Thames Water

Baroness Jones of Moulsecoomb Excerpts

Wednesday 4th June 2025 Lords Chamber

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

My Lords, the Government do not have any intention for consumers to pay towards this. We do not see that consumer bills need to go up to cover these debts. It is not for consumers to pay for the mistakes and poor behaviour of the water companies. In response to the second question, within the regime, we will look at it in detail, but it is, again, not our intention for the water companies to basically get away with it.

[Baroness Jones of Moulsecoomb (GP)]

My Lords, we are already paying more for our water because Thames Water has put up our bills. I declare an interest as a Thames Water bill-payer. How much higher are our bills going to go before the Government actually accept that they have to put public ownership before private profit?

[Baroness Hayman of Ullock (Lab)]

One of the reasons that bills are going up—not just for Thames Water customers but for other consumers—is the lack of investment for years and years by the water companies in infrastructure, which is why we have so many problems with pollution, for example. While it is not something that the Government want to see continue—we do not want to see consumer bills going up unnecessarily—it is important that, with the PR24 settlement that was made, that money goes directly into investment, which is why we are stopping dividends and unnecessary bonuses being paid.

Thames Water: Bids

Baroness Jones of Moulsecoomb Excerpts

Monday 28th April 2025 Lords Chamber

[Baroness Hayman of Ullock (Lab)]

As I am sure the noble Baroness is aware, a special administration order is the mechanism to ensure that the company continues to operate and customers continue to receive their water and wastewater services. However, the bar for entering special administration is understandably high; the law states that it can be initiated only if the company becomes insolvent, can no longer fulfil its statutory duties or seriously breaches an enforcement order, and Thames Water does not fit those criteria, despite all its other problems. All I can say to the noble Baroness is that we are currently monitoring the situation closely.

[Baroness Jones of Moulsecoomb (GP)]

My Lords, 90% of England’s water and sewerage services are owned by foreign investors. Can the Minister explain why the Government are so happy for that to happen but not happy to allow us to buy our own vital resources back? It seems madness to allow our vital infrastructure to be owned by foreign states.

[Baroness Hayman of Ullock (Lab)]

Obviously, water privatisation happened quite a long time ago now, which was when different foreign states came in and invested in our water system. I am sure the noble Baroness is very aware of the work going on through the Cunliffe review at the moment in order to try to get our water companies into a better state. The Government are very keen that we sort out the problem with Thames Water, but that is Ofwat’s and the company’s responsibility at present and we are just watching to ensure that Thames Water does not fail, because we cannot afford to have water companies failing.

UK Fishers: EU Agreement

Baroness Jones of Moulsecoomb Excerpts

Monday 31st March 2025 Lords Chamber

[Baroness Hayman of Ullock (Lab)]

I am sure the noble Baroness is aware—because we have talked about it in relation to other issues with Defra—that we are working closely with other departments in this area, including DESNZ, to address exactly the kinds of issues she raises. I will go back to the department and talk to my colleague the Fisheries Minister, Daniel Zeichner, specifically about the point that she just raised.

[Baroness Jones of Moulsecoomb (GP)]

My Lords, I am sure the Minister knows that we have French and Danish fishing fleets not only fishing in our waters, as per the agreement, but bottom trawling in our marine protected areas. Are the Government going to start protecting those marine protected areas, or shall we call them something else?

[Baroness Hayman of Ullock (Lab)]

The Government are looking with different groups and industry to increase protections across MPAs and at the best way to move that forward. Around 100 of our MPAs have by-laws which are in place to protect designated species and habitats from fishing gear that we know is damaging, including bottom trawling. As I have said before, we are looking at how we can move forward in this area.

Biodiversity and Conservation

Baroness Jones of Moulsecoomb Excerpts

Thursday 13th March 2025 Grand Committee

[Baroness Jones of Moulsecoomb (GP)]

My Lords, I congratulate the noble Lord, Lord Grayling, on getting this debate. I am sad to say that nature does not seem to play much of a role in Labour’s aspirations for its term of office. The Prime Minister cannot stand tree-huggers like me and Rachel Reeves talks as if she wants to squash frogs and newts under the wheels of progress. It does not look good at the moment. Lots of people enjoy the countryside, litter-pick and clear paths. I do not think that they understand where Labour is going regarding biodiversity and nature; they see this as an issue that Labour cannot connect with.

Only yesterday, riverside campaigners discovered that, under new rules proposed by this Government, the precious waterways that they seek to clean up and protect would be unlikely ever to achieve bathing water status and thereby win the extra testing and safeguards of the Environment Agency. If these rivers are not safe for people, they are definitely not safe for wildlife. They are not great for fish and all the other ecosystems there. This is only a small issue, I guess, but this Government are aiming to undermine attempts by campaigners to use the EU-derived Bathing Water Regulations as a driver to clean up our toxic rivers, which of course suffer from sewage pollution, agricultural run-off and urban run-off.

Another proposed change by the Government is in their Planning and Infrastructure Bill. They want to move away from individual ecological assessments in the planning process and look at big plans, with lots of money being spent on nature somewhere else. This could inflict significant damage on UK biodiversity, as the developer will be allowed to erase biodiversity in one place as long as they do something that looks good in another place. I saw this at work when I was a councillor. It is a scam. Nature always loses out. Labour is moving in absolutely the wrong direction. Of course, this approach would violate international and domestic, legally binding commitments to restore and protect nature.

I want houses built and I want our energy system upgraded to cope with a massive increase in renewable energy. I also want those houses and renewable energy sources to be owned by local communities, not by developers who slow the whole system down. However, this Government appear to want to bypass the communities that protect their local landscapes and their rivers and biodiversity. When we are already one of the most nature-deprived countries in Europe, I am worried that the changes to the planning system in favour of developers—as well as the other backward steps that this Government are planning to take—will make things much worse. This is not what I expected from a Labour Government, and I do not think it is what a lot of Labour voters expected either.

I have two questions. First, what steps are the Government taking to ensure that the urgency in tackling toxic pollution continues against the ongoing threat to our coastlines from underreported spills from oil and gas developments in the North Sea? We really are not protecting our marine protected areas. As I said earlier this week in the Chamber, only 5% of marine protected areas are actually protected, while the others are vulnerable to bottom trawling.

Secondly, the tanker collision is another shocking reminder of the polluting power of big oil, so I am curious as to why the Government have gone ahead with the last round of offshore oil licences in and around marine protected areas. I am more than happy to help Labour in any way if it would like some of our Green Party policies, which are so superb at protecting nature and biodiversity.

High Seas Treaty

Baroness Jones of Moulsecoomb Excerpts

Monday 10th March 2025 Lords Chamber

[Baroness Hayman of Ullock (Lab)]

Supporting our fisheries is an important part of the work that Defra does. We must ensure that when we work on areas of conservation those who fish are also talked to and understand the implications—and that we understand the impact that any decision has on our fishing fleet. My honourable friend Daniel Zeichner MP, the Fisheries Minister, speaks regularly to those who fish so that we hear their voices as loudly as we hear others.

