mentioned, the flood recovery framework is activated only when there is large-scale and widespread flooding—the noble Baroness, Lady Bakewell, mentioned that.

A number of questions were asked about the future of these schemes. I am ever so sorry, but I cannot really say anything until after the spending review. The same applies to the question from the noble Earl, Lord Caithness, around the underspend, as it is all part of spending review discussions.

On the Flood Resilience Taskforce, better communications were mentioned. Part of that is improved co-ordination and communications between central government and the different agencies on the ground that have to deliver schemes. We had a meeting on 12 September and the next one is going to be in January.

The noble Earl, Lord Caithness, asked about droughts. The Flood and Droughts Research Infrastructure was announced on the 31 August 2024. This is going to be a £40 million initiative and it is the first UK-wide network focused on understanding the impact of extreme weather conditions across the country, so there is work taking place on that.

The noble Earl, Lord Devon, mentioned the need for water companies to work closely with farmers on flooding. We need to look at all options as to how we can work collaboratively, and we are doing a lot of work at the moment with water companies so it is something we need to look at.

We recognise the valuable role that farmers serve in this country. We want to do our best to back British farmers. The Minister, Daniel Zeichner, is working very hard to look at how we can make the ELMS work for farmers and for things like flood mitigation and food security. Getting all this right is a difficult balancing act, and we need to look at the best way we can achieve it. We want to do our best to support farmers in flood management and food security but also on prevention of flood. There are many schemes that can help support that, including the one in Keswick, which was mentioned.

I am very pleased that we had this debate. There have been some very interesting suggestions. I am sorry I cannot say more about funding; hopefully, at some point, we will have a much clearer picture and we can look at working together to get our best deal for farmers and flood prevention in the future.

Water (Special Measures) Bill [HL]

Baroness Hayman of Ullock Excerpts

2nd reading
Wednesday 9th October 2024 Lords Chamber

Moved by

[Baroness Hayman of Ullock]

That the Bill be now read a second time.

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

My Lords, I am delighted to begin the Second Reading of the Water (Special Measures) Bill. Improving water quality is a priority for this Government, and we have taken rapid action to ensure that water companies put customers and the environment at the centre of what they do. The Water (Special Measures) Bill is being introduced to drive rapid and meaningful improvements in the performance and culture of the water industry. The Bill not only delivers on the Government’s commitment to put water companies under special measures but is an important first step in enabling wider, transformative change across the water sector.

I am sure noble Lords will agree that there is a lack of public trust in the water industry, and widespread concerns about underinvestment in infrastructure, levels of pollution and failures to address spills of sewage. Between 2020 and 2023, water company executives paid themselves more than £41 million in bonuses, benefits and incentives, despite poor performance in the water sector, and only one-quarter of water company customers think that companies act in the interests of people and the environment. At the same time, the number of serious pollution incidents remains unacceptably high.

That is why this Government are taking swift action to turn around the performance of the water industry as a first step towards enabling long-term change. In his first week in post, the Secretary of State announced a set of immediate steps to improve the performance of the water industry. They include ring-fencing vital funding for infrastructure investment, placing customers and the environment at the heart of water company objectives, and working with Ofwat to strengthen protection for households and businesses when their basic water services are affected. However, this Government know that this is not enough to address the fundamental changes needed to the water system and that targeted legislative action is needed. This brings us to our consideration today of the Water (Special Measures) Bill.

Concerns about the performance of the water industry have risen right to the top of the public and political agenda in recent years. The water industry was privatised under the Water Act 1989. That Act was followed by the Water Industry Act 1991, which largely sets out the regulatory regime for the industry. The industry is regulated principally by the Environment Agency in England and Natural Resources Wales in Wales, along with the Water Services Regulation Authority—Ofwat—and the Drinking Water Inspectorate. The Bill makes new provisions to improve the regulation of water and sewerage companies and gives new and extended powers to these regulators.

I turn to the detail of the provisions. As I have noted, the core provisions of the Bill serve to strengthen the powers of the regulators to hold water companies to account for poor performance. The measures it introduces are intended to complement each other in a way that will ensure that the regulators are better equipped to identify and respond to water company failings. It will encourage behaviour change to ensure that water companies are delivering for their customers and the environment, from the start of the next water industry investment period that is due to begin in April 2025. Accordingly, the Bill provides Ofwat with a new power to establish rules for the water industry relating to governance and remuneration. This power will allow Ofwat to make rules around performance-related pay and the introduction of a fit and proper person test to ensure that water company bosses are not rewarded where performance is not up to scratch.

The Bill also includes provision to make obstruction of the general investigatory powers of the Environment Agency, Natural Resources Wales and the Drinking Water Inspectorate punishable by imprisonment and allows for executives to be held personally liable for obstruction where the offence has been committed with their consent, connivance or neglect. This will help the water industry regulators to carry out effective investigations and will bring criminal charges against persistent lawbreakers.

To further ensure that non-compliance is tackled, the Bill includes provisions to enable the Environment Agency and Natural Resources Wales to issue automatic and severe penalties for certain offences, as well as provisions to strengthen environmental civil sanctioning powers so that regulators can impose a penalty on the civil standard of proof for water industry offences. This will ensure that water companies face rapid repercussions where it is immediately clear that they have acted unlawfully, and that rapid enforcement action is taken against minor to moderate offences before they can become a more serious matter.

To ensure that the regulators are able to make full use of their expanded and new powers, the Bill also provides for enhanced cost-recovery powers for the Environment Agency, Natural Resources Wales and the Drinking Water Inspectorate to ensure that water companies bear the cost of non-compliance, in line with the “polluter pays” principle. In addition, the Bill contains provisions to ensure the independent monitoring of all water company outlets. These provisions place a requirement on water companies to publish discharge data at 100% of emergency overflows and publish data on discharges from emergency overflows in near-real time. The Bill also places annual pollution incident reduction plans on a statutory footing, increasing transparency around water company operations. The Bill will also bring forward provision to modernise the existing special administration regime for the water industry, to bring it in line with special administration regimes for other regulated sectors and to ensure that taxpayer money is protected in the event of a water industry special administration regime.

Collectively, these measures represent the most significant increase in enforcement powers in a decade. This will help to ensure that water companies are delivering for customers and the environment as we move towards the largest-ever investment period for the water industry, with an £88 billion spending package proposed for the next price review period.

I turn to delegated powers and devolution. The Government are committed to working closely with the devolved Governments to tackle shared problems, including the issues facing the privatised water industry. My officials have worked closely with Welsh counterparts during the development of the Bill, and I am delighted that most provisions in the Bill are expected to apply to both England and, at the request of Welsh Ministers, Wales. Although the Bill does not apply to Scotland or Northern Ireland, my officials have also engaged with these devolved Governments during the Bill’s development.

With regard to the Bill’s powers, it contains provisions both to amend primary legislation and to confer a limited number of delegated powers on regulators and the Secretary of State. To reflect the evolving nature of the issues facing the water industry and the changing expectations of customers, the Bill contains eight legislative and three non-legislative delegated powers. These provisions contain a mix of powers conferred directly on regulators—for example, the power to set rules in relation to remuneration and governance—and powers that will be enacted via the affirmative resolution procedure, such as the power to amend relevant environmental regulations. These delegated powers will enable government to keep pace with and react to developments in the water industry. I assure noble Lords that these powers will be subject to all appropriate scrutiny and safeguards.

Since the Bill’s introduction there has been some inaccurate reporting on the effects of its provisions. I would like to take the opportunity to correct some of these misconceptions, to ensure that we can have a fully informed and helpful debate.

First, it has been reported that some of the Bill’s measures—for example, those that will enable the banning of bonus payments and those that enable imprisonment for obstruction offences—already exist in law. Let me explain why this is not the case. Although it is possible for Ofwat to set expectations with regards to executive remuneration, it does not have the power to set legally binding rules. The Bill introduces such a power, meaning that Ofwat will be able to stop the payment of bonuses to executives where performance has not been up to scratch—for example, in the areas of consumer matters, environmental performance, financial resilience and criminal liability. Similarly, although the obstruction of regulators can be punished by imprisonment, that is currently possible only in extremely limited, emergency circumstances. The Bill strengthens the maximum penalty for all cases of obstruction to imprisonment for up to two years. It also makes that offence triable in the Crown Court and, importantly, ensures that executives can be held liable for wrongdoing, which is not currently the case.

