Fair Dealing Obligations (Pigs) Regulations 2025

Baroness McIntosh of Pickering Excerpts

Monday 12th May 2025 Grand Committee

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

My Lord, these regulations use powers contained within the Agriculture Act 2020 which enable the Government to address power imbalances within agricultural markets. These fair dealing powers allow for regulations that impose obligations in relation to the contracts of those businesses—usually larger businesses—that purchase from smaller producers. The fair dealing powers in the Agriculture Act, and their first use in the Fair Dealing Obligations (Milk) Regulations 2024, have previously been debated in this House, with important contributions made. I therefore know that many noble Lords will agree that these powers can play a significant role in promoting fairness in this sector and beyond.

I should first say that the pig sector is a British success story, characterised by effective relationships between producers and processors. It is a sector that delivers high-quality products, enjoyed across the UK and around the world. However, where power imbalances exist, relationships are not always as fair as they should be. As a result, farmers have too often felt that they bear a disproportionate share of the risk when market challenges arise.

A public consultation in 2022, seeking views on contractual practices in the sector, highlighted several challenges faced by producers. Defra has developed these proposals in response to the concerns raised and in close collaboration with industry, aiming to ensure fairness for producers while taking account of the practical concerns of processors. I am pleased to report that many stakeholders believe we have struck the right balance—protecting farmers while supporting existing good practice.

There will be opportunity for detailed discussion, but I would like to begin by outlining some key provisions. First, I will say a word on existing structures that already serve to protect farmers. We heard from many producers that the collective negotiation undertaken through marketing groups is highly valued. These regulations preserve this arrangement, allowing collective sellers, who purchase pigs from more than one farmer without processing them, the same protections as individual sellers.

At the heart of the regulations is the principle that written contracts should be the norm. While many transactions already use written agreements, this is not consistent across the sector. Establishing written contracts as the default provides a vital safeguard for farmers’ rights and promotes greater transparency in commercial relationships. Although industry supported this approach, it was also clear that not every transaction requires a protected contract. The pig sector includes a functioning spot market, where pigs are traded off-contract, an important mechanism for managing supply. In these cases, and others, the regulations allow producers to issue a notice to disapply the requirements for certain purchases. However, in most cases, both farmers and processors benefit from certainty. When no notice to disapply is given, farmers must be offered a fully compliant written contract, which cannot be varied without their consent. We heard clearly that farmers often felt that changes were imposed on them unilaterally, and this is not in the spirit of an open and balanced relationship.

One of the key priorities raised was the need for clarity around agreed volumes of supply. Clear terms in this area will support better planning and ensure that both parties fully understand their responsibilities and the consequences if those commitments are not met. In the pig sector, pricing is already often linked to published data or other shared information, offering a level of transparency that benefits both parties. The regulations encourage this approach by placing fewer obligations on processors who base their prices on such information.

At the same time, we were clear that flexibility must be preserved. It is for producers and processors to decide together how prices are calculated, reflecting what works best for their commercial relationship. However, when pricing mechanisms use data or factors which are not clearly accessible to producers, it is right that contracts include provisions to allow farmers to verify that pricing is fair and consistent with the agreed terms.

In addition to volumes and pricing, the regulations require that contracts clearly set out all terms relating to the purchase, as well as essential elements of the agreement that define how the relationship will operate in practice. These include matters such as payment terms, delivery arrangements, and how and when the contract can be terminated. While the specific details of these terms can be negotiated between the parties, this clarity helps protect farmers by reducing the risk of sudden or unfair changes, ensuring that both sides understand their rights and responsibilities throughout the contract. Importantly, all contracts must include a dispute resolution procedure. This will promote dialogue and help sustain the successful relationships already present in the sector.

The regulations extend the enforcement powers of the Agricultural Supply Chain Adjudicator. The ASCA will investigate complaints about compliance with these regulations, as it already does in the dairy sector, on behalf of the Secretary of State.

Before I conclude, I should note that these regulations make an amendment to the Fair Dealing Obligations (Milk) Regulations 2024. After those regulations came into force, the Government were made aware of unintended consequences regarding tiered pricing in exclusive agreements. We received representations from businesses with shared ownership structures, explaining that exclusive supply is central to their model, and that the prohibition on tiered pricing was inadvertently penalising arrangements that actually benefit producers. These regulations therefore introduce a limited amendment to allow such practices in cases where a shared ownership structure is in place.