[Baroness Jones of Moulsecoomb (GP)]

My Lords, I am sure that the Minister is well aware that of our marine protected areas only 5% are protected from bottom trawling. Does the high seas treaty mean that when some of our allies, such as Denmark or France, assert that they are okay to bottom trawl in our MPAs, we can stop them?

[Baroness Hayman of Ullock (Lab)]

The key thing that we are doing around bottom trawling is looking specifically at the areas that are most important and need conserving the most. When we look at making agreements with other countries, that is clearly an important consideration, because there is no point in designating somewhere a marine protected area if we do not look carefully at which parts need protecting the most and ensure that damage does not take place. It is good that we have 60% of our MPAs protected, but, clearly, we need to move forward and do more.

Water Companies: Fines

Baroness Jones of Moulsecoomb Excerpts

Thursday 6th February 2025 Lords Chamber

[Baroness Jones of Moulsecoomb (GP)]

My Lords, I congratulate the noble Baroness, Lady Grender, on this very topical Question. It is such a pleasure to see a Labour colleague, a Lib Dem colleague, a Conservative colleague and, I have no doubt, a Bishop colleague standing up and saying things that I completely agree with—it is so rare.

I am going to take a slightly different tack from my colleagues. It is very hard to convey the anger felt by not just hundreds of thousands but millions of people at the mess the water companies have made over the past 30 years. I say “mess”, because that is what the public have had had to deal with. This is about sewage-filled seawater, dirty beaches, polluted rivers, chalk stream ecosystems destroyed and sometimes even E. coli in our water supply. Of course, water companies have been amazingly efficient at siphoning off money for shareholders and employees. But this week, the public are fighting back.

I will focus on Thames Water, not least because last week I had a letter from it demanding £19 extra per month on my bill to pay for the work it should have been doing over the past decades and has not done. But my anger with it pre-dates that by quite a long way. Thames Water has £17 billion of debt and is at the centre of a public backlash against Britain’s privatised water industry, which created monopolies, so customers have no choice. It has increasingly polluted our environment with sewage amid justified accusations that profit has been prioritised over the environment.

Windrush Against Sewage Pollution is one of 34 clean river groups involved in a legal challenge in the High Court this week, in an attempt to push for temporary nationalisation of Thames Water. Obviously, I strongly support this. In court, the campaign groups will argue that Thames Water should be put into a government-handled special administration. The court hearing will decide whether to approve the £3 billion in emergency funding that Thames Water has been allowed so far. The judge will hear campaigners argue that the emergency loan will be far too costly for customers. I would add: why should we pay twice for goods and services that we have not had? Again, let us remember that Thames Water already has a debt of £17 billion.

The High Court judge will also hear from Britain’s biggest water supplier and groups of rival creditors on Monday before deciding whether to approve the rescue of this close-to-bankrupt company. Without the debt lifeline, Thames Water has said it could run out of cash by March. Last month, Thames Water was granted Government approval to seek the £3 billion cash loan, which the troubled company said was crucial to ensure that it had enough money to stave off temporary nationalisation.

Clean river campaigners led by Charlie Maynard, the Liberal Democrat MP for Witney, have made a written submission to the court. The case is closing today, with the decision in mid-March. Charlie Maynard, whose constituency has been at the centre of mounting anger over raw sewage pollution being pumped into the River Windrush, is backed by other MPs in the water company region, and 28 parish councils. Maynard said in the submission that he was opposed to the restructuring plan in the interests of the company’s 16 million customers and argued that servicing the emergency fund would not be financially sustainable in the mid or long term for the company, and that it did not make appropriate provision for the company to fulfil its legal obligations to provide water and sewerage services and not to pollute rivers. Ultimately customers will be forced to pay for the emergency loan, which comes with a 9.75% interest rate—absolutely staggering.

Thames Water said it was confident that its plan would succeed as it had the backing of creditors holding more than 90% of its secured debt, despite opposition from a group of much lower-ranked creditors. The judge must decide whether the dissenting creditors would be no worse off in the most likely alternative to the plan, which Thames Water has said is that the company is placed in special administration. Under government proposals, Thames Water would get access to additional funding, cash reserves and debt extensions, giving it breathing space to secure its survival in the long term. A lot of people would say that it did not deserve that, and that it actually deserves to go bankrupt.

Evidence provided to the court by Dieter Helm, professor of economic policy at Oxford University, said that Thames Water had failed on the capital maintenance of its assets and had

“profit maximised by gearing up its balance sheet at the outer limits of what was sustainable”.

He added:

“Thames used the balance sheet to mortgage the assets and pay out the proceeds in special dividends and other benefits to shareholders”.


Then, only today, another Thames Water fail: bottled water is being delivered to homes in parts of Surrey, after residents have been left without water. Supply problems in the area are said to have been caused by “multiple bursts” on the same pipe. People in that area may have low pressure or no water, Thames Water has said. In its latest update, it said:

“We remain on site, working to fix the pipe that has been damaged during the bursts”.


That is a considerate statement to its customers, who are quite used to it failing them completely. But it has promised that

“additional supplies of bottled water are available”.

There is absolutely no doubt that Thames Water did this damage, so presumably it has to pay to clean it up—in which case, the money that it pays in fines really has to go to the clean-up. It is not possible to repair all the damage to nature and people, because ecosystems have been destroyed. I really hope the Minister can explain to the Treasury just how annoyed millions of people are that this has not yet happened.

I very much support the whole idea of the restoration fund, and I hope that this Government go for it.

Global Warming

Baroness Jones of Moulsecoomb Excerpts

Thursday 16th January 2025 Lords Chamber

[Baroness Jones of Moulsecoomb (GP)]

My Lords, I too congratulate the noble Lord, Lord Teverson, on this debate. I agree with almost every word he said, but when he starts telling the House that the Labour Government are to be congratulated on their climate change actions, I am afraid that I disagree really strongly. In a debate on an existential crisis for the human race and the planet, we have one Labour Back-Bencher—albeit an excellent one. At least we have three Tories, most of whom will talk some sense—but not completely, obviously. I just do not understand how this Government can take this so casually. It is absolutely appalling and I have been sitting here fuming since we started.

We need nature and we need biodiversity. It is not a nice thing to have but absolutely necessary for human life. Biodiversity, in particular, is nature’s safety blanket; it cushions the shocks and creates resilience. We have been shredding that security blanket for decades with an industrialised agricultural system that is overly dependent on chemical life support.

Human actions have raised global temperatures by 1.5 degrees. We have done that a decade ahead of when we thought we would. Climate science is constantly wrong because it is constantly cautious in talking about impacts and because it is constantly running to catch up with real-time impacts that scientists are measuring. For example, last year the UN issued its big climate report that brings together all the other reports. It was its sixth assessment, and it declared that things were far worse and disaster much closer than it thought in its fifth assessment. Its fifth was worse than its fourth, and that was worse than its third. We have had decades of these reports and emissions are still going up.

The science that went into the UN report last year is already out of date. First, the rate of increase in global temperatures has accelerated and broken barriers that we thought we had over a decade to reach. It might be why Trump is so interested in the sovereignty of Greenland; as the ice sheets melt, zinc and all the other minerals and precious metals will be available for grabbing. His rich friends know that the climate is changing. Their denial is simply greed; they want to carry on making money while the rest of us have to swim to our lifeboats.