Secondly, there have been reports around the use of special administration regimes to nationalise water companies and on the impact of the special administration regime clauses on customer bills. I want to be clear. Special administration is not a form of renationalisation. It is a tool to ensure that vital public services continue to be provided after a company fails. The Government would take no ownership or management of the company during a special administration regime. It would cost billions of pounds and take years to unpick the current ownership model; it would slow down our reforms, leave sewage pollution to get only worse and stall much- needed investment. There is a very high bar for the imposition of a special administration regime. The Government and Ofwat will always act to protect consumers as a priority, and any intervention that would increase customer bills would be considered very seriously and as a last resort.

Having spoken about what the Bill will do, it is important to note as well what it does not cover. This Bill focuses specifically on measures relating to the regulation of water companies, taking immediate action in response to the poor performance of the water industry in recent years. However, the Government are clear that the Bill alone will not be enough to fix our water system. It is an immediate down payment on the wider reform that is needed after years of failure and environmental damage. It is for this reason that the Government have also announced a review to fundamentally transform how our water system works and clean up our rivers, lakes and seas for good.

Through this review, we will examine holistically the framework that underpins our water sector; we will invite views from a range of experts and stakeholders; and we will hold a public consultation to ensure the proposals are robust and radical enough to meet the public’s appetite to clean up our polluted waterways. I am sure that many noble Lords here today will take a keen interest in the work of this review, and I have already had discussions with many in this House about wider issues facing the water sector. I look forward to working with noble Lords closely as the review progresses, and further detail on this will come forward later this autumn.

To conclude, I know that there is considerable support, both within Parliament and among the public, for this Bill. I hope that Members of your Lordship’s House will agree on the importance of working together to reset and transform the water sector through these first crucial steps and the work to come. I look forward to what I am sure is going to be a passionate debate; I would expect nothing less for a Bill of this importance and I am greatly looking forward to hearing noble Lords’ contributions. I hope that your Lordships will support the Bill and ensure that we work together to strengthen our regulators and hold water companies to account.

--- Later in debate ---

[Baroness Hayman of Ullock (Lab)]

My Lords, this has been a very interesting and worthwhile debate. I thank all noble Lords who have spoken for their thoughtful, informative and constructive comments.

As we have heard, the Bill is going to be used to drive meaningful improvements in the performance and culture of the water industry, as part of our wider efforts to ensure water companies deliver both for customers and for the environment. Many campaign groups, as well as parliamentarians, have called for measures to hold water companies to account. We also know that there is huge public support for the Government to do something. There is clear and broad recognition of the need for action. Let me now take the opportunity to address some of the points and questions raised during the debate.

First, I would like to stress that the Bill goes beyond the previous Government’s ambition. It is not true that the Bill does not contain anything further than measures put in place by the previous Government. For example, the Bill will go beyond the current regulatory framework. To give a couple of examples, it will provide legal powers to ban bonuses—currently, you can only set expectations—and it will also require water companies to report in near real time on discharges from emergency overflows, which are at present largely unmonitored.

The noble Duke, the Duke of Wellington, the noble Earl, Lord Russell, the noble Lord, Lord Blencathra, my noble friend Lady Young of Old Scone, the noble Earl, Lord Devon, and many other noble Lords were particularly interested in what exactly the review is going to do. As I said, the Bill alone is not enough to fix our water system; it is only an immediate down payment on the wider reform that is needed after many years of failure and environmental damage. As I mentioned, the review is going to be carried out to fundamentally transform how our water system works so that we clean up our rivers, lakes and seas for good. We will invite views from a range of experts, covering areas such as the environment, public health, consumers, investors, engineering and economics. We will have a public consultation to test that any proposals are robust and ambitious enough to clean up the pollution from our waterways. Through our review, we will look at long-term wider reform of the water sector as a whole, including considering and clarifying the roles of regulators. We expect this work to culminate in shaping further legislation and intend to set up further details about the review later this autumn. It is also really important that specific measures are consulted on during the passage of the Bill, and we will be looking to do so.

The noble Baroness, Lady Jones, and my noble friend Lord Sikka particularly asked about nationalising water companies. As I have said previously, the Government have no intention to nationalise the water companies. We are focusing on improving the performance of the water industry as an urgent priority. The measures in the Bill are designed to do exactly that.

As we have said, it will cost billions of pounds and take years to unpick the current ownership model, during which time underinvestment in infrastructure and sewage pollution will only get worse. Research that has been commissioned by the Consumer Council for Water, which we have heard about—

[Lord Sikka (Lab)]

First, can the Minister say how many billions of pounds, and can she publish that calculation? Secondly, she says it will take a long time, but the Government are going to integrate the newly created companies to manage the railways, and there are numerous mergers and takeovers everywhere where new entities are accommodated. Could the Government publish a paper to see what the complications would be? Although I recognise some of the complications, I do not think that any of this is insurmountable.

[Baroness Hayman of Ullock (Lab)]

Rather than get into a discussion around this, as I have a lot of questions to answer, I suggest that perhaps the noble Lord and I—and the noble Baroness, if she so wishes—take this away into another meeting and discuss it further when we have more time.

The noble Baroness, Lady Jones of Moulsecoomb, asked about the special administration regime, as did other noble Lords, and she asked particularly about profits for shareholders and creditors. The special administration regime is there to enable a seriously underperforming or insolvent water company to be put into special administration, with the requirement that vital public services—that is, water and wastewater—are continued to be provided pending a rescue package and transfer to new owners. This contrasts with normal administrations, where the appointed administrator is focused on the creditors’ interests only.

A number of noble Lords—the noble Duke, the Duke of Wellington, the noble Baronesses, Lady Parminter, Lady Pinnock and Lady Bakewell, and my noble friend Lady Young of Old Scone, in particular—asked why the Bill is not being used to reform Ofwat or the Environment Agency. The Bill introduces the most significant increase in enforcement powers for the water industry regulators in a decade and is designed to give them the teeth they need to take tougher action against water companies in the next investment period. However, we want to go further. Through the review, as I mentioned, we will look at the regulators in order to carefully consider their roles and responsibilities and how we can ensure that they operate as effectively as possible. So that will be part of the review.

The noble Lord, Lord Douglas-Miller, asked whether the regulators were adequately resourced to implement all the new provisions in the Bill. Through the new cost recovery power in the Bill, we will enable the Environment Agency to fully recover costs for the full extent of its water company enforcement activities. That will include prosecutions and civil sanctions, revocation notices of permits, and pollution incidents. In addition, the EA is already recruiting up to 500 additional staff for inspections, enforcement and stronger regulation, increasing compliance checks and quadrupling the number of water company inspections by March next year. This will be fully funded by around £55 million per year through increased grant in aid funding from Defra and additional funding from water quality permit charges levied on water companies. I hope that helps to answer the noble Lord’s question.

There were also questions around the detail of Ofwat’s rules. The noble Lords, Lord Blencathra and Lord Remnant, mentioned this. We feel that it is more appropriate for Ofwat, as the independent regulator, to determine the specific performance metrics that should be considered when setting the rules. Allowing Ofwat to set out in the rules the performance metrics to be applied will also enable those standards to be more easily amended—subject to the relevant procedural requirements, of course—where or when it is appropriate to do so in the future. Ofwat would need to consult with relevant persons, including the Secretary of State, Welsh Ministers, the Consumer Council for Water and others, before such rules were finalised. I also reassure noble Lords that Ofwat will issue a policy consultation in October on the scope of the rules.

Consumers were mentioned a number of times. First, on representation on boards, as we go through the Bill, we will look at this in more detail, but the idea behind the Bill is that Ofwat will be required to issue rules on consumer representation. Customers largely foot the bills for water company decisions, so we believe it is right that they have a say where their interests are at stake. Ofwat will need to consult with relevant persons, including the Consumer Council for Water, before finalising the rules on performance-related pay, and fitness and propriety and customer representation. I think my noble friend Lord Whitty asked about some of those issues.