In summary, I hope I have demonstrated to noble Lords that these regulations represent a significant step forward for fairness in the UK pig sector. They respond directly to producer concerns, protect practices that work well, and will promote more balanced and transparent contractual arrangements. I beg to move.

[Baroness McIntosh of Pickering (Con)]

My Lords, I welcome the regulations before us this afternoon and thank the Minister for giving us the outline. It is an interesting backdrop, in the sense that pig prices seem to have been at their highest for a while now. I have come straight from a meeting with some Danish businesses—none of them farmers. While I am half-Danish, I wish to help only the British farmer, I should explain.

I am a big supporter of auction marts. How will this provision impact on sales through such marts? Will they be left pretty much as is allowed at the moment? Presumably, the regulations will come into their own at a different time, when the prices are particularly low and when the farmers, or pig producers, are not covering the full costs of their production.

Having been an MEP in an area with intensive pig farming and then having gone on to be an MP in another area with equally intensive pig farming, it was very sad to see the impact of foot and mouth disease on pig production. Many farmers will simply not go back into pig production again. Anything that we can do, like the content of these regulations, is very helpful indeed.

The Minister referred to the role of the Groceries Code Adjudicator, and I pay tribute to it. I still believe that we should go further and allow the adjudicator to look at the market and at particular supplies off its own initiative. If there is an imbalanced relationship that it is there to resolve—and overwhelmingly it has worked well—there is no way that someone is going to jeopardise it. That perhaps relates more to different sectors than to pigs, such as the dairy sector and fruit production. If you are in a contract and you are being unfairly discriminated against, it is difficult for you to jeopardise that contract by being identified as a complainant with the adjudicator. I take this opportunity to ask the Minister whether the Government will continue, please, to keep that under review.

Mindful of the fact of movement—which I do not think is covered by the regulations, but perhaps the Minister could write to me about this—we have a number of agricultural shows coming up at this time of year, right through to the autumn, and they are immensely important to the agricultural sector. Again, this probably covers sheep and lambs—I have not seen too many pigs at the Great Yorkshire Show, I have to say. Will the department give advice on movement of animals? I know it is on the case as regards avian flu, but some imports have already been banned because of foot and mouth existing in parts of the European Union. Will she make sure that the department gives advice at the earliest possible opportunity, well in advance of the shows taking place? That would be very welcome indeed.

I cannot let this opportunity go without singing the praises of the Malton pig factory. Again, while not directly within this remit, we have a bed and breakfast for pigs in North Yorkshire, and they are just as well looked after as we are at the famous bed and breakfasts that many of us stay in. One of the outlets for the bed and breakfast pig industry is the Malton Bacon Factory. It exported a huge amount to China, which takes pig’s trotters and other parts of the anatomy that I will not go into, which we do not enjoy in this country. That was a multi-million pound contract, and that might have gone by the wayside. The regulations focus probably more on those that do not necessarily have an initial contract.

One thing that struck me in the regulations—I am very grateful to the Secondary Legislation Scrutiny Committee’s 21st report—is that it seems very odd in this day and age that many contracts are still not made in writing. Will the Government insist on that through the course of the regulation? The committee highlights in paragraph 44 that the requirements will

“include that all contracts are made in writing, contain clear pricing terms and set out how the price is determined”.

That relates to my initial question about how this will impact—presumably, the auction marts will be left alone and this will relate just to those contracts that are done individually. I would be very interested to know what proportion of the market is intended to be covered by the regulations. I welcome the regulations this afternoon and the opportunity to raise those issues.

[Lord Jones (Lab)]

My Lords, it is always instructive to follow the noble Baroness, Lady McIntosh. I thank the Minister for her persuasive, well-informed introduction. I do not quite know how George Orwell—Mr Blair—would view these regulations, because he had it in for Napoleon. But the Explanatory Memorandum is very helpful, and clearly Mr Andrew Powley has played a blinder in the department.

In another place, for some 31 years, I visited perhaps six farms a year, and one was hospitably received—bacon sandwiches were often on the farm menu. Indeed, I was once an Agriculture Minister in the lovely land of Wales. I cannot be the only one of your Lordships who regularly tunes in at 5.45 am to Radio 4’s informative farming programme. Pigs feature therein, and I am sure our Minister listens quite regularly to that programme—after prayers, of course.

