Independent Water Commission

Debate between Baroness Hayman of Ullock and Earl Russell

Wednesday 23rd July 2025 Lords Chamber

[Baroness Hayman of Ullock (Lab)]

My right honourable friend said in his speech down the other end that the new regulator

“will stand firmly on the side of customers, investors and the environment and prevent the abuses of the past”.

That basically demonstrates that we need to look at the big picture about what went wrong in the past and what we need to do to rectify it in the future. I am sure that we can look at the noble Lord’s suggestions as we move forward to ensure that we have regulation and pricing that are fit for purpose.

[Earl Russell (LD)]

I declare my interest as a board member and director of the Water Retail Company. I thank the Minister for the Statement, and we welcome the report. I am sure the Minister will join me in thanking all the members of the public, charities and NGOs who have done so much work to ensure that we are aware of the level of the sewage crisis and the pollution in our water system. I noticed that there is no direct recommendation in the report to support citizen science. What action will the Government take to support these citizens? What is happening with the water restoration fund?

State of Climate and Nature

Debate between Baroness Hayman of Ullock and Earl Russell

Monday 21st July 2025 Lords Chamber

[Earl Russell (LD)]

My Lords, we on these Benches welcome this Statement, issued in response to the Met Office’s State of the UK Climate report, our most authoritative assessment of the UK’s changing weather patterns. We also very much welcome the intention to make this an annual update.

We see this Statement as a message of hope—that together we can start to reverse the impacts of climate change. Our climate has changed in my very own lifetime. The science is absolute, and our scientists are some of the best in the world. We are as certain of man-made climate change as we are that the earth is not flat. The Met Office report focuses on 2024, when the UK experienced its second-warmest February, warmest May and warmest spring since records began in 1884. The last three years have all been in the UK’s top five warmest on record. Mike Kendon, the Met Office report’s lead author, said:

“Every year that goes by is another upward step on the warming trajectory our climate is on. Observations show that our climate in the UK is now notably different to what it was just a few decades ago”.


The Met Office calculates that the UK is warming at a rate of around 0.25 degrees Celsius per decade, with the 2015-24 period 1.24 degree Celsius warmer than 1961-90. The UK is also getting wetter, with rainfall increasing significantly during the winter. Between October and March, rainfall in 2015-24 was 16% higher than 1961-90. The new normal is even more extreme.

These indisputable ground truths are an urgent and unmistakable call to action. Nature bears witness and suffers these unparalleled and accelerating changes. We are already one of most nature-deprived nations on earth. One-third of our natural species has been lost from UK biodiversity in my lifetime. Nature is struggling to adapt, just as we are. To those politicians who have given up on efforts to tackle climate change and remain happy to take funds from the fossil fuel companies, I say, you offer no solutions and no hope to our children. Like the tobacco lobby of the 1970s, who said, “One more puff of cigarette smoke in your lungs won’t hurt”, they say, “What are a few more tons of CO₂ in our atmospheric lungs?”

The UK green economy grew by 10.3% last year. A green future is our only future, and it is a good future. Global green growth is our future climate solutions, our future energy security, and our future economic prosperity.

Those who say that we cannot afford the cost of preventing climate change never calculate the devastating consequences of not doing so. Analysis from the New Economics Foundation showed that the reversal of climate policies would cost the UK economy up to £92 billion, almost 3% of our entire GDP, and mean the loss 60,000 jobs before the end of the decade. British leadership is global leadership. When we work together at home, we lead the global conversation. We are lucky: we have the knowledge, we have the technology, and we have the time to enact change. We join calls for a return to this powerful cross-party consensus on climate change. We will always seek political co-operation on these common challenges.

It feels as though Labour has found its voice and will improve its communications—and better communications are required. I ask the Government to also tackle the growing problem of misinformation and disinformation. Their own message needs to be more coherent and consistent: less talk of nature protection as a blocker, and more honesty about the complexities and challenges that we face. The nature and climate challenges are interlinked and interdependent. Nature is not only nice to have but essential to all life. Labour’s messaging on nature has been muddled, but I thank the Minister for the amendments that have been brought forward to the Planning and Infrastructure Bill. These are indeed welcome.