The noble Lord, Lord Roborough, asked in his speech just now about further increases to customer bills. Where increased costs are a result of penalties being issued by the regulators—for example, under the new automatic penalties regime—the penalties will come out of water company profits and not from customers. Where costs are unrelated to penalties—for example, where they will fund new and improved infrastructure—we are working closely with the water industry regulators to see how we can best minimise the impact of measures introduced by the new legislation on customer bills. We do not want to see the customers bearing the brunt of these new actions.

A number of noble Lords, including the noble Lords, Lord Remnant, Lord Douglas-Miller and Lord Cromwell, and the noble Earl, Lord Devon, asked about investor confidence. Private sector investment is at the core of how we grow our economy. The Government are committed to establishing a strategic framework in order to deliver long-term stability, and which is conducive to attracting the sustained investment in the sector that we need. The Bill will deliver a clear and consistent regulatory framework for the water industry and its investors. I do not think anyone would think that investors have a lot of confidence in much of the water industry as it stands. On 10 September, Defra and Treasury Ministers held a round table with investors where they outlined how the Government will work in partnership to attract the billions in private sector investment that we desperately need to be able to clean up our rivers, lakes and seas.

On that issue, there was also discussion around attracting talent. A number of noble Lords talked about the fact that it is more stick than carrot and asked how we are going to attract people into this. We believe it is right that companies and their executives are held to account for basic and fundamental performance requirements. Should companies meet their performance expectations, we believe that executives should rightly be rewarded, and there are also previous and existing examples of similar rules in other sectors. I will give a couple of examples. The financial services sector previously had a set cap on the level of bonuses—somebody mentioned that; I am sorry but I cannot remember who it was—and fit and proper person tests are also conducted by the Financial Conduct Authority and the Prudential Regulation Authority in that sector. Those sectors have continued to attract talent.

The noble Earl, Lord Devon, asked about ensuring that water companies invest sufficiently when considering pressures such as climate change and population growth, and about ring-fencing money for improvements. In July, Ofwat announced in its draft determinations a proposed £88 billion worth of expenditure between 2025 and 2030, which will be the largest investment in infrastructure that has ever been made by the water industry. We hope that that investment will deliver much of the work needed to achieve the issues that the noble Earl referred to.

The pollution incident reduction plans were discussed by many noble Lords during the debate. One question was: why have we not included a duty to implement the plans rather than just publish them? I think the noble Baroness, Lady Parminter, in particular talked about this. We say that these plans should be seen as part of the broader package of powers for regulators which exist and which are strengthened through the Bill to reduce pollution incidents.

The Environment Agency already has access to a range of tools to enforce against pollution incidents and this Bill is designed to supplement this with its provisions for automatic penalties and for Ofwat to ban bonuses when water companies have not met environmental standards. Water companies will also be required to report on overall progress on the actions that were set out in the previous plans. A specific duty to implement the plan would make enforcement more difficult, we believe, as it would cut across the wider legal requirements for pollution reduction.

The noble Baronesses, Lady McIntosh, Lady Browning and Lady Pinnock, all talked about sustainable drainage systems—SUDS. This is a complex issue. Existing planning policy requires that SUDS are included in all new major developments unless there is clear evidence that that would be inappropriate. This is in addition to requirements that SUDS should be given priority in new developments in flood-risk areas. However, I am aware of the issue around the previous legislation that has been sitting in front of us for 14 years, so I want to assure noble Lords that the Government are currently assessing how best to implement their ambitions on SUDS, while also being mindful of the cumulative impact of new regulatory burdens on the development sector. We are having regular discussions and trying to co-ordinate joint work with MHCLG officials on this issue. We want to move this forward.

The impact assessment was mentioned. There is an impact assessment for the Bill—I am sure noble Lords will be delighted to hear that—but it is currently with the Regulatory Policy Committee. We will publish it as soon as it has concluded its review. We are hoping that will be fairly soon.

The timeline for implementation was mentioned. Our ambition is to implement the provisions to give the regulators the powers they need to take tougher action against water companies for the next investment period, which is due to start in April next year.

The use of delegated powers was mentioned by the noble Duke, the Duke of Wellington, the noble Lord, Lord Sandhurst, and my noble friend Lady Young of Old Scone. I want to reiterate the reassurances I made in my opening speech that the provision of delegated powers will be subject to appropriate scrutiny and safeguards. We believe the powers are necessary to ensure that the provisions in the Bill keep pace with the changing requirements on the water industry and the changing expectations of customers. A full justification for the inclusion of delegated powers in the Bill is available through the delegated powers memorandum which has just been published.

On the statutory instruments for new penalties, we will be consulting on whether new automatic penalties can be used. Parliament will debate and vote on secondary legislation before any changes are made, so we intend to bring that before the House.

A few noble Lords mentioned local issues. The noble Earl, Lord Devon, talked about Devon, not unexpectedly, and my noble friend Lord Lipsey talked about the River Wye. I was impressed that he got away with that word. When I was in the other place and we had a similar debate, I got ticked off and had to change what I had said. But we are concerned about the issue of poo in the River Wye and he is right to raise it. There are also issues in Cumbria, where I live, around Lake Windermere and the other lakes, as mentioned by the noble Lord, Lord Inglewood. This is something that I personally feel we need to sort out. Our national parks are hugely important. They should be peaceful, beautiful places, not places that have been damaged by sewage overspills and other pollution. I reassure noble Lords that cleaning up iconic sites such as the River Wye and Lake Windermere is a top government priority. We want to get this sorted. The 2024 price review package that I mentioned earlier will include funding for improvement projects at priority sites and we are also working closely with the Welsh Government, particularly on the issues around the River Wye.

I am just about out of time. If I have missed anything that I should have answered, we will of course check Hansard and I will get back to people in writing, but once again I thank all noble Lords who have spoken today for their valuable contributions. It is clear that we agree on the importance of addressing issues in the water sector swiftly and decisively and that there is a consensus on the core aims of the Bill. The water industry really does need an overhaul, so I look forward to continuing constructive engagement with noble Lords. My door is always open. I commend the Water (Special Measures) Bill to the House and beg to move.

Bill read a second time and committed to a Committee of the Whole House.

Wild Atlantic Salmon

Baroness Hayman of Ullock Excerpts

Thursday 12th September 2024 Grand Committee

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

My Lords, I am pleased to respond to this Question on wild Atlantic salmon. I thank the noble Lord, Lord Forsyth, for raising this important matter, and all noble Lords for their speedy contributions—it is a shame that we did not have longer. As the noble Lord, Lord Roborough, said, the noble Lord, Lord Douglas-Miller, did a lot to draw attention to this while he was the Minister, and I thank him for his work because not enough attention has been paid to it in the past.

I acknowledge the importance of wild north Atlantic salmon, a protected and iconic species. Young salmon undergo a complex transformation so that they can leave our rivers and migrate thousands of kilometres to feed in cold north Atlantic waters. These salmon spend at least a year in the Atlantic before returning to our rivers to spawn. But, as we have heard, over the last 30 to 40 years there has been a significant and ongoing decline in salmon stocks, not only in UK rivers but across much of the north Atlantic. We have heard some very frightening figures for the rapidity of that decline.

Historically, there has been a strong tradition of commercial and recreational salmon fishing right across the United Kingdom, bringing in tens of millions of pounds annually. Now, there is only limited commercial salmon fishing in Scotland, and recreational salmon fishers operate largely on a catch-and-release basis to protect the remaining stocks, as we have heard.

The pressures facing Atlantic salmon are serious. They are wide ranging and often difficult to manage. As we have heard, they include fishing, climate change, habitat degradation, invasive species, disease and genetic introgression, to name just a few of the challenges facing the industry. Without increased conservation efforts, there is a real risk that we will see our remaining wild salmon stocks drop further—the noble Lord, Lord Forsyth, was clear on this in his introduction. As other noble Lords have said, according to the International Union for Conservation of Nature’s red-list criteria, Atlantic salmon are now endangered in Great Britain and near threatened globally.