Farming: 25-year Road Map

Baroness McIntosh of Pickering Excerpts

Monday 28th April 2025 Lords Chamber

[Baroness Hayman of Ullock (Lab)]

My Lords, as I said, the first iteration will be published later this year. As we are still in the process of determining the content of the road map, and therefore the timetable of implementation, I am unable to give a detailed answer to my noble friend. We will publish more details in due course. I can assure her that we are continuing with targeted engagement right across the sector in order that we can agree a collective vision and shape the first version of the farming road map through discussion with stakeholders.

[Baroness McIntosh of Pickering (Con)]

My Lords, does the Minister share my concern at the loss of farmland, to the tune of 10%, through the proposed clean energy projects? Will she ensure that the road map rolls back this land grab and ensures that all grade 1, 2 and 3 farmland—the most productive land—will remain in farm production, putting food security and self-sufficiency at the heart of the road map?

[Baroness Hayman of Ullock (Lab)]

I assure the noble Baroness that food production and self-sufficiency will be at the heart of the road map as it is developed. We work very closely with DESNZ around where energy projects are sited. With the land use framework also being developed, there is a lot of discussion about the best use of farmland, because we do not want good agricultural land taken out of food production.

Farming and Rural Communities

Baroness McIntosh of Pickering Excerpts

Thursday 3rd April 2025 Lords Chamber

[Baroness McIntosh of Pickering (Con)]

I congratulate my noble friend on securing this debate, and I welcome the Minister to her place today. I declare my interests as vice president of the Association of Drainage Authorities and a member of the rural interest group of the Church of England Synod; I also work with dispensing doctors in rural areas. I can testify to the inequality in access to healthcare, housing and transport in rural areas.

It is a matter of regret that Labour, having been elected on the promise of restoring trust and confidence in government, has achieved quite the reverse with its farming and planning proposals. First, it reversed its promise not to amend inheritance tax proposals affecting farms, or agricultural property relief; then there was the early closure of the sustainable farming initiative, with no promised six-week notice. How can any responsible farming business plan around such erratic policy changes without notice or time to prepare to make alternative arrangements?

The impact on the uplands has been severe. Farmers are stuck in less lucrative, higher-level stewardship schemes and are unable to switch. Early SFI closure has had a particularly devastating impact on family and upland farms. There is a long-term threat to livestock, which will simply disappear from the uplands, and there will be a consequential knock-on impact on lowland farms too.

I urge the Minister to find a better balance between food production and nurturing nature, and to recognise: who better to achieve this than farmers, who actively farm the land and tend the livestock?

The issues of food security and greater self-sufficiency in food must be addressed. We must learn from the invasion of and ongoing hostilities in Ukraine the lesson of how quickly the food supply chain can be upturned.

The economic impact of the international aspects of food and farming cannot be ignored. The free trade agreements with Australia and New Zealand have been neither fair to our farmers nor have allowed them to compete. The very minimum demand in any free trade agreement should be that imports be permitted only if these agricultural products meet the same animal welfare and environmental standards as are demanded of our domestic producers. In addition, no meat should be allowed into the UK if produced with antibiotics or hormones or rinsed in chlorine.

Farmers play a crucial role in flood prevention and flood resilience. The noble Baroness will have seen this first hand locally in her time as a constituency MP. This role is exercised through internal drainage boards, as well as the regular maintenance and dredging of water courses, for which farmers and landowners are responsible. It is still not clear whether the temporary storage of water on land, by farmers and other rural businesses such as golf courses, will be rewarded under the ELM scheme. If so, how will the de minimis rules of the Reservoirs Act apply in these circumstances?

The role of auction marts should be celebrated. They not only set an economic and transparent price, but enable the animals to be seen live at the point of sale, and provide an essential social and support network.

Farming is a vital part of the rural economy. When farming does well, a market town flourishes. Children attend schools in a healthy and well-fed fashion, and farmers clear the roads of snow and ice in winter and play other such roles throughout the year, benefiting the rural community—at no cost.

The Planning and Infrastructure Bill poses a further threat to rural communities with its proposals for building and developing on high-grade agricultural land. The Minister kindly promised to return to me on the vexed question of 9% of farmland being lost under energy proposals to build solar farms, battery storage plants and pylons on farmland. Has she had the opportunity to look at this and discuss it with the Energy Minister in this place? Farmers need certainty and stability, not these constant changes at short notice, which do not instil confidence for their future.