Secondly, the scientists who work on the Atlantic meridional overturning circulation—the Gulf Stream is part of that—are saying that it could fail because of all the freshwater running off the Greenland ice sheet, and a lot of those scientists are now saying that it could fail in the next few years, rather than in the next few decades. That research is important, as it talks about Britain losing the warm waters coming north and having the same climate as Newfoundland. Imagine icebergs floating off the coast of Cornwall and you will get the picture. That research will not appear until the UN’s seventh assessment report in 2029. We can see that the science is constantly behind in reporting.

I used to worry about what a seven metre rise in water levels would do to our coastlines and major cities when the Greenland ice sheet melts, but it turns out that, well before that happens, we will be very, very cold. That cold will probably destroy our farming industry and wildlife. This Government and the last—I blame the previous Government just as much—are unprepared for any of this because their plans are based on the out-of-date science of the last UN report, rather than on what the latest research is telling us. I hope that Government Ministers can get more up-to-date advisers. Please talk to scientists and find out the latest research.

Building up the countryside’s national resilience to the potential shocks of climate chaos should be a priority for our Government, farmers and planning system. The talk of constant growth does not fit with human survival. Capitalism places no value on nature, other than destroying it as fast as possible to create more wealth. We are destroying parts of the planet that we need for our own lives and well-being. That is utterly stupid.

I want to bring up a nationally important case for rivers. Labour committed in its manifesto to clean up rivers. There is a river in North Yorkshire—with a nice name, but I cannot find it in my notes—over which the Pickering Fishery Association, a club in North Yorkshire, won a landmark legal case against the previous Government and the Environment Agency. The anglers successfully argued that the Government and the Environment Agency had failed in their legal duties to clean up and protect the Costa Beck, a former trout stream near Pickering. Please can the Minister tell me what the change is? The previous Government put in an appeal against that ruling. This Government, through Steve Reed—who the noble Lord, Lord Teverson, congratulated—have continued with that appeal. This Government are refusing to clean up a river that the courts have said they should.

I do not understand why this Government cannot see that they should be the face of change—and they are not. We might as well have the Tory Government still in power—though I do not want that.

Water Bills

Baroness Jones of Moulsecoomb Excerpts

Thursday 21st November 2024 Lords Chamber

[Baroness Hayman of Ullock (Lab)]

As I said, we are working very closely with water companies to ensure that bills do not increase unnecessarily. There are many challenges in the farming industry, and the Farming Minister is working across the piece to try to support farmers. For example, the farming budget was not reduced in the Budget this year.

On ability to pay bills, we know that all water companies have measures in place for people who struggle to pay for their water and waste services, and we encourage water companies to work with customers to apply for those whenever it is appropriate.

[Baroness Jones of Moulsecoomb (GP)]

My Lords, this House debated the Water (Special Measures) Bill yesterday, and presumably the Government thought it might bring bills down for bill payers and taxpayers—yet it will not. Where is the justification for passing a Bill that makes it more difficult for people to pay bills?

[Baroness Hayman of Ullock (Lab)]

I do not really understand the noble Baroness’s logic in thinking that it is going to increase bills. That piece of legislation is to ensure that water companies are better held to account and to drive behaviour change from what we have seen in recent years.

Water (Special Measures) Bill [HL]

Baroness Jones of Moulsecoomb Excerpts

Report stage
Wednesday 20th November 2024 Lords Chamber

[Baroness Bakewell of Hardington Mandeville (LD)]

My Lords, I thank the Minister for her time over the period between Committee and now. I shall speak first to my Amendment 9, which deals with performance-related pay and, more specifically, with bonuses paid to CEOs and directors of water companies. Performance-related pay should be related specifically to how well the water company has carried out its functions, having regard to the environmental targets it has been set. These are likely to relate to the number of illegal sewage spills that have occurred in the preceding 12 months.

During the last year—and especially during the general election campaign—the issue of sewage overflows was in the news almost daily. We saw the outrage of local residents at the state of their streams, rivers and lakes due to sewage spills—many occurred when there had not been any heavy rain. I will not go through the arguments, which have been well rehearsed in this Chamber. What I and my colleagues on these Benches are looking for is a reassurance from the Minister that where a category 1 and/or a category 2 pollution incident has occurred, the management of the offending water company—including the CEO, directors and senior officers involved in decisions in respect of controlling pollution—will be prevented from receiving any bonus or other performance-related pay enhancement to their basic salaries. It is unacceptable to the public for those in a very senior position in sewage and water companies to be rewarded over and above their normal salary for allowing sewage and other pollution to take place and not to have taken any steps to rectify the situation in a reasonable timeframe.

On Amendments 1 and 5 in the name of the noble Duke, the Duke of Wellington, environment groups have expertise to give to the water industry, but they should sit on boards. Consumers would also have a voice on boards. On our Benches are Peers who have in the past sat on water boards and contributed positively to their debates. This is a good and positive way forward. We support environmental groups and consumers being on boards and not being sidelined.

Amendments 2 and 8 from the noble Lord, Lord Cromwell, are about reporting. Amendment 2 would set up annual reporting on financial restructuring, including debt levels. This would seem a sensible way to ensure that the sewage and water company was aware of its business. However, Amendment 8 would involve others in the work of the authority, which is likely to become a bureaucratic nightmare. I have in a previous life sat on such bodies and found them to be unproductive and ineffective—I am sorry. Expectations of the civil society representatives will be high, sometimes with little understanding or knowledge of just how long it can take to implement what may often seem like a trivial matter.

Amendments 4, 7 and 10, from the noble Lord, Lord Remnant, do not align with our Amendment 9 and therefore we do not support them. However, I am conscious that whatever penalties the Bill hands out to directors and CEOs of water companies, they have to be proportionate, or it will be difficult to recruit people with the necessary expertise to sit on the boards of sewage and water companies.

Amendments 11 and 58 from the noble Lord, Lord Roborough, would introduce an SI into the legal framework. SIs are a favourite tool of Governments to get the detail of legislation in place. They tend to get somewhat divorced from the original Act that they refer to, but the timeline proposed here should mean that the original Act will still be fresh in peoples’ minds.

Amendment 57 from the noble Lord, Lord Sikka, is, I fear, unworkable. I know from previous debates that he and the noble Baroness, Lady Jones of Moulsecoomb, would prefer to be debating the renationalisation of water and sewage companies.

[Baroness Jones of Moulsecoomb (GP)]

True.

[Baroness Bakewell of Hardington Mandeville (LD)]

The Government have indicated that this is not going to happen. The amendment is an attempt to bring forward a different model of governance. The proposal is for 25% of board members to be chosen by local authorities. Local authorities are struggling with social care, looked-after children, education and people with learning disabilities. They certainly do not need this added to their “to do” list.

I look forward to the Minister’s response to this group of amendments, particularly Amendment 9.

--- Later in debate ---

The time for the democratisation of regulation and the empowerment of stakeholders is with us. We ought to take that chance. I look forward to hearing from the Minister on this.

[Baroness Jones of Moulsecoomb (GP)]

My Lords, I thank the Minister for having listened not just to Members of your Lordships’ House but to the thousands of campaigners, because the amendments tabled in her name are actually of great value. However, I feel they do not go far enough, and a lot of people—though probably not those here—might agree with me.