It is vital that we build new, clean energy infrastructure, but, equally, we must support nature recovery. This Government must champion the benefits of joined-up actions on climate and nature policies. Labour’s green mission is overly centralised: it is being done to us and not always with us. If Labour fails to work with and include our communities, public support will erode. The Government must listen to and take our communities with them. They must stop trying to do it all alone and empower and include our communities to help with the task. My party has suggested how new energy market reforms could be brought in to bring about reductions in our energy bills. These matters are urgent, so I ask the Minister: when will the Government be able to bring forward their plans to reduce our energy bills?

We must mitigate and adapt; both are needed. Not a single adaption delivery pathway plan was rated as good. The simple truth is that we have been better at changing our climate than we have been at adapting to the changes we ourselves have made. Our duty as politicians is to co-operate, create change and enable hope.

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

My Lords, I thank the noble Lord and the noble Earl for their interest in the Statement.

Going on some of the comments made by the noble Lord, Lord Offord, he seems to be a bit glass half-empty at the moment. I encourage him to work with the Government to become a little more positive in his outlook. First, he asked about the cost of net zero. We believe that growth and net zero go hand and hand. Net zero is the economic opportunity of the 21st century, and it can support the creation of hundreds of thousands of good jobs across the UK and protect our economy from future price shocks from reliance on fossil fuels alone. We also believe that this is the way forward to getting the UK better energy security and to deliver a range of social and health benefits. Last week, the OBR showed clearly in its latest report on risks to the government finances that the cost of cutting emissions to net zero is significantly smaller than the economic damages of failing to act, as the noble Earl, Lord Russell, just said.

Both noble Lords asked about bills. We are determined to cut bills for people. We appreciate that they have been high in recent years and the basis of our clean energy superpower mission is to look at how we can do exactly that. If we just carry on as we are, we are exposed to expensive, insecure fossil fuels, as we saw when Russia invaded Ukraine and prices went through the roof. We are driving forward with renewable power and with nuclear, because that is the way, in the long term, that we get to cut bills. We are also looking at how we cut the cost of electricity as part of that, so that, for example, if you put in a heat pump it makes financial sense. We have to look at it all along those lines.

Renewable infrastructure and the impact on nature were also mentioned by the noble Earl, Lord Russell. We believe that nature recovery and preserving our ecosystems are an essential part of the clean energy superpower mission. As we unblock barriers to the deployment of these clean power projects, we are committed to ensuring that, wherever possible, nature recovery is incorporated in development stages and that innovative techniques can be used to encourage nature recovery—the noble Earl mentioned the amendments that we are making to the Planning and Infrastructure Bill, for example—because we want to get that balance right.

The noble Lord, Lord Offord, also talked about jobs. We are working very hard to bring in a just transition that is fair and built on the principle of fairness, because we need to ensure energy security and protect prices, as I said, but also to ensure fairness for workers, because decarbonisation has to be seen as the route to reindustrialisation. Working towards net zero and adapting to climate change are essential if we are to prevent widening inequalities and to reduce inequality as it stands. We know that if we do not act, climate change impacts more severely the most vulnerable groups, so we have to move forward on this.

The oil and gas sector was mentioned. We know that oil and gas production in the North Sea is going to continue for decades to come. We want to manage its reduction in a way that ensures the just transition and that our offshore workers can continue to work in the industries of the future. We are publishing a response to the consultation on the North Sea energy future later this year. That will look at how we can address the transition of oil and gas workers into working in clean energy. On that point, Robert Gordon University notes that over 90% of the UK’s oil and gas workforce skills have a medium to high transferability to offshore renewables.

Last time, when we had coal and steel collapse and communities were left behind, that had a terrible impact, and we are determined that that will not be the case this time, so we are working in partnership with trade unions, businesses and local communities, investing in skills and running regional skills pilots in places such as Aberdeen and Pembrokeshire.

The question was asked: why should we bother when other countries are not pulling their weight? That is not exactly true: other countries are acting. Over the last decade, there has been a transformation in the extent to which countries are taking it seriously. At least three-quarters of global GDP is now covered by a country-level net-zero target. This rises to 80% when taking account of commitments made by subnational governments. India is often mentioned. It has a target of 500 gigawatts of non-fossil fuel capacity by 2030 and of reaching net zero by 2070. China is also committed to peaking its CO₂ emissions by 2030, with a target to reach net zero by 2060. I could go on.