Farmers’ mental health is an issue of mounting concern. I pay tribute to the churches for their rural pastoral work, as evidenced by the outreach to rural communities such those in Thirsk.

When did the Government take their decision to end SFI? Will they recognise and reward upland farmers for producing food at a time when food security and self-sufficiency levels are being challenged? Will the noble Baroness address the issues of falling stock levels and tenant farmers, most particularly in the uplands; and what will the future be for graziers who want to graze in perpetuity on common land? Finally, where will the growth of the rural economy come from, if not from farming?

UK Fishers: EU Agreement

Baroness McIntosh of Pickering Excerpts

Monday 31st March 2025 Lords Chamber

[Baroness Hayman of Ullock (Lab)]

As I made quite clear, we intend to negotiate with the EU in the best interests of the fishing industry and to protect our fishing communities. However, due to the nature of the current negotiations regarding the EU reset, I am not in a position to give any further information about what we discussed at those meetings.

[Baroness McIntosh of Pickering (Con)]

Does the Minister share my concern that fishers have lost 10% of their grounds through energy use, particularly through the Great British Energy Bill? How does she intend to address this spatial squeeze and ensure that the fisheries’ grounds loss is not permanent but will be compensated?

[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.

High Seas Treaty

Baroness McIntosh of Pickering Excerpts

Monday 10th March 2025 Lords Chamber

[Baroness Hayman of Ullock (Lab)]

The noble Earl makes a very good point. No law or agreement is worth anything unless we enforce it. That is why we are determined to do all that we can to achieve our 30 by 30 commitments at sea. These are challenging targets—it is important that we acknowledge that. Minister Hardy, who is responsible for this area in Defra, has confirmed her intention to continue working on this and push forward. Enforcement and ensuring that it happens are part of that important work.

[Baroness McIntosh of Pickering (Con)]

My Lords, does the Minister share my concern at the intense pressure that our fishing grounds are coming under with a spatial squeeze from marine conservation and 10% of fishing grounds removed through the GB Energy Act? Will she look carefully at this to see that our fishing grounds and future fishers’ livelihoods are ensured?

[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.

Flood Reinsurance (Amendment) Regulations 2025

Baroness McIntosh of Pickering Excerpts

Monday 10th March 2025 Grand Committee

[Baroness McIntosh of Pickering (Con)]

My Lords, I thank the Minister and congratulate her on bringing this instrument forward, which I wholeheartedly support. I want to press her on a number of issues arising from it.

In the last Parliament, the Minister had the grace and good sense to support an amendment of mine to what is now the levelling-up Act. It stated that there should be no homes at all built on functional flood plains after 2009. As the Minister will be aware, and as this instrument states, there is no insurance cover for homes built on functional flood plains after 2009.

At the time, I was delighted that Flood Re was set up, with the support of the present Government, by the then Conservative Government. However, the mapping is not as tight as it might be. As we discussed during the passage of the levelling-up Bill, we are dependent on local authorities to home in on the crucial area of zone 3b. If the Minister and her Government are committed, as they seem to be, to continuing to build on functional flood plains, which we recognise are not covered by Flood Re, can she tell the Grand Committee the average cost of insurance for those home owners to insure themselves, particularly where they may have been flooded on one or more occasion since they moved into a home which was built after 2009?

I believe that we should look at this in the context of Flood Re and the housebuilding programme. I know the Minister will probably tell me that I must be patient and wait for the planning and infrastructure Bill to come out—perhaps she could give us a date for when to expect it. That is my first and key point: what insurance cover there is, the cost for individual households and to what extent they might benefit.

Has the department done an impact assessment on the instrument as it stands? Is the Minister able to say what plans the Government have to extend the scheme in a number of ways—first, to cover homes built on flood plains after 2009 going forward, but also to extend it to cover businesses in particular? I am not entirely sure what the position is as regards farms, which are partly a business and partly a residence, but there are other businesses as well—many owner properties—where the business and the home are shared.

When will the Government have a view on what the future of Flood Re should look like when it reaches the end of its natural life? When this instrument was discussed in the other place, my honourable friend Dr Neil Hudson, who speaks for the party there, asked about the frequently flooded allowance, which was introduced by the last Government as a ring-fenced fund of £100 million to protect areas that had been affected by repeated flooding. Is the Minister able to say whether the Government are minded to continue that programme going forward?