I have co-signed two amendments in the name of the noble Lord, Lord Cromwell, and one in the name of the noble Lord, Lord Sikka. I will vote for them if any of them are put to the vote. There are lots of other helpful amendments, but those three are the most useful.

I cannot help but feel that, if we were talking about benefit claimants who had behaved in the way that water companies have, we would not just slap them on the wrist in the way that we have the water companies; we would crack down on them, claw back the money and take them to court. The water companies have got off so lightly in this whole process. That really does not seem fair to bill payers or to taxpayers.

Amendment 2 goes to the heart of the issue. Water companies have been ripping us off with financial engineering, and I do not think that the Government’s action plan will resolve this. The water companies have been saying that they invest all the bill payers’ money in infrastructure, but they then take out loans and pay themselves dividends. With this legislation—even with the amendments—the Government are missing the opportunity to crack down on predatory capitalism.

[Lord Roborough (Con)]

My Lords, I thank the Minister yet again for her engagement at every stage of the Bill’s progress and for the significant improvements that have been made to it as a result. I will speak to my Amendments 11 and 58, to Amendments 4, 7 and 10 in the name of my noble friend Lord Remnant, and to Amendment 2 in the name of the noble Lord, Lord Cromwell.

Amendment 11 is a simple amendment that would give the Secretary of State greater influence over the drafting of the rules on remuneration and governance. We all know that it is the Government who will be held to account in this House and across the country for their record on water quality and pollution reduction. It seems only right that Ministers should have the ability to shape these rules. Indeed, given the importance of getting them right, Amendment 11 would make the regulations subject to the affirmative procedure for statutory instruments, giving Parliament its own role in approving these rules. I intend to test the opinion of the House on this, depending on the Minister’s answer.

Amendment 58 relates to limits on water company borrowing. I will not reiterate the arguments I made in Committee and, having listened to the Government’s concerns about the possible impact of a hard statutory limit on current negotiations between the sector and prospective investors, I have tabled an altered amendment here on Report.

It is clear to His Majesty’s Opposition that water companies have failed to take a sustainable approach to borrowing, and the current safeguards are insufficient. The amendment simply gives the Secretary of State the power to make regulations under the affirmative procedure for secondary legislation, limiting water company flexibility and returns to shareholders when leverage becomes excessive. I am most grateful to the noble Lord, Lord Sikka, for stating the current leverage ratios of the industry, and I agree with many of his comments, if not his amendment.

Nothing in the amendment forces the Government to do anything; we are merely seeking to give them the tools they need to deliver an effective limit on water company borrowing, given the inability of the regulator to do so historically. The Minister will no doubt tell us that borrowing will be considered in the wider review of the water sector, and we welcome this. However, in the meantime, Ministers need tools to take appropriate action now. If the Government do not feel that a borrowing limit is necessary, nothing in the clause requires them to act, but we on these Benches feel that it would be a missed opportunity to let the Bill pass without giving Ministers powers that they may need to ensure that water company borrowing is at sustainable levels while we await the conclusion of the Government’s review. Subject to the response of the Minister, I am also minded to test the opinion of the House on Amendment 58.

The amendments in the name of my noble friend Lord Remnant, which we spoke positively of in Committee, have a great deal of merit. They would ensure that board members are the individuals subject to the rules on remuneration and governance, as well as preventing consumers being inadvertently subject to these rules and other penalties as members of a water company’s board. This can be left to the company to decide.

Amendment 2 in the name of the noble Lord, Lord Cromwell, to which I am also a signatory, complements my Amendment 58 on water company borrowing. Greater clarity on water companies’ financial engineering is important. Should he seek to test the opinion of the House, we would support his amendment.

Finally, following the Minister’s constructive response, I did not bring back an amendment on the requirement to provide training to employees on their specific legal obligations within the water industry both before and after the implementation of the Bill. I would be most grateful if she could confirm that the Environment Agency will give guidance to the industry on how employees will be informed of these legal obligations.

--- Later in debate ---

[Baroness Willis of Summertown (CB)]

My Lords, I will speak to government Amendment 48. I am extremely grateful to the Government for bringing forward this amendment, which reflects the substance of the amendment that I and others brought forward in Committee, and I am happy to support it by putting my name to it. That debate showed that there was a clear case for Ofwat doing more on environmental issues, and I thank the Minister and her officials for their extremely productive approach, openness in meetings and willingness to work together to address these concerns. I am really pleased that we now have on the face of the Bill a new duty for Ofwat to have regard to the need to contribute to our climate change and environmental targets when exercising its functions. It is so critical that this is factored into decision-making, so that opportunities to contribute to these targets are not missed or deprioritised.

While I am grateful for the progress we have made in seeking to redress the imbalance, it would have been preferable to have a stronger duty than “have regard to”. I know the reasons for using this language, but my previous wording, which would have obligated Ofwat to

“take all reasonable steps to contribute to”

our climate and nature targets, would have provided a stronger obligation without caveats. Therefore, I very much hope that the progress we have made today is just the start of wider changes to ensure better environmental outcomes in our water industry. Perhaps the Minister can confirm that the question of how Ofwat will balance environmental duties and deal with the related trade-offs with other economic and consumer objectives will be looked at in detail as part of the water commission’s work.

I also want to raise the important issue of adaptation. My original amendment contained an additional limb which was intended to ensure that adapting to the current or predicted impacts of climate change, as identified in the most recent report of the Climate Change Committee, would also be part of Ofwat’s remit when exercising its functions. In discussions, the Minister said that adaptation is covered by the resilience strategic priority. However, this does not directly link back to current Adaptation Committee reports. I hope this too will be examined by the water commission, because in spite of having the resilience objective, this has not so far led to the new reservoirs we urgently need for housing and drought resilience. More clearly does need to happen, and I would be grateful for any assurances the Minister can give regarding adaptation.

I also welcome government Amendment 42. I hope that this will be a step forward in increasing the use of and spend on nature-based solutions, and lead to their greater and more systematic use to address adaptation issues such as flooding and drought.

Amendment 44, in the name of my noble friend Lady Boycott—who sends her apologies—is the same as the one tabled in Committee. It addresses the very real issue of water companies not being transparent with environmental data, and specifically does three things. First, subsection (1) would provide statutory underpinning to the Fish Legal case, making it beyond challenge that water companies are, and will remain, public authorities for the purposes of the Environmental Information Regulations 2004. This is necessary because, if it is not in legislation, its overturning by a future ruling remains a distinct possibility.

Secondly, proposed new subsection (2) would cut through the delaying tactics and refusals by water companies to make it clear that effluent and wastewater treatment data must, as a minimum, be proactively published by water companies. The water companies will be required by law to publish it up front, without anyone having to ask. This would be consistent with the expectation of transparency that we are setting though the Bill.

Thirdly, proposed new subsection (3) would amend the appeal and enforcement provisions in the 2004 regulations to allow members of the public to complain directly to the Information Commissioner about data not being proactively published—which they cannot at present.

In Committee, in response to this amendment, the Minister said that, while the Government supported the principle of transparency, these

“specific proposals duplicate pre-existing provisions and would create practical difficulties”.—[Official Report, 30/10/24; col. 1186.]