Consumption and emissions were talked about, as well as offshoring emissions. There has been a substantial overlap between our carbon footprint and territorial emissions. This means that our ambitious carbon budget targets and commitment to making Britain a clean energy superpower will reduce our carbon footprint in the process of reducing our territorial emissions. The latest figures do not show that we are offshoring emissions from the UK to other countries. As the CCC states in its 2025 Progress in Reducing Emissions report:

“The reduction in territorial emissions since 1990 significantly outweighs the increase in emissions from imports over that period, reflecting the fact that emissions reductions in the UK have largely occurred without offshoring emissions”.


I thank the noble Earl, Lord Russell, for his support for the Statement, but also for his clear recognition of the huge challenges that we face in tackling climate change. I completely agree with him on the complexities that he was referring to. As he said, we absolutely need that balance between nature and development.

The noble Earl, Lord Russell, also talked about the global impacts. I assure him that we are committed to working internationally and to multilateral action. We are not going to address climate change and the nature crisis on our own. The UK is steadfast in its commitment to the three Rio conventions, which aim to protect the global environment, the landmark Paris Agreement and the Kunming-Montreal global biodiversity framework. We also have international milestones coming up such as the United Nations Framework Convention on Climate Change and the Convention on Biological Diversity. We will reaffirm our commitment to working with partners around the world to scale up integrated solutions that deliver for climate and nature. That will include demonstrating how our plans at home are working to make people in the UK safer, healthier and more prosperous.

Ancient Trees: Protections

Debate between Baroness Hayman of Ullock and Earl Russell

Thursday 24th April 2025 Lords Chamber

[Baroness Hayman of Ullock (Lab)]

The noble Lord asks an interesting question, to which I do not actually know the answer. I shall look into it and get back to him.

[Earl Russell (LD)]

My Lords, our ancient trees are an extremely important part of our national psyche and extremely important for our biodiversity. I welcome the Minister’s comments that the Government are looking at what more they can do to protect our ancient trees, but can I press her further? When do the Government feel they might bring forward legislation in this area? Would the Planning and Infrastructure Bill be such an opportunity?

[Baroness Hayman of Ullock (Lab)]

The noble Lord made a number of points there, on planning infra- structure, nature, biodiversity and a wider tree strategy. Defra and MHCLG have been talking extensively about environment and planning, and doing a lot of work on that ahead of any legislation in that area. Regarding nature and biodiversity, we are having a number of conversations in Defra on our priority legislation going forward. Clearly, these areas will be part of those discussions.

Storm Bert: National Preparedness

Debate between Baroness Hayman of Ullock and Earl Russell

Thursday 28th November 2024 Lords Chamber

[Baroness Hayman of Ullock (Lab)]

On the dredging question, the Environment Agency undertakes dredging to manage flood risk where it is technically effective, does not significantly increase flood risk for others down stream and is environmentally acceptable. Some locations will benefit from this and others will not, so it is looked at case by case. On flood warnings, my feeling is that most of the time they work very well. I am signed up for them: we get them by email and text, and we get a phone call. I urge anyone who has not signed up for flood warnings and who lives in a flood area to do so, because they are effective. Regarding having a single place, that is something I can take back to the department to review.

[Earl Russell (LD)]

My Lords, for every one degree rise in temperature, the air can hold up to 7% more moisture. In the UK, rapid climate change is having an ever more devastating impact on our local citizens and property. We are particularly seeing a rise in very localised extreme weather surface water flooding events. What action are the Government taking to help improve the forecasting models for these hyper-localised devastating flooding events?

[Baroness Hayman of Ullock (Lab)]

The answer is twofold. First, what do we need to do to reduce the likelihood of surface flooding? A lot of the nature-based solutions that we have been bringing in and discussing in the water Bill will help towards that. Climate change is having a serious impact, so we need to review the effectiveness of how we are working and have a long-term model. We have set up the new flood resilience forum, which will look across the board to consider floods that have taken place and how we can react better in future.

Water (Special Measures) Bill [HL]

Debate between Baroness Hayman of Ullock and Earl Russell

Committee stage
Monday 4th November 2024 Lords Chamber

[Baroness Hayman of Ullock (Lab)]

I completely get the noble Baroness’s point. I would hope that, when we do the review, we look completely across all the issues to do with a water company, including the way it behaves because of the way it is set up, and that that should be part of any consideration. By the time we have reported, I am sure the noble Baroness will be very happy to have another Labour Government.