Due to the Atlantic salmon’s huge geographic range, it is vital that we work with international partners to protect this species. The 1984 convention for the conservation of salmon in the north Atlantic put an end to almost all fishing for Atlantic salmon over 12 nautical miles from shore and established the North Atlantic Salmon Conservation Organization—NASCO —of which the UK is a member. Measures agreed by NASCO have resulted in significant further reductions in fishing effort and have driven improvements in salmon management more broadly.

Having said this, stocks are still not recovering, so the Government welcome NASCO’s recently published strategy and action plan, which aims to prioritise and drive actions necessary to slow the decline of wild Atlantic salmon populations and demonstrate that restoration is possible. The target for this is within the next 10 years. NASCO will now focus on increasing our understanding of the pressures on salmon; on developing best practice around the management of salmon habitat, aquaculture, stocking and fisheries management; and on increasing collaboration and accountability for the delivery of salmon protection work.

Our domestic situation and approach echo the international picture. But, before delving into this, I should clarify that, although Defra leads on our international salmon work, domestic salmon policy is a devolved matter where it happens in Scotland, as we have heard. Between 2014 and 2020, commercial salmon netting was banned in Northern Ireland, Wales and England, and, in 2016, a prohibition on retaining any salmon caught in coastal waters was introduced in Scotland.

Recreational catch and release rates are between 89% and 96% across the UK. This has been achieved through a combination of voluntary and mandatory measures. Despite this, most recent stock assessments continue to show a downward trend, with the majority of the UK’s salmon rivers having unsustainably low salmon populations.

I am fortunate to live alongside a river myself. The River Marron is a salmonid river, so I have personally seen what is happening and am aware of the stark reality of the situation. However, there are ways we can improve things and there is some hope. For example, a few years ago on our land, a weir was removed from our river to aid the passage of salmon. There are other examples where removing barriers to free up the passage of Atlantic salmon has assisted an increase in salmon numbers, such as on the Derbyshire Derwent, Yorkshire Don, River Calder, River Dee and River Tweed, but clearly, we need to do more. We need to build on this to restore stocks on more salmon rivers. It is too early to confirm specific actions in England, but we have committed to clean up Britain’s rivers and to speed up nature’s recovery. I want to ensure that salmon and other migratory fish see the greatest possible benefit from these commitments.

I will now address some of the specific points raised by noble Lords today. Farmed fish and their welfare was clearly central to the debate, and we want to see the highest standards of animal welfare. Of course, the welfare of farmed animals in Scotland is a devolved matter for the Scottish Government to address, but I consider this to be a matter that we also need to take seriously as a Government. I will be writing to Mairi Gougeon to ask her to set out clearly what protections are in place, the levels of mortality, sea lice and antibiotic use, as well as the number of escapees—how many salmon are getting out of these farms—so that we have a clearer picture of the situation in Scotland. I am also looking to arrange meetings with my counterparts in the devolved Administrations and will discuss this, among other matters.

My noble friend Lord Grantchester talked about the importance of healthy peatlands. This of course is also devolved in Scotland, but we think that healthy peatlands are incredibly important for restoring nature and improving salmon stocks. The noble Lord, Lord Vaux, talked about the Sitka spruce. Again, in Dumfries and Galloway that is a devolved matter, but I think we need to see an end to forestry monoculture. I have discussed this with Forestry England, and I know that is the approach that it is taking.

The noble Lord, Lord Forsyth, talked about moving to more sustainable salmon farming and the noble Duke, the Duke of Wellington, talked about the organic farm that he had seen in Ireland. I am aware that AquaCultured Seafood Limited is seeking to build the UK’s first commercial land-based salmon farm in Grimsby. Land-based salmon farming does not put additional pressure on wild salmon populations in the way that open-net salmon farming does, because the fish are then isolated from that environment. As a Government, we are encouraging sustainable innovation in the salmon farming sector to increase our environmental standards. I would be very happy to look at a visit to an organic salmon farm and I thank him for suggesting that.

Predation was raised by a number of noble Lords: the noble Earl, Lord Shrewsbury, and the noble Lords, Lord Forsyth, Lord Thomas and Lord Bellingham. Given the poor status of salmon stocks predation may, under certain conditions, have significant impacts—we are aware of that. It is slightly nuanced, in the sense that the predators are often protected themselves, so we need to be careful about how and when such predators can be managed, but it is something we are very aware of.

The noble Lord, Lord Thomas, mentioned the Save the Spring project. To be honest, I did not know much about it, so if the noble Lord would like to send me some more information about it I would be really interested to take a look. Likewise, the noble Earl, Lord Shrewsbury, mentioned the project on the River Frome. My daughter has just moved to Frome, so this is something I should take an interest in.

The noble Earl, Lord Caithness, and the noble Lords, Lord Bellingham and Lord Roborough, talked about by-catch and netting of salmon. This could well be a contributing factor to declining wild salmon populations, so we are actively working with NASCO to understand this risk better. Following this year’s annual meeting, at the UK’s request and with agreement from other parties, NASCO has submitted a request to the International Council for the Exploration of the Sea to include salmon on its by-catch monitoring list in order to help us better understand the scale of the issue and inform any mitigations.

[Lord Bellingham (Con)]

I thank the Minister for giving way. It is not just by-catch that is of concern but international vessels that are fishing using sonar deliberately and specifically for salmon. They may be wiping out whole shoals of fish at one time.

[Baroness Hayman of Ullock (Lab)]

The noble Lord makes a very important point. I thank him for reminding me of it.

The noble Lord, Lord Roborough, also talked about the impact of barriers. Between 2019 and 2023, the Environment Agency and its partner organisations mitigated 58 barriers on England’s salmon rivers. Following that, the Environment Agency is conducting a review of further barriers to fish passage and intends to make recommendations on what government support is required to further move this on. We will consider that in due course.

The noble Viscount, Lord Trenchard, talked about hatcheries and stocking. NASCO has this year reviewed and updated its stocking guidance to further clarify the risks associated with stocking practices and appropriate mitigations. This is something else that the Environment Agency is reviewing.

The noble Lord, Lord Moynihan, raised the issue of the River Wye, which is an issue that we fully recognise. Natural Resources Wales and the Environment Agency are working with a number of different agencies and organisations. I am sure he is very aware of this, but I would be very happy to work with him to move forward with this issue, if he has input that he can bring.

The noble Earl, Lord Shrewsbury, mentioned sand-eels. I am afraid I will have to write to him on that matter.

Finally, my noble friend Lord Campbell-Savours asked some detailed and specific questions. With the limited time I have—I have only a few seconds left—I will have to respond to him in detail in writing.

To conclude, I once again thank the noble Lord, Lord Forsyth, for securing this important debate. I assure all noble Lords that I am committed to taking action in this area.

[Lord Forsyth of Drumlean (Con)]

I think we still have some time, so can I just pick the noble Baroness up on the point she made about predators and how some of them are protected? That is indeed the case, but it is because they are protected that the populations have grown so strongly. It makes them a great threat to this fish, which is an endangered species.

I will also pick up the point that she made about devolved matters. Now that this has been designated as an endangered species, and with the Government’s international treaty obligations to deal with that issue, surely it is incumbent on her and her department to bring the devolved nations together, as she indicated she was prepared to do, to work out a plan so that the United Kingdom’s international responsibilities in respect of protecting and maintaining biodiversity are met.

[Baroness Hayman of Ullock (Lab)]

The noble Lord just made some really important points. I am extremely keen to do joined-up work with the devolved Administrations because that is the way we move forward, particularly on issues such as this. As I said, I will write to the relevant Minister in the Scottish Parliament to look for a meeting. If we are to make progress on these kinds of issues, we have to work together. It is the only way we will move forward.

Environment and Climate Change Committee Report: An Extraordinary Challenge: Restoring 30 per cent of our Land and Sea by 2030

Baroness Hayman of Ullock Excerpts

Wednesday 11th September 2024 Grand Committee

[Lord Blencathra (Con)]

My Lords, in standing in for my noble friend Lord Roborough, who could not be present at the start of this debate, I must tell the Committee that the last time I clutched a Dispatch Box desperately seeking inspiration was Thursday 20 March 1997. I was the last Conservative Minister to answer a departmental Question at 3.15 pm, immediately followed by John Major answering his last PMQs, and then we prorogued for the general election. Some 28 years later I am an example of His Majesty’s policy of patching up and mending old things, and putting them to work again.