I am sure that, when responding, the Minister will say that the Government have improved the resilience of properties and therefore are quite entitled to encourage local authorities to build on functional flood plains. She was, sadly, unable to attend the launch of the report by Westminster Sustainable Business Forum—Policy Connect—in which we looked at flood and coastal erosion risk management policy for the new Government. I do not know whether the Minister has had a chance to look at this, but will her department especially consider our recommendations to ensure the uptake of property flood-resilience measures, some of which come under Build Back Better, to which she referred—but they also go beyond that? Will the Government be minded to allow for the installation of both resistance and resilience measures as part of property flood-resilience schemes funded by the Environment Agency? Will she also review the eligibility criteria and distribution process for the property flood-resilience repair grant scheme to make it more widely accessible and streamlined? Further, will the Government align all property flood-resilience funding resources—including those from the Environment Agency’s property flood-resilience framework, Flood Re’s Build Back Better and Defra’s flood-resilience repair grant—to the same amount, so that all the funding resources would be aligned at £15,000, possibly as part of the forthcoming multiyear spending review? I realise that these are very technical recommendations and that the Minister may not have the answers, but they relate to the instrument and the forthcoming spending review.

Finally, the recommendation that I press to the Minister today would be to normalise the use of property flood resilience in both new and existing properties. Part C of building regulations should be updated to require the installation of basic property flood-resilience measures for properties at risk of flooding and the installation of very basic no-regret measures for all new homes, irrespective of risk.

These recommendations go to the heart of my belief that, if we continue to build properties that are not covered by Flood Re, we owe this to the people who will buy those properties. I find myself not needing a mortgage: I had sold a property, and I was in a position to have bought, and I almost did buy, a property without a mortgage—this is going back to the 2000s. No one would have told me that I could not be insured. I know the Minister will say that they can be insured, but I would be interested to know how affordable it is for these properties not covered by Flood Re and built after 2009 on flood plains. How expensive is that insurance? If the Government are going down this path, we must have more resilient houses built in those areas. That said, I welcome the opportunity to debate the instrument today. I hope it will have a fair wind and be approved.

[Baroness Bakewell of Hardington Mandeville (LD)]

My Lords, I thank the Minister for her introduction to this short but important statutory instrument. I was assisting on the Water Bill in 2014-15 when Flood Re was first debated to provide insurance to properties that were uninsurable due to constant flooding, the main insurance companies not being willing to take any of the risks on those homes and dwellings.

This SI is quite simple: it raises the levy that insurance companies can indirectly pass on to their customers from £135 million to £160 million. The £135 million level was set in 2022, when the levy was reduced from £180 million. The Explanatory Memorandum quite rightly states the importance of not having a levy that is higher than it needs to be, but I stress that there is a danger in setting it too low.

--- Later in debate ---

[Baroness Hayman of Ullock (Lab)]

My Lords, I thank noble Lords who have taken part in this debate today. Personally, I was very pleased when Flood Re came in; I thought it was incredibly important legislation. Anyone who has lived in a house that has flooded, like I have, and in communities that flood, will know how very important it was that we had this insurance scheme come into place. I therefore thank noble Lords who have supported this small but extremely important SI today; it is important that the scheme stays viable and continues.

I would like to try to cover most of the questions that have been asked. There has been a desire for government to look at whether the scheme can be extended; that came across clearly from all who took part. Before I go into the particular individual responses and specifics, let me say that although we have no plans to make changes right now, we are continuously keeping all our policies under review, including those relating to flooding insurance. It is important that we discuss, debate and listen to others as we move forward in how we make those decisions around policy changes. If we make any changes to the scheme in future, it would be important that we secure the appropriate reinsurance for that, which would be challenging in the current market. To put it into context, this would mean that the levy we are talking about today would then need to be increased even further.

I know that noble Lords are aware that, currently, leasehold properties with three or fewer units, where the freeholder is living in one of those units, qualify for Flood Re building insurance. The problem with larger blocks not being eligible is that they are considered to be commercial businesses, and that is why they fall outside of the scope of Flood Re.