However, we have looked, we cannot find these pre-existing provisions and we do not understand what the practical difficulties would be. All we are asking is for sewerage undertakers to publish data that they hold and which, under the Environmental Information Regulations 2004, they are meant to publish but do not because the regulations are effectively unenforceable.

Noble Lords and the Minister may have seen over the weekend an article in the Observer, which has already been mentioned, about precisely this issue. United Utilities has been fighting a legal challenge that has been brought upon it to not give the public access to environmental data on its—to be generous—“potential” pollution of Lake Windermere. First, it claimed that the phosphorus data was not environmental information, then that it was internal communication. Obviously, this is environmental. ICO agrees and has said that it should be published—but still it has not been.

In this example, we can see that some sewerage companies will not behave in the public interest unless forced to do so. In this amendment, we have an opportunity to address these refusals to be transparent. It would go some way to removing their supposed legal defence, forcing them to co-operate. I really hope that the Minister can get behind this today, as the only thing that will help here is words in statute. If there are specific concerns with the drafting, we would welcome her amending it at Third Reading.

In conclusion, I reiterate my thanks to the Minister and her team. We have made important progress for climate and nature in this Bill and we will start to see delivery of better outcomes for our precious river and coastal ecosystems.

[Baroness Jones of Moulsecoomb (GP)]

My Lords, my Amendment 49 puts a clear and unambiguous environmental duty on Ofwat. It gives the authority a primary duty to protect the environment. I am well aware that the Government probably will come round to the Greens’ way of thinking in 10 or 15 years and that perhaps this side of the Chamber might come round to our way of thinking in 25 or 30 years, but we have to care now about our environment and our planet. What we have passed so far, although very welcome, is just not enough.

As the noble Baroness, Lady Willis, said, natural flood management is proving to be a cost-effective way of reducing flood risk, far cheaper than traditional construction involving lots of concrete. Water companies should be investing in these nature-based solutions to reduce the infrastructure cost of handling service water run-off, because every litre of water that soaks into the ground is a litre of water that does not flood into the water treatment system.

I have two requests of the Minister. Will the government amendments now provide a baseline so the Minister can take forward a piece of work to expand the use of natural flood management, especially where it is significantly cheaper than other methods? Secondly, will the Government please put these climate and nature amendments on the face of their Bills at drafting stage, rather than having to amend them down the line?

[Lord Gascoigne (Con)]

My Lords, it is always an absolute pleasure to follow the noble Baroness. I was going to call her “my noble friend”—but not quite yet. I am delighted to speak to my Amendment 55. I am grateful to my noble friend Lord Roborough, who has also signed the amendment, and I thank all noble Lords who spoke to this in Committee.

Like so many other noble Lords today, I join in the great “love-in” for the Minister. All I will say, speaking from experience, is “Enjoy it while it lasts”. I pay tribute to the Minister and the officials who have engaged with me over the last few days since we last met. Echoing words that have already been said, looking back to where we were in Committee on this amendment, and on nature and the environment as a whole, the Government have listened and moved quite a lot. Collectively, we pushed, and the Government have listened. I think a lot of this comes down to the Minister, who cares about it and gets it.

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[Lord Cromwell (CB)]

My Lords, I shall speak to both Amendments 39 and 40 in my name. I am grateful for the kind support of the noble Baroness, Lady Browning, on Amendment 39 and of the noble Baroness, Lady Jones of Moulsecoomb, on Amendments 39 and 40.

I am told that Amendment 39 is unwelcome because it is hard to determine when explanations can be expected. As the Minister knows, my catchphrase in Committee was “modest and proportionate”. I think that this very small amendment is modest and proportionate, but it is my further understanding from discussions that management plans will, once a year, give explanations of such discharges as part of their pollution plans. With numerous discharges happening across the year, that annual document will be a mighty task to compile and to read through. More importantly, it seems that people living with the discharges might have to wait 12 months or more simply to find out why a discharge has occurred and, presumably, what has been done to deal with it and prevent a recurrence. This invites not only discontent but accusations that nothing is being done and that people are being kept in the dark. Can the Minister take this away and see whether a government amendment can do better in addressing the concerns and rights to information of the public?

Amendment 40 in my name is essentially about trying to get information all in one place so that anybody from the public can access it. Since tabling this amendment, I have been advised by the Minister that Water UK, the body that represents the water companies, is to create a map of discharges that can be accessed by the public. That is very welcome, but unless the mapping is presented and run in a comprehensive and timely way, is sufficiently detailed to provide meaningful information and is periodically assessed for its quality of delivery, it will be of little use.

I have a number of questions which I would be very grateful if the Minister can address, either from the Dispatch Box or by letter. There are six of them—brace yourselves. Can the Minister clarify what information exactly this map will show? When will it be up and running? At that start date, will all future discharges be shown in close to real time? Who will have the responsibility for ensuring that Water UK receives the necessary information in real time? What will be the penalties for failure to supply the information and doing so in good time? Who will have the responsibility for auditing the online mapping performance of Water UK over time? Somebody needs to watch the watchers to ensure that this potentially rather colourful and enjoyable map is accurate, sufficiently detailed and up to date in real time.

[Baroness Jones of Moulsecoomb (GP)]

I support these amendments. It is obvious that the public have a right to know when sewage is being dumped. Would the noble Duke, the Duke of Wellington, like to speak to his amendment first? If not, I shall carry on.

The water companies have this as real-time data and there is no reason why they cannot publish it in real time so that the public know whether the waterways are clean enough to swim in, paddle in, kayak in or even let their dogs run in. I simply do not understand why the water companies cannot provide that information. Well, I do know why—they will fight this tooth and nail because the true level of leaks of sewage discharges is so ridiculously high.

[Lord Cromwell (CB)]

I thank the noble Baroness for supporting my amendment. To be clear, it requires an explanation of why the discharge has occurred, not that it has. The Minister pointed out that that might take quite a long time to establish.

[Baroness Jones of Moulsecoomb]

In that case, the noble Lord’s amendment is not radical enough for me, but I hope it passes anyway.

[The Duke of Wellington (CB)]

I speak to Amendment 41 in my name. It makes a simple point that I hope will find sympathy with the Minister and other Members.

I well remember, as other Members may, that during the passage of the Environment Act three years ago, there was a major spill by Thames Water somewhere in the London area. The excuse given at the time was a power failure. I remember thinking that that really was not a very good excuse. Those in charge of any infrastructure installation surely should have sufficient emergency generator capacity in place and maintained so that, should there be a power failure for an essential activity, it can be covered for a while. Clearly, if the power failure lasts for a day or two, the generator capacity will probably not have sufficient fuel to run that long—I understand that. Nevertheless, it seems too easy a let-out for a sewerage undertaker to be able to excuse an emergency discharge of any sort simply on account of a power failure.

I have therefore put down this amendment and hope that the Minister can assure me that water companies are required to have sufficient generator capacity in place and to keep it maintained so that they cannot simply say that there was a power failure and the generator did not work. That is just not good enough. I hope to get reassurance from the Minister about this; it is an important point, because otherwise we are giving too easy a let-out to the water companies.