I need to declare my interests as on the register but to go further too. I remain for the next three months the deputy chair of Natural England. I have checked with the clerks and, while I can talk factually about nature, Natural England, this report and the last Government’s response, under the Addison rule I cannot speak officially for Natural England, nor answer questions about its activities or advocate its policies—only the Minister can do that. Because of my position in Natural England, I am automatically on the Joint Nature Conservation Committee, so I leave it to the Minister to say what a brilliant job we are doing in Natural England.

I welcome the Minister to her post. There is no one better on the Labour Benches in the Lords to do it, and she is an excellent addition to the Defra ministerial team.

I commend the noble Baroness, Lady Parminter, and all the noble Lords who conducted the 30 by 30 inquiry, on their recommendations. I also commend the 16 noble Lords who have spoken today. They made excellent points, including in the superb speech by my noble friend Lord Goldsmith of Richmond Park, who is welcome to take this seat back any time he likes.

A lot has happened since the report was published in July 2023, and not just the change of Government. Noble Lords have read the last Government’s response, and in the changed circumstances I see no point in rehashing it all today. The report called for national parks to be given a new statutory duty to protect nature, and Section 245 of the Levelling-up and Regeneration Act imposed a new duty to do just that; I hope that my noble friend Lord Harlech will be reassured by that. As I recall, that was the Lord Randall amendment in the Lords.

The report called for local nature recovery strategies to be given statutory underpinning in local development plans. Schedule 7 to the levelling-up Act did that; I believe that was the Baroness Parminter amendment. On SSSIs, I say to my noble friend Lord Harlech that Natural England has now moved fully to assessing the condition of SSSI features at the site scale, and the focus is on bringing SSSI condition assessments up to date and in line with the EIP target to complete this by the end of January 2028—although that is highly dependent on not cutting Natural England’s grant in aid.

Natural England is also progressing the EIP target to have action under way and on track by January 2028, which will bring 50% of SSSI features into favourable condition. Natural England is continuing to look for improvements in the approach to monitoring —to make more use of modern technology, such as earth observation, to increase the contribution of participatory science, and to utilise condition assessments gathered by third parties, such as ENGOs, which my noble friend Lord Lucas called for—and we aim to grow that.

I say to the noble Baroness, Lady Young of Old Scone, that I have been involved in about six new SSSI designations or extensions. They may not be many in number but two were absolutely massive, including a large one down in west Cornwall—which was slightly controversial—and another large one near RAF Fairford and the waterworks around there.

The report underplays the role played by national nature reserves, which I argue are a legitimate component of other effective conservation measures. I submit that the country’s NNRs meet the OECM criteria defined in CBD 15 and in the Government’s nature recovery Green Paper. There are currently 221 national nature reserve sites, which comprise 110,000 hectares or 427 square miles. That is 0.85% of England’s area. Natural England manages 134, the Wildlife Trusts 50, the National Trust 20, local authorities 29 and the RSPB, National Parks, other NGOs and other government agencies 34.

Let me cite a superb example: the new, supersized Purbeck Heaths NNR announced in 2020. Seven organisations manage it: Natural England, the National Trust, the RSPB, the Amphibian and Reptile Conservation Trust, the Dorset Wildlife Trust, Forestry England and the Rempstone Estate. The new NNR is larger than the original NNR, which was 996 hectares—it is now 3,331 hectares, a 234% increase. It is better, as it is increasing biodiversity and creating a more dynamic and resilient landscape, and it is more joined up, as it has a huge continuous grazing area and landscape-scale objectives.

Another excellent example is the Somerset Wetlands “super” NNR which links up six pre-existing national nature reserves on the Somerset Levels and Moors. It is managed in partnership by Natural England, the Environment Agency and five other NGOs. The crucial point is that some say NNRs should not be included in the OECM category nor count towards 30 by 30, since they are not statutorily protected—but that is a feeble point. These organisations are all approved by Natural England to manage reserves properly and bring about species recovery and conservation. Thus, I say to the Minister that they should be included as part of our 30 by 30 targets, since they may be managed by other effective means, as my noble friend Lord Lucas pointed out.

Finally on national nature reserves, paragraph 83 of the report said:

“We recommend that the Government enable and resource Natural England to develop and publicise accessible digital and offline tools and communications to enable members of the public to learn about and engage with their local protected areas”.


I agree entirely but, before doing so, we need to sort out proper online publicity for the 134 national nature reserves run by Natural England. I invite everyone, including the Minister, to search “visit a national nature reserve” on Google. Up will pop some very sexy sites with superb photos, but they are all from the National Trust, the RSPB, the Wildlife Trusts and NNRs run by similar organisations. Down that list somewhere will be a GOV.UK site called “National Nature Reserves in England”. Click on that and it will reveal 11 regional categories. Click on “North West NNRs” and it will reveal seven more categories. If the Minister clicks on “Cumbria”, that will list 37 NNRs—without a single map to help you. If she clicks on “Bassenthwaite Lake”, she will get this:

“The reserve is a shallow, balanced nutrient lake in the north-west of the Lake District. Main habitats: open water”.


To paraphrase Bob Geldof, is that it? It is the most beautiful landscape—after Ullswater and Blencathra, of course—and there is not a single photo of it, nor of any other national nature reserve, featured on GOV.UK. No wonder the NNRs managed by the other organisations have five times the visitor numbers. We all want people to access nature for the benefits it brings to health. I hope the Minister will have far more success than I have had over the last six years trying to get a dedicated site for national nature reserves, rather than buried in the bowels of GOV.UK.

The report, in paragraphs 73 to 75, urges the Government to prioritise working with the overseas territories. As the Minister will know, 94% of the United Kingdom’s biodiversity is not in Great Britain and Northern Ireland but in our 14 overseas territories, their unique islands and their 6.4 million square kilometres of ocean. The Darwin Plus scheme applies to our OTs.

I was the Minister way back at the first Earth Summit in 1992 in Rio, which launched the Darwin Initiative. I must admit, as a new, five week-old Environment Minister, I had not a clue what I was launching. I read the brief and had no idea how successful the scheme would turn out to be. Now, the Government have funded over 1,275 projects at a cost of £230 million, achieving both biodiversity conservation and multi- dimensional poverty reduction. Twelve years ago, I worked with our overseas territories for a few years and saw at first hand the splendid work the Joint Nature Conservation Committee did in our OTs and how the OTs desperately wanted more JNCC input, if only it could afford it.

Minister, it is an easy and impressive win for us in here in the United Kingdom to support the Blue Belt programme and the overseas territories biodiversity strategy being worked up at this precise moment by the JNCC and Defra. The JNCC has also done work on creating blue finance criteria, so that companies can invest in nature recovery projects in our United Kingdom’s oceans and our overseas territories’ seas and know that it is not genuine and not bluewashing.

The report made some very important recommendations on marine monitoring, and discussing all the implications could be a full day’s debate in itself. The last Government’s response pointed to the targets in the EIP and said that monitoring is very complex. Indeed it is. Natural England identified our marine protected areas in just 10 years. That was a splendid achievement, but identifying and designating them is one thing; managing them is another. All of us here can stand on a piece of land and have a fair idea of what it is, its condition and what we think we would like to do to improve it, but we can stand at the edge of the ocean and we have not got a clue what is happening under the surface. If we cannot measure it, we cannot manage it.

All I can say today is that I encourage the Government to step up all marine monitoring efforts, which are essential for biodiversity and carbon capture and form part of our 30 by 30 target. I agree entirely with my noble friend Lord Caithness, the noble Baronesses, Lady Boycott and Lady Jones of Moulsecoomb, and my noble friend Lord Banner, on bottom trawling. I have been deeply involved in all this for the last six years and, as your Lordships know, I can bore for England—or Natural England—on it, but let me give some general observations and advice to the Minister, if I may be so impertinent.