[Earl Russell (LD)]

I thank the Minister for her responses on this group. Mine was a probing amendment and I appreciate her response. I fully recognise that there would be issues with six months as a period, but I think it is important that we have a discussion about the power of revoking licences. I appreciate that the Government are keeping that under review. On Amendment 97, I appreciate what she says about the courts and their powers in all this: that was a welcome response. On Amendment 98 on the public ownership of water companies, I think her response to the noble Lord, Lord Sikka, giving those figures and calculations, was useful in moving that debate forward. Obviously, there are costs involved in that and in the Government supporting failing water companies as well. I know that these are difficult matters. Of course, on our Benches we want to have public ownership of water companies, and we will continue to support that, but I thank the Minister for her inclusive responses and I beg leave to withdraw the amendment.

Water (Special Measures) Bill [HL]

Debate between Baroness Hayman of Ullock and Earl Russell

Committee stage
Wednesday 30th October 2024 Lords Chamber

[Baroness Hayman of Ullock (Lab)]

I do not have that detailed information. I will write to the noble Lord and place a copy of the letter in the Library so it is available to everybody ahead of Report.

Amendment 50 was tabled by my noble friend Lady Young of Old Scone. The Government fully agree that emergency overflows should be monitored. However, we do not support the removal of the delegated power for Ministers to make exceptions to the Clause 3 duty. We believe that this power is necessary to allow for scenarios where it is not feasible to monitor emergency overflows, such as where an overflow is due to be decommissioned. Removing this power may inadvertently lead to delays in commencing this duty, if issues arose that we could not resolve without this power. Any exception to the monitoring duty would need to be agreed by Parliament using the affirmative statutory instrument procedure.

On Amendment 58, tabled by my noble friend Lady Young of Old Scone, water companies should bear the cost of understanding the impact of their discharges on water quality. Installing and maintaining continuous water quality monitors requires regular access to water company sites. Water companies can do this much more easily than can the Environment Agency. Defra has issued guidance on the expected standards of these monitors, and in future all monitors will be expected to become independently certified under the Environment Agency’s certification scheme. Water quality data that will be made available will then be scrutinised by the independent regulator. Regulators will continue to work with water companies to ensure that the data is of high quality. I hope that this reassures my noble friend and that she feels able not to press her amendments.

Amendment 75 was tabled by the noble Baroness, Lady McIntosh of Pickering, and I thank her for raising this issue. Misusing sewers to dispose of materials such as wet wipes and cooking oils contributes to major issues, such as blockages in the sewerage system. The noble Lord, Lord Deben, asked whether I have gone down a sewer. I have, and it is just disgusting; it is quite extraordinary what can happen there. Sewer blockages cost the water industry £200 million a year to fix and are responsible for 40% of pollution incidents.

Many people are not aware that the actions they take in their own homes can have such damaging impacts. Small but significant steps, such as not pouring fats and oils down the plug hole, can prevent blockages. The Government work to encourage all householders and businesses to play their part, and fully support water industry campaigns to address this issue, including Water UK’s “Bin the Wipe” campaign. I completely understand where the noble Baroness, Lady McIntosh of Pickering, is coming from. I will take this away and look at whether there is any more we can do to draw attention to this fact.

Having said that, we do not believe that water companies should be exempt from sanctions when using emergency overflows following blockages caused by sewer misuse. Water companies should take every reasonable measure to prevent the use of emergency overflows, including measures to prevent blockages. Some blockages caused by sewer misuse can often be mitigated by good maintenance; for example, by detecting blockages before they become significant issues and with preventive cleaning. The intent of this Bill is to strengthen water companies’ accountability for pollution incidents and not to diminish it. That is why Clause 2 will require water companies to publish the pollution incident reduction plans that we debated earlier.

I was interested in the suggestion from the noble Lord, Lord Deben, to look at how Canda deals with this issue. My brother-in-law lives in Canada, so my family and I go there. It is a really interesting suggestion.

I turn to Amendment 87, tabled by the noble Baroness, Lady Boycott. Proactive data publication is vital for transparency and to enable the public to scrutinise water companies. While we support the principle of transparency and are taking action to increase transparency through Clauses 2 and 3, we are concerned that the noble Baroness’s specific proposals duplicate pre-existing provisions and would create practical difficulties. Case law and the Information Commissioner’s Office have been clear: water companies are public bodies for the purpose of the Environmental Information Regulations, and water companies already provide information under these regulations.