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[Baroness Jones of Moulsecoomb (GP)]

My Lords, I have three amendments of my own in this group and I have co-signed Amendment 56 in the name of the noble Lord, Lord Sikka.

I spoke earlier about the Government’s plans not being strong enough to get a grip on these out-of-control water companies. The amendments in this group, including my Amendments 53, 54 and 59, are illustrative of what could be put in place to really force the water companies to clean up their act. There does not seem to be any protection whatever at the moment against a water company simply going through the special administration process and then hiking bills up on the other side. The moral hazard is obvious.

I am going to take my amendments out of order, and noble Lords will see why. My Amendment 54 would create a special administration process for environmental failures, such as persistent sewage dumping. I do not understand why only financial failure should lead to special administration, when a much bigger failure is the sheer amount of sewage pumped into our rivers and on to our beaches. Thames Water, for example, will come out of special administration still in private hands, but with the bulk of the debt paid off by higher bills. My amendment would change this by giving the special administrator the power to write off the bulk of the debt where it has been used to pay for dividends and where the company has failed to deliver the investment to fix the sewage system. Those powers are not in the current rules and the Government have the chance to change that. Otherwise, we will reward the failures and greed of companies such as Thames Water and will be blamed for it.

I will take my Amendments 53 and 59 together only because I would actually have liked to press them to a vote. They are two amendments I care about very much, on issues that I think the general population cares about very much, and it staggered me that there has not been more support for them in your Lordships’ House. I thank the noble Lord, Lord Sikka, for supporting me: it is two Greens and him who have proposed this.

Essentially, my Amendment 53 would prevent water companies being bailed out by either the public purse or via consumers’ water bills. This is because I am quite suspicious that the whole Bill is a tactic to support the water companies, at vast expense to bill payers and eventually to taxpayers. I simply do not understand why profits are privatised but losses are not. We, the public, pay for the losses but do not get the profits.

My Amendment 59 would require the Government to conduct a full assessment of the costs of bringing water companies into public ownership. So much of the public ownership debate is dismissed based on dubious industry figures about how expensive it would be. These conveniently miss the fact that some of these companies are now distressed assets facing bankruptcy. I at least ask the Treasury to do a proper costings exercise which discounts the fact that water company valuations are based on expectations that taxpayers or bill payers will underwrite the future profits of the water companies. Given the total failure of water privatisation, the Government need to seriously plan to bring water back into public ownership. The public are crying out for it, and it would actually be good value for money. The first step towards that is to work out the real costs rather than regurgitating figures from a biased industry.

It will be a race against time whether we can pass this Bill before Thames Water fails. All the experts agree that Thames Water is going to collapse, so why are the Government not taking it into special administration immediately? My genuine fear is that this Government will find themselves in a political storm over the big rise in water bills to finance a new private company taking over. The Government would have three regrets: first, that they did not refuse a bailout; secondly, that they did not listen to the public and change the powers of the special administrator to write off shareholder-accredited debts; and thirdly, that they ruled out public ownership as an option and boxed themselves into a corner. I deeply regret this aspect of the Bill, and I wish there were support in your Lordships’ House for no bailout and public ownership.

[Lord Sikka (Lab)]

My Lords, I rise to speak in support of Amendments 53 and 56, with some trepidation. At 4 pm today my heart soared, because the Railway Minister said that government policy was to bring these monopolies into public ownership. But by 5 pm the Minister—the noble Baroness, Lady Hayman of Ullock—said no, and that water companies must remain in private hands. It is nearly 9 pm now, so I do not know whether the policy has changed again. It would be interesting to know.

Water companies and shareholders and lenders have extracted vast sums of money, and under no circumstances must they be bailed out. We are now almost reaching the endgame and maybe the beginning of a new chapter in water companies. Thames Water is an interesting case. All nine of its shareholders have declared the company to be a basket case and are refusing to invest, after extracting billions of pounds in dividends and inflicting massive, real-term price hikes on customers. The value of those shares has been written off; the value of debt has also taken a haircut in the marketplace.

The interesting thing is that Thames Water is now going to borrow more money, which does not make any sense; I do not know how the Government have made any sense of it. Thames Water already has a debt of about £18 billion, and its gearing, as I said earlier, is already over 80%, compared to Ofwat’s idealised ratio of 15%. Thames Water is now negotiating a £3.5 billion new loan at 9.75% for two and a half years. This new loan will require it to pay £800 million over two and a half years, with interest and various fees, to intermediaries, after which it will also have to repay the loan of £3 billion. That is £3.8 billion—which it will probably try to recover from customers. It has 16 million customers, so that works out at a charge of £95 per customer simply to service this debt. This simply is not viable. There would be riots in the streets if water companies went ahead and squeezed the customers even more. It is simply and utterly unacceptable.

The company will continue to discharge tonnes of sewage in the rivers. Water leaks will still go unplugged. We are talking about not just investment in infrastructure; Thames Water has also neglected other investments such as investment in IT. Some of its IT systems date back to the 1980s and are obsolete. According to whistleblowers, some of its essential systems still use Lotus Notes software from the 1980s and 1990s, which cannot be updated any more.

Thames Water will run out of cash soon and will inevitably pass to its lenders. But that will not solve the problem either, because the lenders, as the new equity holders, would still want a massive return on their investment, so we are back to the territory of massive new bill hikes. The Government’s delay and dithering are not helping to clarify the situation. They need to bring this company into public ownership. Private equity and hedge funds are lurking—they are the new hyenas ready to feed on the carcass of Thames Water and grab whatever assets it has left. I have been told that they are especially after land. They are counting on some kind of government bailout so that the value of their investment soars.

Thames Water is not alone. The same scenario is being repeated at Southern Water. The Minister said today that Ofwat’s approval is needed to pay dividends, so it is interesting that today Severn Water declared six-months profits, which have nearly tripled in six months, and has increased its dividends from 46.74p per share to 48.6p per share. It would be interesting to know when Ofwat approved this. Can we have some public evidence to show that Ofwat approved this higher rate of dividend?

It is a matter of concern to me and others that the Bill enables the Secretary of State to dip into the public purse and also levy massive charges on customers to restructure the companies. That is effectively a bailout by another name. Through this process, the Government may possibly write off the debts of these companies and possibly take on the liabilities and costs associated with cleaning rivers, seas and lakes. So there is nothing of any value in this for the customers at all, because they will end up paying more and the citizens will end up paying more as well. The bottom line is that public money should not be used to bail out any of these investors, whether they are lenders or shareholders. Hopefully, the Minister will give that commitment.

I tabled Amendment 56 previously, but I got some strange responses so I want to return to it. In any civilised society, a key requirement is that all businesses, especially those that control services essential for life, must be operated by organisations that are law-abiding, ethical and responsible. But none of that applies to water companies. The whole industry is controlled by organisations with criminal convictions galore. It is not one or two, and it is not that somebody forgot something or perhaps there was an innocent oversight. There are 1,109 criminal convictions, and there is not a single water company without a criminal conviction.

