Water Industry (Specified Infrastructure Projects) (English Undertakers) (Amendment) Regulations 2020

Debate between Baroness Jones of Whitchurch and Lord Alderdice

Monday 8th June 2020 Lords Chamber

[Baroness Jones of Whitchurch (Lab) [V]]

My Lords, I thank the Minister for his introduction to these amended regulations, and I thank all noble Lords who have spoken.

As the Minister said, this is a fairly straightforward change, removing the sunset clause from the original regulations agreed in 2013. We should welcome the approach taken back then, as it seems a model of good government, and the inclusion of the sunset clause has given us the opportunity to debate the issues today. At the time, it was an innovative approach to funding large infrastructure projects. It provided for a timely review and an end date, which would force us to consider whether the approach was working. That is exactly what we are doing today, and we should not take this responsibility lightly. I agree with noble Lords who queried whether a further sunset clause might be appropriate. I shall be interested to hear the answer to the question from the noble Baroness, Lady Bakewell, about whether there will be further reviews. We do not want the response to this to be open-ended when the sunset clause comes to an end.

Clearly, the fact that other funding options were considered at the time is an indication that the Government saw this as an experimental approach which might not be successful. However, the one model that we have before us today—the Thames Tideway Tunnel project—seems to have made a success of the powers enabled by the regulations. As noble Lords have said, this is a huge and impressive engineering project. It has generated thousands of jobs and is bringing significant environmental benefits by protecting the Thames from sewage overflows. Like many noble Lords, I have had a chance to visit the construction site along the Thames and have been hugely impressed by it. I am very pleased to report that it appears to be on target for completion by 2024 and largely on budget.

In this case, the creation of an infrastructure provider separate from Thames Water, which was allocated to Bazalgette Tunnel Ltd after a competitive process, seems to have worked well. Of course, there continue to be risks with both the funding and timescale. Can the Minister explain what continued monitoring and regulation of the project will be in place to ensure that customers will be protected from footing the bill if the private funding falls short in future? He will be all too aware that the privatised water industry does not have a good record of putting customers’ interests first. Recently, we have seen customers left without water for days and trillions of litres of water lost through leakages, while those at the very top have been rewarding themselves with huge bonuses. It remains important that we have robust oversight of multi-million-pound projects such as this.

In addition, the post-implementation review, which took place in 2018, mainly received responses from stakeholders with a financial interest in the project. Not surprisingly, they said that everything was going really well. However, as noble Lords have pointed out, the Consumer Council for Water’s response was more circumspect. It said that the arrangements for

“the handling of customer complaints and queries presented greater challenges … a significant amount of proactive communications was required to educate and inform customers … This activity … was not originally accurately priced”.

Meanwhile, Ofwat reported that the “initial delivery” of the regulatory

“framework was significantly more complex and time consuming than originally anticipated”.

What steps have now been put in place to ensure that these concerns are addressed and not replicated in future projects that would operate under these regulations?

Finally, the removal of the sunset clause opens the door to other complex water infrastructure projects to be funded via this route. So far, it has applied only to Thames tideway, but the Explanatory Notes make reference to a number of new high-risk infrastructure projects that might benefit from these regulations in future. I am grateful to the Minister for his outlining the four projects being considered under that reference. How will the Government ensure that this funding model is appropriate for each of those four new projects? How will they ensure that lessons are learned from the Thames tideway experience so that a more responsive and accountable system of oversight and delivery is applied in future?

I look forward to the Minister’s response to my noble friend Lord Adonis’s question on whether a future national natural water network is being considered. That certainly seems a hugely sensible option for a country that suffers both flooding and drought. I also agree very much with the point made by the noble Lord, Lord Blencathra, about separating rainwater from sewerage. Again, I would be grateful if the Minister could address that point. Other than that, I welcome the proposals and look forward to his response.

[The Deputy Speaker]

Unfortunately, the noble Baroness, Lady McIntosh of Pickering, ran into a technical problem earlier. I think that we have time so I would like to see whether we can bring her in now.