The Information Commissioner’s Office is clear that water companies must be transparent, and it is taking several actions to enforce that. In May of this year, the ICO released decision notices for six water companies, instructing them to disclose the start and stop times of sewage discharges. In July, it wrote to water companies to encourage them to proactively publish information on sewage monthly. In October, it published a practice recommendation to United Utilities to address the specific issues that it had identified.

I turn to Amendment 89, tabled by the noble Baroness, Lady Browning. The Government acknowledge that it is important that there is more transparency about the abstraction of water by water companies. However, any new requirements must be both practical and proportionate. Clause 7 already provides the necessary flexibility for the Secretary of State and Welsh Ministers to impose conditions or general rules for abstraction licences. We believe that secondary legislation is the more appropriate vehicle to address these technical matters effectively. However, having listened to the noble Baroness carefully, we will consult on the use of Clause 7 powers to ensure that the conditions introduced are appropriate and achievable.

Finally—I am sure we all want our dinner—I turn to Amendment 94, tabled by the noble Earl, Lord Russell. I am supportive of greater involvement of the public in this sector. He made the very important point that bringing in the public is vital, including through citizen science. However, this amendment is not needed, as we believe that the provisions in the Bill will already increase transparency and the provision of data in this sector, which are critical to informing and engaging the public going forward.

I hope that I have set out sufficient detail on Clause 3 to reassure all noble Lords of its intended purpose and effect. I sent out a fact sheet on the definition of emergency overflows and storm overflows to try to make sure that everybody is clear on the difference, but I am sure that we will come back to these issues in future. I hope that noble Lords will not press their amendments and enjoy their dinner break.

[Earl Russell (LD)]

My Lords, I thank the Minister for her detailed response; that was a lot of amendments to respond to in one go.

I take the point about volumetric flow monitoring. I will go away and think about that but I am aware that there might have been costs associated with it. It is welcome that that has been confirmed.

I take the point also about a number of amendments on the website, access to data and one data point. I hear what the Government say—that one does not want to pin that down, limit it and find that what is written in the Bill is yesterday’s technology, or that there are other, better ways of making sure that it is accessible. I welcome the response there as well.

I also welcome the response of the Minister about the plans of the Government to publish live maps in one place. That seems sensible.

In relation to my amendment on citizen science, I welcome what the Minister said. Let us go away, think about it and explore it. I am pleased that the Government acknowledge the importance of that matter, the work that has been done and the work going forward.

This has been an interesting group of amendments. I thank the noble Baroness, Lady Young of Old Scone, for what she said, and the Minister’s response on the emerging threats was important. I am particularly concerned about microplastics because we do not know what those are doing. They are in our brains and various parts of our body where they should not be. I encourage the Government, outside the Bill, to do more research and work on that.

I thank also the noble Lord, Lord Cromwell, for his interesting comments on telemetry monitoring, and the noble Lord, Lord Deben, for his contribution.

This was an interesting debate. I am getting in the way of everyone’s dinner, so I thank noble Lords. I beg leave to withdraw my amendment.

Independent Water Commission

Debate between Baroness Hayman of Ullock and Earl Russell

Tuesday 29th October 2024 Lords Chamber

[Earl Russell (LD)]

My Lords, I declare my interests as set out in the register and thank the Minister for this Statement updating the House on the launch of the independent water commission. There is much that we on these Benches welcome, most importantly that this Government, through the Water (Special Measures) Bill presently being considered by this House and the launch of the water commission, have given a clear signal that they are determined to try to fix our broken water system. The intent is a welcome step change, and I am thankful for it.

That said, there is a time for reviews and commissions and a time for calm, direct and decisive government action to fix systems that have been broken for far too long. The Government talk proudly about their longer-term approach, when the electorate is keen for more radical and immediate action. My friendly warning to the Labour Government is that the people who voted for them did so with the expectation that real action would be taken to resolve this mess, at scale and at pace. Labour has had many years in opposition; quite frankly, we expected the Government to be better prepared and to have come up with the necessary plans and answers by now that are urgently needed to fix these problems.