Much of the Government’s growth talk has been about building houses, and more houses are urgently needed. I accept that not all so-called green-belt land is sacrosanct and there are poorer bits which can be built on, but genuine high-quality green belt must be protected. Growth and nature are not exclusive; they are complementary. If the Government build houses on grey belt land, they must ensure that there is green space right around them for gardens, space for nature and rewilding, tree-lined streets and not just a token little green park 15 minutes away. I agree with my noble friend Lord Gascoigne, who made that exact same point. Nature recovery is essential in our towns and cities, not just the countryside.

On the countryside, I appeal to the Minister to maintain the £2.4 billion expenditure on ELMS and innovation grants. Farmers are key to nature recovery, as well as producing the food we need.

My main disagreement with my noble friend Lord Banner is that, in my experience farmers excel with carrots rather than sticks. I hope the Government will take on board the points made about tenant farmers by my noble friends Lady Rock and Lady McIntosh of Pickering.

Also, Minister, please get the message across to all those doing big infrastructure projects to consult Defra’s arm’s-length bodies, including Natural England, at a very early stage to look at what protected species might be affected. Workarounds can then be done in the early stages, but if they wait until the bulldozers are about to demolish the bat roosts, the ancient woodlands or the Ramsar sites, then delays will occur—delays caused not by the intransigence of Defra’s arm’s-length bodies but by the law.

Over the last few years, the Forestry Commission, the Environment Agency and Natural England have liaised to increase co-operative working on the ground. That makes sense. If we are to deliver 30 by 30, then we have to work together. If, for example, we look at a river catchment area, the Environment Agency will have a view on river flows and dredging, the Forestry Commission will have a view on what trees should be planted on the banks or nearby and Natural England will have a view on what other flora and fauna, such as beavers or voles, could be present. By co-operating, we get the best possible solutions to reduce flooding, increase woodland and recover nature and wildlife, and that will help deliver 30 by 30. Working together would assist in removing the uncertainty that concerned the noble Earl, Lord Devon. My plea to the Minister is that all the Ministers, in the Commons and here, and the directorates in Defra collaborate in the way that the three ALBs I mentioned are collaborating on the ground at operational level.

As the Government look to create three new national forests and nine new river footpaths, deliver the best possible nature recovery programmes in ELMs and revise their EIP targets, can we ensure, for example, that the forests link in with existing SSSIs, national nature reserves or landscape recovery projects to create wildlife corridors which are more joined up and protected, as my noble friend Lord Gascoigne suggested? Our national forests could also be part of our 30 by 30 targets, as well as the ELM and landscape recovery schemes, provided they meet the criteria. The take-up of schemes for landscape recovery has been incredibly excellent and is beginning to make a real difference for nature recovery: that is farmers volunteering to farm for food and nature. A time may soon come when these could also be included in our 30 by 30 target, provided that they meet the quality thresholds.

Let me conclude on this note: the one area where the Government cannot blame the Tories—

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

Is there just one?

[Lord Blencathra (Con)]

There is more than one, but one area is our Environment Act, which has given us the tools for nature recovery for the first time in our history. I invite all colleagues to look at Sections 98 to 116, which include “Biodiversity gain”, the “duty to conserve and enhance” nature, “Local nature recovery strategies”, “Species conservation strategies”, “Protected site strategies”, controlling tree felling and “Habitats Regulations”. Add in “Conservation Covenants” in Part 7 and the ELM schemes from the Agriculture Act and we have the greatest raft of measures for nature recovery that this country has ever seen. As nature recovers in those areas, then they can become protected and could qualify for 30 by 30. I suggest to the noble Baroness, Lady Jones of Moulsecoomb, that these powers are better than the new commission she suggested, but I do wish her a speedy recovery for her trusty right boot, provided it is not used on me.

Indeed, the Labour manifesto, on page 58, calls it “our Environment Ac.t” I did not expect it to say, “Michael Gove’s brilliant Environment Act”, but what I take from that wording is that they will tweak the EIP targets and tweak some other things, but they will not undermine the excellent new levers in our Environment Act. Let us use every lever in that Act, not just to bend the curve on nature loss, but to achieve real, sustained and progressive recovery of nature in this country.

[Baroness Hayman of Ullock (Lab)]

My Lords, I thank the noble Baroness, Lady Parminter, for securing today’s debate and for her excellent chairmanship of the committee, which came out with this excellent report. I thank all members of the Environment and Climate Change Committee for their work. This has been an excellent and important debate. This is an area in which is challenging to move forward, and it is something that we need to get a grip on.

I thank noble Lords who have kindly welcomed me today and over the past few weeks. People have been generous and supportive, and I appreciate it very much. It is genuinely an honour to hold this position, following the example of the noble Lord, Lord Goldsmith, sitting opposite. I welcome the noble Lord, Lord Blencathra, to his role. As I am going to have to follow him in every single debate, it could be quite fun.

The report represents a wealth of expertise and insights into the state of nature in this country and offers many valuable recommendations on how we can make the changes that we need to rise to what the report calls “an extraordinary challenge”. I assure noble Lords that this Government are committed to charting a new course and ensuring that nature is truly on the road to recovery.

The Secretary of State has confirmed the Government’s intention to launch a rapid review of the Environmental Improvement Plan, to make sure it is fit for purpose so that it will deliver on our ambitious targets, including 30 by 30. We therefore think that this debate and consideration of the recommendations in the committee’s report are very timely. We want to make sure that those recommendations are properly considered as we carry out the work of the review of the EIP. While this work is clearly newly under way—we are a very new Government—I will do my best to address and respond to the points raised during the discussion as best I can.

As we have heard clearly today, our biodiversity is in crisis. Without nature we have no economy, no food, no health and no society. However, we now stand at a moment in time when nature needs us to defend it. Critical to those efforts is what we have been debating today: the 30 by 30 target to protect 30% of land and sea by 2030. As we have heard, it was the UK’s international leadership that helped to secure a global 30 by 30 target at the UN biodiversity summit in December 2022. I thank the noble Lord, Lord Goldsmith, for keeping going on this issue until he achieved it. What is the word I am looking for? Persistence, that is the word. Of course, he was supported in that by the noble Lord, Lord Benyon, and others. Their leadership made an ambitious commitment here in the UK, which we have to deliver on land and at sea.

Targets are meaningless if you do not actually deliver them, so I am pleased that the new Labour Government have renewed that commitment, and we are now focusing on how we can deliver it for the long term. That will be critical to supporting our wider priorities, including cleaner rivers, lakes and seas—the first of two water Bills will be coming shortly—and boosting food security; we have heard about farming. Those priorities also include protecting communities from the dangers of flooding and delivering our legally binding environmental targets.

With just over five years remaining until 2030, we are rapidly approaching the halfway point of this decade, yet unfortunately we are still one of the most nature-depleted countries in the world. That is why I am grateful for the contributions today; they are valuable in helping to inform how we move forward.

What is clear is the sheer scale of the extraordinary challenge we are facing. We have not yet seen the urgent step change that the report rightly calls for. Achieving 30 by 30 will require a clear vision and a delivery strategy to drive the urgent progress we need, but one that draws on the work already taking place across government and beyond. The 30 by 30 programme is about bringing these efforts together to ensure that more nature recovery actions have a lasting long-term legacy.

Importantly, it is also about collaboration between and right across sectors. The Government intend to take immediate action to realise the urgent step change needed, and are currently in the process of reviewing our approach. Later this year we hope to confirm the criteria for land that counts towards 30 by 30 in England in order to set a clear and ambitious standard to ensure that only areas that are effectively conserved and managed can contribute towards the commitment. In addition to confirming the criteria, later this year we will begin piloting the process for recognising land that already meets those criteria.

Building on the committee’s recommendations, that will help us to develop a process to identify land beyond protected areas that meets the 30 by 30 criteria and can be formally recognised as other effective area-based conservation measures, as was mentioned in the debate. These areas represent a unique opportunity to take a more inclusive approach and recognise where nature is being effectively protected outside of those designated sites. We desperately need a clear strategy to chart our course to meeting that target, and it is important that we continue to drive that work forward. This includes ensuring that our protected areas are delivering as they should be for nature.

Our national parks and national landscapes and the Broads—collectively, our protected landscapes—are extremely special places. We know that they cover nearly one-quarter of England and contain around half of England’s priority habitats, but we also know that they continue to suffer the effects of climate change and biodiversity loss. The noble Baroness, Lady Jones, mentioned Windermere and pollution. This is clearly an area that we have to tackle quickly, which is why we are prioritising our water Bill. We are committed to ensuring that these iconic landscapes become wilder and greener and deliver a significant contribution towards the 30 by 30 target in England.