The Flood Re scheme as it is set up at the moment, and as it will continue to be set up through the statutory instrument in front of us, is funded by the providers of household insurance, not those who underwrite commercial policies. Buildings insurance is the responsibility of the freeholder and kept separate. However, I recognise that there is a problem.

When Main Street in Cockermouth flooded, for the second time in only six years, I held meetings with business insurance companies and high street businesses to look at ways we could move forward, because there are still alternative things that we can do and that the Government can look to support.

Having said all that, and with properties built after 2009 having been referred to—the noble Baroness knows that that is something that I was concerned with—we are planning to explore this further. Minister Hardy, who is the Minister responsible for this area, has asked Flood Re to look into the matter to understand the scale of concern and how industry might respond, to ensure that those living in properties that currently do not come under the scheme could be provided with appropriate insurance cover. Although it is not in front of us today and not something we are actively looking at, we have asked for this to be considered further. In the meantime, contents insurance policies can be applicable, so there is that potential as well.

[Baroness McIntosh of Pickering (Con)]

The Minister may be coming on to this, in which case I apologise, but do we know what the policy would cost? I visited Cockermouth and Keswick after the floods in 2009—I have suddenly had a nightmare that I did not tell whoever the MP was that I was there, but we will gloss over that. Many of those people could not afford contents insurance, yet they were clearly at risk of flooding. Does the Minister have a figure, or could she provide one in writing?

Beaver: Reintroduction in England

Baroness McIntosh of Pickering Excerpts

Thursday 27th February 2025 Lords Chamber

[Baroness Hayman of Ullock (Lab)]

Of course, hare coursing is not allowed in this country. I congratulate the previous Government on tightening up the rules around this, which was really important. The particular issue around the shooting of hares is that there is not a closed season, which there is for other species. This is an anomaly, and we should look at it very carefully.

[Baroness McIntosh of Pickering (Con)]

My Lords, I congratulate the Minister on the stand that this Government have taken. If beavers are to be introduced in areas where they are currently not found, to what extent will farmers, drainage boards and others in the catchment area be consulted?

[Baroness Hayman of Ullock (Lab)]

I can be very brief and clear: we intend to do full consultation with stakeholders and work closely with them around any introduction.

Water Companies: Fines

Baroness McIntosh of Pickering Excerpts

Thursday 6th February 2025 Lords Chamber

[Baroness McIntosh of Pickering (Con)]

My Lords, I congratulate the noble Baroness, Lady Grender, on securing this debate, and I am delighted to follow the noble Lord, Lord Browne. I welcome the Minister as ever to her position. I am delighted that the noble Baroness, Lady Grender, has given such a warm welcome to the outgoing Conservative Government’s Plan for Water and the water restoration fund. I declare my interest as on the register: I am an honorary vice-president of the Association of Drainage Authorities; and I co-chair the All-Party Parliamentary Group for Water.

We were fortunate enough to hear this week from Sir Jon Cunliffe, who has been charged by the Government to produce a report for the water commission by the end of June this year, and I very much look forward to his conclusions. In the meeting of the All-Party Parliamentary Group for Water, he told us that the model that was introduced by the then Conservative Government for water privatisation factored in a level of debt, and I think that is something to which he will refer. He has not been asked to review the water privatisation model in that sense of nationalising the water sector, and I think we should recognise that in the debate today.

I repeat my request to the Minister: when does she imagine that Schedule 3 of the Flood and Water Management Act 2010 will be introduced, so that there will be an obligation for all major new developments to have sustainable drains? That will help the situation and reduce flooding.

Some of the project bids invited by the previous Government are still on the table. For example, farmers were invited to make environmental improvements to prevent flooding downstream by slowing the flow, as we saw in Pickering in North Yorkshire, by creating dams, including by planting and felling trees. Can she confirm that such projects will benefit?

As I had long called for them, noble Lords can imagine my welcome for the Plan for Water and the subsequent launch of the water restoration fund as precisely the types of measure that would benefit farmers and local communities under ELMS and other schemes such as the SFI. A number of groups applied for these schemes to bolster their capacity and capabilities to deliver such on-the-ground projects, and they were invited to put forward bids by June 2024.

They were applied for by farmers and landowners—I imagine in Yorkshire, Northumbria and other parts of the country—but they never heard any more. Can the Minister say what has happened to those projects? As the noble Baroness, Lady Grender, asked, what has happened to the water restoration fund? Farmers, landowners and the environmental organisations working with them were led to believe that these were just the types of projects that the water restoration fund was meant to help.