This is the result of deliberate planning in company boardrooms: the directors decided to violate laws, lie and cheat. The field of these convictions is led by United Utilities, with 205; Thames Water has 187 convictions; and South West Water has 174. None has shown any sign of mending their ways; if they had, these convictions would have stopped years ago, but they continue. Just last month, the BBC reported that United Utilities dumped more than 140 million litres of raw sewage into Windermere between 2021 and 2023—at that time, it was not permitted to do so. A BBC investigation found that illegal discharges had been taking place for more than three years—far longer than the discharges in the four months the company retrospectively reported. In other words, it lied.

There is no effective fit and proper person test in the UK to decide whether somebody ought to be allowed to run or control a water company or a wastewater disposal service. If there were, none of these companies would pass it. But, rather than punishing companies engaged in criminal activity, successive Governments have protected them. They ask people, year after year, to hand more money to these organisations, which obviously continue with their pattern of behaviour.

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[Baroness Hayman of Ullock (Lab)]

I thank all noble Lords for the constructive discussion on the important topic of ownership and management structures of water companies. I turn first to Amendment 50, tabled by the noble Lord, Lord Remnant. I understand his concern about the aspect of the clause that allows for socialisation of shortfall recovery. We had some discussion around that, as he mentioned. However, I reassure him again that this element is necessary for the shortfall recovery power to function effectively and safeguard the interests of taxpayers and water customers.

We do not expect to have to use this power—the noble Lord mentioned that we had talked about this—and I stress that it would be utilised only if it were not possible to recover all the funding provided by Government over the course of a special administration; that is, in the event of a shortfall. It is only at that point that Ministers would decide whether to exercise the shortfall recovery power. Water sector stakeholders, including the Consumer Council for Water, would be consulted about any decision to exercise the power. It is therefore not entered into lightly.

All water customers benefit from the use of a special administration regime, as it ensures that services continue in the event that a water company fails. This power already exists within special administration regime frameworks for other essential service sectors, such as energy, where there is a well-established principle of socialising these costs across the sector.

The noble Lord, Lord Remnant, asked specifically about why we think the powers are needed, so I will provide an example. There may be an occasion where government funding, provided during a special administration regime, contributes towards water sector infrastructure—such as a reservoir—that goes on to benefit several different water companies. In other cases, a particularly small water company, with a limited number of customers, may enter special administration. In this scenario, it is vital that a decision can be made about recovering a shortfall from more than one company, to ensure fair allocation of costs and to prevent customers of a single, small company facing unmanageably huge bill increases.

In all scenarios, a failure to deal with a shortfall fairly, or to prevent impacts unduly falling on a single company, risks increasing the cost of capital for the whole sector. This is because investors will price in the risks of excessive shortfall costs falling on a single company. The ability to recover a shortfall from multiple companies is therefore necessary both to ensure that it is possible to recover government funding in the event of a shortfall and to safeguard the sector from any wider cost impacts. I reiterate that we see it as very unlikely that this will ever happen. For this reason, the Government will not accept the amendment.

I turn next to Amendment 53 tabled by the noble Baroness, Lady Jones of Moulsecoomb. While I thank her for her engagement on this clause, the Government must reject this amendment because it would jeopardise the main purpose of the water special administration regime, which is to ensure the continuation of water and sewerage functions in the event of a water company insolvency or failure.

The role of the special administrator, once appointed, does not include a power to cancel debt, so does not serve to bail out water company creditors or shareholders. When a water company exits from special administration, via either a rescue or a transfer, the special administrator determines the level of repayment to creditors in accordance with the statutory order of priority. The level of repayment that creditors and shareholders may expect will be in accordance with the order of repayment clearly set out in statute. Any power to cancel debts outside of a restructuring plan agreed as part of a special administration, or a scheme where there is built-in court supervision, would be a material departure from long-established insolvency principles of fairness and treating creditors equally according to their rights. I hope that the noble Baroness understands why the Government must therefore reject this amendment.

I will turn next to Amendment 54, also tabled by the noble Baroness, and Amendment 56 tabled by my noble friend Lord Sikka. He mentioned dividends. I assure him that Ofwat is able to stop the payment of dividends if they would risk the company’s financial resilience, and can take enforcement action against water companies that do not link dividend payments to performance. I just wanted to make that point clear.

Amendments 54 and 56 are already covered by the existing legal framework for insolvency and special administration regimes. The noble Baroness, Lady Jones, specifically asked why a SAR can be used in only financial circumstances. However, that is not the case. A water company can already be placed in special administration on performance grounds where it is in such serious breach of its principal statutory duties, or an enforcement order, that it is inappropriate for the company to retain its licence. Both the amendments would limit the powers of the Secretary of State and Ofwat by forcing their hand to take specific action, thereby limiting their ability to respond appropriately to individual situations. As part of an application to the court for a special administration on performance grounds, the Secretary of State and Ofwat must consider all aspects of a company’s performance and enforcement record, including its record of criminal convictions. Under the current framework, a company must take actions to address performance issues, including those involved with poor performance. Any failure to do so would form part of any assessment by the Secretary of State, or Ofwat, of the appropriateness of that special administration in the first place. Special administration must be a last resort, and proportional and appropriate to the circumstances. An automatic threshold for special administration, such as outlined in these amendments, would limit the ability of the Government or regulators to act. It would also likely undermine the confidence of actual and potential investors, and bring instability to the wider sector.

The Government are already taking action to strengthen the regulatory system through the recently launched independent commission into the water sector and its regulation. The regulators’ roles and responsibilities, including on enforcement, will be reviewed as part of this. We expect that recommendations from this review will form the basis of future legislation. The rigid approach in these amendments would prevent the Secretary of State from exercising their powers to respond to the details of individual cases. For this reason, the Government will not accept these amendments. However, I hope that noble Lords are reassured by my explanation.

Regarding Amendment 59 tabled by the noble Lady, Baroness Jones of Moulsecoomb, I have already spoken at length about the costs of nationalising the water sector. It would require a fair price to be paid to shareholders and debt holders. This would come to over £90 billion. I know that noble Lords have disputed this figure, but it is based on Ofwat’s regulatory capital value figures for 2024. I have also spoken about the benefits—or lack thereof—of nationalisation.

Research commissioned by the Consumer Council for Water, an independent organisation that represents customer interests, found that a substantial change to the industry and company ownership would not address the main problems experienced. We also see a variety of ownership models in the UK and internationally, with clear mixed performance. For these reasons, the Government have been clear that nationalisation is not on the table.

[Baroness Jones of Moulsecoomb (GP)]

As the noble Lord, Lord Sikka, said, it is okay for the railways but not for water. If it were within the remit, at least we could get some accurate figures. At the moment we do not have accurate figures. Also, a recent poll said that 82% of the general public would like water out of private hands and in public ownership again. That means that this Government are going against the grain.

Water (Special Measures) Bill [HL]

Baroness Jones of Moulsecoomb Excerpts

Committee stage
Monday 4th November 2024 Lords Chamber

[Earl Russell (LD)]

My Lords, this group of amendments is on water company ownership. In preparing for this Bill, my Whips’ Office briefing note said that, in some circumstances, Ofwat could take no fewer than 25 years to revoke a water licence. When I read this, I found it hard to believe that this was the case, so I had to go away and have a look at it myself.