At sea, the Government have taken significant steps to protect our marine environment. We have 181 marine protected areas, including three highly protected marine areas, and as a priority we need to work out how we are going to properly provide protection for them.

The noble Baroness, Lady Boycott, and others talked about bottom trawling. I assure noble Lords that we think it is extremely concerning and we understand its negative impacts. Our marine regulators have assessed all fishing activities on the protected species and habitats in our MPAs and identified bottom-towed fishing as a major pressure, so it is very much on our agenda. To support our 30 by 30 target, the Marine Management Organisation has introduced by-laws, which we heard about from the noble Baroness, Lady Boycott, to restrict the use of bottom-towed gear over sensitive habitats. More recently, in March the MMO introduced a new by-law restricting the use of bottom-towed gear over rock and reef habitats in 13 MPAs. That means that around 60% of our marine protected areas are now protected by by-laws that limit the use of damaging fishing gear used for bottom trawling. We are pushing that further and continuing to work on strengthening protections. Evidence was gathered last year on the impacts of fishing on seabed sediments, and further by-laws are being produced for consultation. So I assure noble Lords that we are taking the issue seriously and moving forward on it.

We are aiming for 48% of marine protected species and habitats to reach a healthy state by 2028, with the remainder in recovering condition. Natural England and the JNCC are developing an MPA monitoring strategy.

--- Later in debate ---

[Baroness Hayman of Ullock (Lab)]

I will try to remember where I was and what I was talking about. Oh yes—I was making lots of promises, was I not?

I talked about the fact that we are developing an MPA monitoring strategy in order to address progress on marine areas. We want to deliver this in March 2028, basically to make sure that we are making continuous progress in this area.

I turn to the specific points made in the debate; if I miss any questions, I will of course write to noble Lords afterwards. I just want to confirm that, later this year, we will confirm the criteria for land counting towards 30 by 30 in England; that was raised by a few people.

The requirement for long-term protection is one issue that was raised; clearly, it is really important. We know that committing land to long-term management can be an extremely challenging prospect for landowners, even those who want to deliver and work for nature conservation; we know that this has been hampered by short-term funding cycles and management agreements. What we are actively doing at the moment is considering the committee’s recommendation, as we review our approach to achieving 30 by 30, to ensure that we establish the most appropriate timescales for the long term and support people who want to work to that.

A number of noble Lords asked about SSSIs. In particular, my noble friend Lady Young of Old Scone talked about the importance of how they are counted, while the noble Baroness, Lady Parminter, talked about the quality of SSSIs being of critical interest and importance. We recognise the committee’s recommendation that, in order to count towards 30 by 30, they have to be in good condition. We are looking at how we can reflect the condition of SSSIs in our approach.

The noble Baroness, Lady McIntosh, asked specific questions regarding Natural England’s resources. Some of them were quite complex, so we will write to her with the detail.

The monitoring of protected sites also came up. The noble Lord, Lord Banner, asked about monitoring, as did my noble friend Lord Whitty, who is no longer in his place. The environmental improvement plan was mentioned; I mentioned it previously.

The noble Lord, Lord Lucas, asked specifically about the six-year cycle for looking at SSSIs. I want to let him know that the Joint Nature Conservation Committee has moved from a six-yearly assessment cycle, so that is not how it is going to continue. Instead, we are moving to a risk-based process for SSSIs, so that we can be much more targeted and efficient in how we assess them. As part of this, Natural England is developing a long-term prioritised monitoring programme and is working to make better use of new technologies such as remote sensing.

Citizen science and partnership working were mentioned. I assure noble Lords that citizen science is already being used to support assessments; for example, we are working with organisations such as the British Trust for Ornithology and the Botanical Society of Britain and Ireland in this area.

The noble Baroness, Lady Jones, asked about protected landscapes. Again, protecting these important landscapes is obviously incredibly important. The new Government are committed to working on how we can improve our protected landscapes so that they offer more to 30 by 30—basically, achieving their full potential going forward, because we know that, at the moment, they are not.

The noble Baroness, Lady Rock, asked about continuing the Farming in Protected Landscapes programme. I am not fobbing her off in any way at all and will come back to this when we talk about the budget but, at the moment, we are simply still looking at the spending review. I assure noble Lords that we have not made any final decisions about this issue, but clearly will be doing so.

The noble Lord, Lord Gascoigne, raised the review of the environmental improvement plan, which I mentioned earlier. I assure him that the review I mentioned will be completed by the end of the year. The idea is to provide a clear vision on how we are going to use it to achieve our environmental goals.

Marine monitoring, including HPMA monitoring, was mentioned by a number of noble Lords. The committee made a recommendation on expanding the current marine monitoring programme, both inshore and offshore. I am sure noble Lords are aware that this is an extremely complex process that requires long-term vision and, of course, investment. We want to work in close collaboration with Natural England, the JNCC and Cefas on what the future of that marine management should look like and the best practice to deliver against the statutory targets that have been set. It is also important that any data they collect complies with accessibility standards and is publicly available.

The noble Earl, Lord Devon, who has kindly given me apologies for having to get his train, asked about marine net gain. For the record, we are currently working to develop options, including timescales for the operation of that policy. It has not disappeared; we will provide more information in due course.

Further on marine, the noble Lord, Lord Blencathra, asked about the Blue Belt. I can give him a firm yes; we support the Blue Belt, which is very important.

The noble Baroness, Lady Jones, asked who the Minister responsible for international development is. I can confirm that it is Mary Creagh MP.

The noble Lord, Lord Blencathra, asked about overseas territories, including Darwin Plus. The committee rightly recognised that the overseas territories will be integral to the UK’s contribution to the global biodiversity framework goals and targets, and calls for effective partnership working. Clearly it is for the individual territories to decide how they want to work within this and how they want to work with us, but we are working closely with the Governments and Administrations of the overseas territories to develop a new overseas territory biodiversity strategy. I assure noble Lords that we are working hand in hand and looking to move forward in this area.

The noble Baroness, Lady Jones, asked about the Global Ocean Treaty. I confirm that we fully agree with her on the importance of the Agreement on Biodiversity beyond Natural Jurisdictions for protecting our marine environment, especially for achieving 30 by 30 for the ocean under the global biodiversity framework. It is important that we show progress on that; we want to make progress and to work with the international community to deliver on these agreements. My understanding is that at the moment the FCDO and Defra teams are working together to come up with a realistic timeline to introduce the necessary legislation for UK ratification.

The noble Baroness, Lady Miller, asked about citizen science and partnership working. These are critical. That is something that we are building through the work we are doing in looking at how to achieve results. The role of partners is going to be incredibly important. This is a huge collaborative effort and we have to work in partnership. The public sector, the conservation sector, farmers, developers and business: we all have to come together if we are genuinely going to achieve these targets.

The noble Earl, Lord Caithness, asked about partnership details for specific organisations. I will just say that we are looking right across the piece to see how we can deliver with partners.

My noble friend Lord Grantchester mentioned the devolved Administrations. This is an important opportunity to work collaboratively with the devolved Administrations as we review and develop our approach here.

The noble Lords, Lord Gascoigne and Lord Harlech, asked about building and the environment. The green belt in particular was mentioned. We are consulting on what we are referring to as the grey belt, which are the areas that are designated as green belt but are not of good standard. Part of the reason for consulting on and talking about the grey belt is to make sure that we protect the green belt that is of value—pulling out the areas that are not, but protecting the areas that are important.

There was a lot of discussion around ELMS. I shall try to cover a few bits but clearly time is ticking on. Just to confirm, we are absolutely committed to ELMS. My honourable friend Daniel Zeichner, the Farming Minister, is working really hard, talking to stakeholders and looking at how we develop ELMS to make it more fit for the future, particularly around such things as nature-friendly farming. Our manifesto said that

“food security is national security”:

we want to work with farmers and other stakeholders, including tenants. We take the needs of tenants and their rights very seriously. There is a lot of good work going on there.