The water industry is a mess, and the sewage scandal was a critical issue at the last general election. The Liberal Democrats are determined to put the protection of our precious natural environment at the heart of everything we do. In 2023, water companies dumped 54% more sewage into our lakes, rivers and coastal areas than they did in the previous year. This amounts to 464,000 incidents and 3.6 million hours of untreated sewage discharges in England alone, damaging our freshwater ecosystems. Meanwhile, water bills are set to rise by some 40%. We are clear that we would abolish Ofwat, create a new, unified and far more powerful clean water authority and replace the failed private water companies with public benefit companies.

The Government have taken a different policy direction. My worry is that the magic trick of making Ofwat fit for purpose, securing investment while keeping consumer water bills low and protecting our environment lies way beyond the measures contained in the Water (Special Measures) Bill and that, when further legislation finally arrives, it will be too late. I welcome the Minister’s engagement, but I call on the Government to work with all sides to make the measures in the Water (Special Measures) Bill more radical and robust. Our environment cannot wait while Labour decides on the real systemic reforms that are the only solutions to this crisis.

Only 14% of our rivers and streams are in good ecological health. With the commission taking at least a year to consider evidence and report back to government, and with further legislation only then to be prepared and debated in Parliament, the radical change required appears unlikely to be implemented before 2028-29 at the earliest. I hope that the Minister can acknowledge a growing sense of concern on all sides of the House that the measures in the Water (Special Measures) Bill are not enough to fix the problem and that further legislation derived from the conclusions of the water commission will just not arrive in the urgent timescales required.

The 30% by 2030 target for protection of nature is coming up urgently. How will this review help support that process? My understanding is that the water review will not report until 2025, which leaves a short timeframe for making the necessary changes and requirements to meet our targets. Further, if we find after the Water (Special Measures) Bill is passed that problems in the water industry persist and we are still in the gap before the water commission finishes its work and is ready, are the Government prepared to put forward additional urgent legislation to help fix any remaining problems?

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

My Lords, I thank both noble Lords for their questions on the Statement made in the other place recently. Both noble Lords mentioned the fact that we had been in Opposition for 14 years— I would suggest that is probably one of the reasons why the water industry is in such a mess. It is a little bit rich of the Opposition to say that we should have sorted it out when we were in Opposition.

In answer to a few questions, the review will be reporting in the first half of next year. It is not that long until next year; it is only a few months away. The idea is that the review will develop new legislation that will make water companies and our water infrastructure fit for purpose for the future.

I thank the noble Earl, Lord Russell, for his broad support. He talked about urgency. It is important to point out that we came into government at the beginning of July. On 11 July, my honourable friend the Secretary of State made a Statement to the House on the agreement he had already reached with water companies and Ofwat to ring-fence money earmarked for investment so it could not be diverted to shareholder payments. On 9 September, we introduced the Water (Special Measures) Bill that we are considering in the House. Yesterday, the review was announced—so we are pretty well cracking on with this as an urgent action going forward.

Water (Special Measures) Bill [HL]

Debate between Baroness Hayman of Ullock and Earl Russell

Committee stage
Monday 28th October 2024 Lords Chamber

[Baroness Hayman of Ullock (Lab)]

My Lords, clearly, public trust in the water sector has been severely damaged and the number of serious pollution incidents is increasing, as we heard very clearly from my noble friend Lord Sikka when he introduced his amendments. At the same time, companies have been paying out millions in bonuses. To rebuild public trust, the Bill enables Ofwat to issue new rules on remuneration and governance to ensure that companies and executives are subject to robust oversight and held accountable for failure. I thank the noble Lords who have tabled amendments relating to the application of these rules.

I will start with Amendment 2, tabled by the noble Baroness, Lady Bakewell of Hardington Mandeville. I thank the noble Earl, Lord Russell, for introducing it on the noble Baroness’s behalf and wish her all the best from these Benches. I also listened with interest to the suggestions made by the noble Duke, the Duke of Wellington. Clearly, he and the noble Earl, Lord Russell, had different opinions on the wording. Our approach is intended to strike a balance between the approaches suggested by the noble Lords, to give Ofwat some flexibility while ensuring that it issues rules in relation to our priority areas.

However, I emphasise that the provisions in the Bill state that Ofwat must exercise its power to set rules in relation to performance-related pay, fitness and propriety, and customer representation. Ofwat may also make rules about other remuneration and governance arrangements at its discretion, but it must take action regarding the specific matters referred to in the Bill. We are pleased that Ofwat is already taking action to implement these rules through the publication of its consultation announced on 22 October. This was referred to by number of noble Lords, including the noble Lord, Lord Remnant. I hope the noble Earl will tell the noble Baroness that we hope that this has reassured her that her amendment is unnecessary.