I note that different conditions apply to household water companies and retail or business suppliers, as retail suppliers operate within a different market, and that this is an extremely complex area of legislation. I understand that Ofwat can take up to 25 years to revoke the licence of a water company in some cases where it is in breach of its licence conditions. My amendment is a probing one. I want to be certain that it is possible for licences to be revoked much earlier than 25 years for matters such as sewage spills and failures to invest in infrastructure. I am also interested in looking at whether six months is a feasible timeframe for revoking licences in the cases of the worst sewage spill offenders.

It is unacceptable that, in 2023, for example, water companies dumped 54% more sewage in our lakes, rivers and coastal areas than they did in the previous year. This amounted to some 464,000 incidents and some 3.6 million hours of untreated sewage discharges in England alone, yet few water and sewage discharge licences have been revoked as a direct result of sewage spills.

The Government have given a clear commitment to make improvements, and this Bill contains many measures that we welcome. The framework for these proposed improvements is one where the Government are passing this Bill to bring in more immediate measures in order to hold the water companies to account and to strengthen the powers of the regulators. This is being done now while the water commission undertakes deeper, more fundamental thinking to make further recommendations in due course.

The Government’s argument is based on the belief that Ofwat can be supported, strengthened and remade to be an effective regulator. The arguments I want to discuss relate to the ultimate sanction of revoking water and sewage discharge licences. If Ofwat is to be effective, the ultimate sanction must act as a real deterrent against illegal and improper behaviour. I fully recognise that my suggestion of changing this to six months may not work and may need a rethink; I would be more than happy to discuss this with the Minister if it is of interest. I recognise that there is a need to balance the needs of water companies, their investors and customers, as well as to ensure continuity of supply.

I will be honest: I know that there are many different licences and conditions for revoking them, and that this is a complex area. The conditions for a quick termination, applying to the issues of a special administrator and bankruptcy, are welcome. My concerns relate more to the broader, far from general, form of deterrence for water companies doing what they have been doing up to now with no real comeback, such as siphoning funds off to shareholders while failing to meet the required levels of investments, falsifying self-reporting of sewage discharges and failing to prevent sewage spills.

I want this amendment to lead to a brief discussion on the licence conditions in place now. I seek reassurance from the Government that they will have a look at these powers, look at how they are used in practice and consider whether any changes are required as part of this Bill. I do this as there are no real changes to any of the licence termination conditions; I wondered whether this was a mistake or oversight. The imposition of tougher prison sentences and higher fines are welcome measures, but what happens if these measures alone failed to regulate companies’ behaviour?

For comparison, the revocation of licences in other regulated sectors appears generally to happen on a much quicker timescale. Can the Minister give the rationale behind leaving the 25 years in statute, and can she give examples of Ofwat acting much earlier in relation to lack of investment or pollution incidents? What is the average time for revoking a water and sewage licence?

I beg to move.

[Baroness Jones of Moulsecoomb (GP)]

My Lords, I will speak to three amendments in this group: Amendments 97, 98 and 99. This weekend saw tens of thousands of people marching for clean water in London. It was the most amazing event. It was a chance for me to speak to people who agree with me—as opposed to being here in your Lordships’ House, where not many people agree with me.

[Baroness Bakewell of Hardington Mandeville (LD)]

Oh!

[Baroness Parminter (LD)]

That is not true.

[Baroness Jones of Moulsecoomb (GP)]

I am sorry. Thank you; it is lovely to see the noble Baroness, Lady Bakewell, back in her place.

All three of my amendments are intended to be helpful—that is, to help the Government regulate the water industry properly and end the 30 years of fleecing bill payers while dumping sewage into our waterways. It is an absolutely unforgivable three decades of abuse of the system.

Amendment 97 would prohibit the Government bailing out shareholders and creditors of water companies in the event of special administration. Amendment 98 would allow the Government to take back control with public ownership of water companies, but it is only an option. It is an option that I believe the Government could use as a lever in their negotiations with the water companies, so I think it is worth putting it back in the Bill. Amendment 99 would allow water companies to be put into special administration for failing on environmental issues, such as leaks and sewage spills.

What strikes me about these issues is that the public are demanding that this is sorted, but the Government are giving us half measures. I am concerned that that will not bring the sort of change we need. There is a democratic shortfall here because polls tell us that 82% of the public want to end privatised water, but only a few of us in Parliament are willing to consider it. To me, this suggests that the Government are out of step with the public, which is very concerning for me; I would like the Labour Government to last longer than one term because I really do not want to see another Conservative Government in my lifetime. There is, of course, a fear among many campaigners that this Bill will raise their water bills by enabling the Government to bail out and reward the people who got us into this mess in the first place.

I thank the noble Baroness, Lady Parminter, and the noble Lord, Lord Sikka, for signing Amendment 97. It is essential that the Government do not bail out the water companies in such a way that they simply hand money to shareholders and creditors and let them start afresh, behaving in the same way but perhaps with a little more regulation. Amendment 97 would prohibit this so that the public purse does not underwrite the casino capitalism and financial engineering that has been going on in the water sector. We have a ridiculous situation where the debt is being traded by hedge funds, which are gambling on water bills going up in future to finance a bailout. If these companies fail, let us instead bring them into public ownership and democratic control. The shareholders and creditors took a gamble on greed when the companies used £75 billion since privatisation to pay dividends rather than invest. Let them take the hit.

Amendment 98 would allow the Government to set out how they will bring water companies into public ownership. The Greens are deeply disappointed that the Government have ruled this out. I do not understand any sort of ideological addiction to private ownership of a public service such as this, particularly when it is not even a competitive market. It is a monopoly, and it is time it stopped.

I have heard the Government say that private investment is essential, but it is simple maths that, if we stop paying dividends and debt payments, that frees up 40% of people’s water bills to be invested in fixing the sewerage system and building more reservoirs. The Government have been using overinflated estimates from the water industry—a figure of some £90 billion—to claim that public ownership would be too expensive, but actually, it is the complete opposite: it is privatised water that is too expensive to continue. Water company shareholders have spent decades sucking out the profits while loading debt on to the balance sheets and hiking people’s bills. That is inevitable, as free market economics simply does not work without competition. Thatcher turned a public monopoly into a cash cow for people who are greedy. Unless amended, this legislation does nothing to stop that continuing for another decade. I want the Government to at least have the power to bring the companies into public ownership. If they rule out that option, the Government will make any taxpayer bailout a lot more expensive, as a potential buyer has the upper hand in all negotiations.

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Further, it is worth noting that performance in general, not just where poor performance has led to a prosecution, is already a criterion. My noble friend asked what financial assistance the Government would provide to a company under a SAR. I confirm that the Government would provide financial assistance to ensure the day-to-day operation of any water company under a SAR. However, we expect that many of these costs would be recouped through the sale of a water company at the end of the special administration, to minimise any cost to the taxpayer. I hope for these reasons that my noble friend will not move his amendment and I thank noble Lords for their contributions.

[Baroness Jones of Moulsecoomb (GP)]

Before the Minister sits down, I had better clarify: I want another Labour Government only if I cannot have a Green Government. On the issue about having monopolies where market forces do not operate, can she see that there are inherent problems in having monopolies on something such as water—or any public service that we all need?

[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.