That brings me to the Budget. As I say, we are still in discussions and nothing has been agreed or decided yet on whether there will be any cuts to the farming budget.

The noble Lord, Lord Lucas, mentioned the OECMs. Again, we will be looking at the committee’s recommendations around this to develop a process to identify land outside the designations. In that same vein, the noble Lord, Lord Blencathra, talked about national nature reserves. I just say that many of these are already in SSSIs, so already contributing.

Finally, the right reverend Prelate the Bishop of Norwich talked about forest schools. My granddaughter has just finished three years at a forest school. She has thrived and grown and it has been the most wonderful experience for her, so I have huge admiration for the work that they do.

Once again, I thank the noble Baroness, Lady Parminter, for securing today’s debate and her committee for all its work. It is a huge piece of work and can greatly inform the Government as we actively consider the recommendations it sets out. I look forward to working constructively with everybody in this Room as we go forward and will write if I have missed anyone’s question.

Water Companies: Financial Resilience

Baroness Hayman of Ullock Excerpts

Tuesday 23rd July 2024 Lords Chamber

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

My Lords, Ofwat monitors the financial position of water companies, taking action when companies need to strengthen financial resilience. Ofwat has strengthened its powers to improve financial resilience, including requiring water companies to stop paying dividends where that is compromised and preventing customers funding executive bonuses where companies do not meet performance expectations. Our water Bill will put water companies under tough special measures by strengthening regulation, as a first legislative step towards improving the sector.

[Lord Sikka (Lab)]

My Lords, I welcome the Minister to her post but let me illustrate the problems by referring to Thames Water. Its shares are worthless and its bonds are close to junk status, while 38% of its revenues service £18 billion of its debt. Based on the debt to asset ratio, Thames Water has a gearing of 80.6%; Ofwat’s target is 55%. The debt to equity ratio used by credit rating agencies gives it a gearing ratio of 1,000%. No amount of regulatory tinkering can change the fundamentals here. The Government need to create some certainty by nationalising it, so can the Minister tell us when that will happen, please?

[Baroness Hayman of Ullock (Lab)]

I thank my noble friend for his very warm welcome. However, the Government have no plans to nationalise Thames Water. It would cost billions of pounds and take years to unpick the current ownership model, during which time underinvestment in infrastructure and sewage pollution would only get worse. We want to improve the situation in the water industry that we find ourselves in as quickly as possible.

[Lord Forsyth of Drumlean (Con)]

My Lords, I welcome the noble Baroness to the Front Bench, but does she accept that simply fining the water companies for not meeting their obligations just adds to the costs of the consumer? Until we do as we have done with health and safety, which is to make the directors personally liable, we will make no progress. Have the Government any plans to do this?

[Baroness Hayman of Ullock (Lab)]

The water special measures Bill that we will bring in front of your Lordships shortly is going to deliver on our manifesto commitment. As well as strengthening regulation, it is designed to make sure that the water industry will be fundamentally changed and transformed. It will ensure that water company bosses are not rewarded with bonuses if a serious environmental breach is committed. It will strengthen and enhance the ability of regulators to bring robust charges against water companies and executives when they have committed offences, including through automatic and severe fines. It will also require that water companies install real-time monitors, so that we can actually see what is going on. I also reassure the noble Lord that this is just a start.

[Lord Cromwell (CB)]

The Ofwat website refers to an £88 billion programme of investment that will go into the infrastructure, and describes this as

“initially … funded by shareholders or through borrowing, with these costs then recovered”

from consumers over five years “and beyond”. Does the Minister have any concern as to whether that money will actually be raised, and does she share my concern about the financial resilience of consumers to pay for it over time?

[Baroness Hayman of Ullock (Lab)]

As the noble Lord quite rightly says, Ofwat has set out a record £88 billion upgrade so that we can deliver the cleaner rivers and seas, and better services for customers, that we need. It is absolutely not right that the public should pay the price for years of mismanagement in the water sector. Any water bill rises are the result of these years of failure, but it is important that we do not put too much on to vulnerable customers, so officials are exploring options for improving affordability measures in the sector.

[Earl Attlee (Con)]

My Lords, is Ofwat fit for purpose?

[Baroness Hayman of Ullock (Lab)]

At the moment we are working closely with the regulators, including Ofwat, to ensure that they are fit for purpose and can deliver what is needed in the sector.

[Lord Whitty (Lab)]

My Lords, further to the question of the noble Earl, Lord Attlee, I speak as a former non-executive director of Ofwat for a few months, and as a former non-executive director of the Environment Agency for a few years. Ofwat was always feeble. The Environment Agency has been rendered feeble by a cut in resources and asking the companies to report on their own homework. What is needed is a new and powerful single regulator for the water sector. Do the Government have plans, at least in the medium term, to move to that?

[Baroness Hayman of Ullock (Lab)]

My Lords, we are working with Ofwat and the water companies to deliver change as quickly as possible. As I mentioned, the first thing we are doing is bringing in the water special measures Bill to try to change the culture within the water companies. We will work on another water Bill that will come forward, and I look forward to working with all noble Lords, including my noble friends, on what that could contain in order to make the biggest difference to the current situation.

[Baroness Bakewell of Hardington Mandeville (LD)]

My Lords, Thames Water is in a precarious state due not only to its financial position but to the poor quality of drinking water and sewage treatment facilities. Are the Government taking action to ensure that those living in the Thames Water area will have access to adequate and safe drinking water now and into the future while they sort out the financial issues?

[Baroness Hayman of Ullock (Lab)]

There is no way we would allow there not to be safe drinking water during the current financial situation. The drinking water directive works extremely hard to ensure that we have safe water in this country. Although Thames Water clearly has financial issues, that should not be affected.

[Baroness Jones of Moulsecoomb (GP)]

I too welcome the noble Baroness to her new post; I am sure she will be superb. How many water companies are currently financially resilient?

[Baroness Hayman of Ullock (Lab)]

I thank the noble Baroness for her welcome. I am sure she has seen the environmental performance assessment that came out today. It reports that most companies continue to underperform and there continue to be a lot of concerns in this area. On the specific question she asked, I will write to her with the proper information so I know I am accurate.

[Lord Moylan (Con)]

My Lords, I also welcome the noble Baroness to her place. In response to the question of the noble Lord, Lord Sikka, she was very clear that the Government did not intend to nationalise Thames Water. However, can she clarify whether she is ruling out, or admitting the possibility of, special administration, which is contained in the current arrangements and is a means by which the shareholders and the debt holders who lost money would be cleared out and the company cleaned up, so to speak, for onward sale on a more robust financial basis? Is that contemplated by the Government as a possible route?

[Baroness Hayman of Ullock (Lab)]

Currently, the regulator is working with the company to look at the best way forward, and the company is looking for further investment.

[Baroness Blower (Lab)]

My Lords, speaking as a Thames Water customer who is not very confident or happy, I was pleased to hear that I might at least have drinking water going forward. All water companies are using financial engineering to overstate their investment and capacity to pay dividends. They all capitalise part of their interest payments, which is, frankly, a highly imprudent policy and was a major reason for the collapse of Carillion. Are the Government content with that?

[Baroness Hayman of Ullock (Lab)]

There are clearly serious problems in the water industry that have been building up for a number of years. We are looking at all options and ways forward to improve the situation, and, clearly, modelling of how companies operate will be part of those discussions.

[The Archbishop of Canterbury]

I join in congratulating the noble Baroness on her appointment. Picking up on the previous question, which is very much the point, is it not true that the shareholders of Thames Water and others have made extraordinary returns by financial engineering, well in excess of what one would expect to make from a utility, which should be low risk and low reward? In looking at the future structure, will the Government put in place measures to prevent the over-return to shareholders by means of financial engineering, and limit the upside so that utilities are run basically for their customers and not simply for the short-term gain of those who have them?

--- Later in debate ---

[Baroness Hayman of Ullock (Lab)]

That is an extremely good point, and very well made. The problem is that we should have had firm action from government to ensure that action was taken much earlier so that money was spent properly on fixing the system, rather than paying dividends and bonuses to company shareholders and not looking at how the company was being financially operated in a way that worked for both customers and the environment.