I turn to Amendment 3, tabled by the noble Lord, Lord Remnant. Ofwat has a range of primary duties, including acting to protect the interests of consumers, ensuring that companies properly carry out their functions, and securing that companies are able to finance the delivery of their statutory obligations. I assure the noble Lord that Defra has worked to assure agreement with companies to update their articles of association to place customers and the environment at the heart of business decisions which impact on consumers.

The noble Lord is correct that I am going to say that Ofwat’s existing duties are already consistent with the outcomes that this amendment aims to ensure. This includes ensuring due consideration of the human and capital needs of the sector. He also raised concerns about influencing Ofwat. The current consultation that I have referred to is an initial policy consultation which has been launched with the express purpose of inviting views early. This will be followed up with further statutory consultations, which will also take into account the views shared through this initial policy consultation.

I thank the noble Lord for bringing his knowledge and experience to the development of this legislation. It is very valuable to hear his contributions. However, I hope that he is reassured that, in setting the rules about remuneration and governance, Ofwat will continue to act in accordance with its core duties and understands that it is for this reason that the Government will not accept the amendment.

Amendment 25, tabled by my noble friend Lord Sikka, and Amendment 27, tabled by the noble Lord, Lord Roborough, relate to the timing and process for setting the rules for remuneration and governance. My noble friend took the opportunity to lay out clearly the many concerns around the behaviour of water companies and the ability of regulators to hold them to account. Ofwat is required to undertake statutory consultation with the relevant persons, which includes the Secretary of State, before any rules are finalised. Allowing Ofwat to set rules in this way, rather than through legislation, will enable those standards to be more easily amended, subject to the relevant procedural requirements, where it is appropriate to do so in the future. The Government and Ofwat agree that the rules should be in place as soon as possible after Royal Assent, and Ofwat intends to implement them following its statutory consultation, which, as I previously mentioned, has already been launched. I hope the noble Lords are therefore reassured their amendments are not necessary.

Finally, Amendment 101, tabled by my noble friend Lord Sikka, relates to dividend payments. Sustained investment in the water industry will continue only if the shareholders of companies can expect a fair return. Ofwat already has the power to stop the payment of dividends if they would risk the company’s financial resilience and to take enforcement action if companies do not link dividends to performance for consumers and the environment. The amendment risks deterring much needed investment in the sector. I highlight that the Government’s new independent water commission will look at how we can improve the regulatory framework to attract investment and support financial resilience for water companies. I hope this is helpful in explaining to my noble friend why the Government will not accept his amendment.

A few noble Lords talked about the importance of investor confidence and the impact that we could have on this and talent in the water industry. While we believe it is right that companies and their executives are held to account for basic and fundamental performance requirements, it is important that, should companies meet their performance expectations, executives can still be rewarded. The proposed £88 billion in investment under PR24 is the largest ever in the water sector and has the potential to create up to 30,000 new jobs. It is crucial that the sector can recruit the talent it needs to deliver the PR24 proposals, because improving the performance of the water industry will help the industry attract and retain talent. Private sector investment is also at the core of how we grow the economy, and the Bill is designed to deliver a clear and consistent regulatory framework for the water industry and its investors. Noble Lords may be interested to know that 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 of pounds in private sector investment that are desperately needed if we are going to clean up Britain’s rivers, lakes and seas.

Finally, I assure the noble Lord, Lord Roborough, that I always try to get on well and work constructively with everybody, including Ofwat. I once again thank the noble Lords for their suggestions and input to this discussion on the general application of the rules for remuneration and governance.

[Earl Russell (LD)]

My Lords, I thank the Minister for her comments. The noble Duke, the Duke of Wellington, put forward an interesting idea on issuing guidance, and it is one that I will take back to my noble friend for further consideration. The noble Lord, Lord Remnant, talked about the lack of ability to scrutinise the rules, the need to attract talent and the carrot and stick approach. The noble Lord, Lord Sikka, talked about broken trust, the poverty of regulations and the level of convictions in the water industry. His Amendment 101 would curb excessive dividends, financial engineering practices and practices inflating the worth of companies. The noble Lord, Lord Roborough, n his amendment said that rules must be published within six months and he talked about the powers of Ofwat being unchecked.