I have read only the one report in the Guardian to which the noble Baroness, Lady Grender, referred, but if these reports are to be believed, it would be entirely inappropriate for the Treasury to hijack these funds and allocate them to other—I am sure very worthwhile—causes. The fact is that, as the Minister will know, it takes time, resources and money to put a bid in for such schemes as the projects invited through the water restoration fund did. They were invited in good faith to put in these bids in April 2024. I understand that the bids closed in June 2024. They were very exciting bids; they ticked a number of boxes for wildlife and the environment, and they were also appropriate to be conducted by farmers and landowners.

I have long believed that, if the ELM and SFI schemes and the water restoration fund are to work successfully, they should benefit local communities and reward farmers for the work they are already doing. The noble Baroness will be aware of the work of drainage boards in low-lying areas such as Lincolnshire, North Yorkshire, possibly Cumbria and other parts of the country.

It sends out a very bad message from Parliament if one Government invite people to apply for these schemes and the next Government then do not allocate the money. I hope the Minister might be able to share the Government’s thinking in this regard and can confirm that these schemes are still viable and may still go ahead in short order this year.

Water (Special Measures) Bill [HL]

Baroness McIntosh of Pickering Excerpts

Consideration of Commons amendments and / or reasons
Wednesday 5th February 2025 Lords Chamber

[Lord Remnant (Con)]

I declare my interest, having been a non-executive director of Severn Trent, the largest of the listed water companies, for eight years between 2014 and 2022, chairing the board’s remuneration committee during that time.

I support Motion 2A in the name of my noble friend Lord Blencathra and will address the reasons given by the Minister in the other place, and essentially repeated just now by the Minister, for objecting to the clauses this Motion this seeks to reinsert. Those reasons are that the additional process of requiring an SI risks compromising Ofwat’s independence, that it would represent significant government interference in the independent regulatory process, and that that kind of interference could have adverse effects on investor confidence.

These arguments have little merit. Ofwat is a government department, and the Secretary of State is responsible for appointing, and has the power to remove, the chair and members of the board. In no way is Ofwat independent of government; nor can the Government escape association with and responsibility for the rules generated by Ofwat, and their consequences. Ofwat is directly accountable to Parliament. If that is so, why should it not account to us for these rules when drafted?

In any event, independence is a red herring when considering the impact on investor confidence. Investors will focus on the rules themselves and their effect on the ability to attract and retain management, and so on the investability of the water sector. In this, they have legitimate cause for concern. The Government are choosing to abrogate their responsibility in this area to Ofwat—an economic regulator, the core competence of which is certainly not the setting of rules on remuneration, and for which it is unsuited.

There are already signs that Ofwat’s approach will be unduly punitive, particularly regarding its retrospective application. However, I thank the Minister for her letter to me at the end of last November following Report, when she confirmed that Ofwat would look closely at the impact retrospectivity has on long-term incentive plans, but the intent was for the provision to cover performance for the 2024-25 financial year onwards only.

None the less, taken as a whole, these rules may discourage the best people from working in the industry, restricting water companies in rewarding good performance and, which is just as important, penalising poor performance. They are likely to force companies away from bonuses and long-term incentive schemes linked to performance, towards a compensating increase in fixed pay. Thames Water has already indicated that this is the line it is likely to take, and others will surely follow. Is this really the result we want to achieve? At the very least, Parliament should have the opportunity to consider the proposed rules and assess for itself the potentially damaging impact on future investment in the sector.

The scale of investment required to clean up our waterways and rebuild our broken water infrastructure is unprecedented. Institutions have a choice of where they invest. In such a heavily regulated sector, they will make a critical assessment of the quality of management tasked with the delivery of the financial plans underpinning that essential capital programme. If Ofwat gets it wrong, it risks starving the water sector of the investment it desperately requires and which all noble Lords wish to see. At best, it will increase the returns investors demand, with the cost inevitably passed on to consumers.

Given the stakes, it must surely be right that Parliament has the opportunity to scrutinise and approve the relevant rules before they come into effect, so I am very much in favour of Motion 2A, tabled by my noble friend Lord Blencathra. I have listened closely to what the Minister has said this evening, but the opportunity for noble Lords to ask questions in a drop-in session is a poor substitute for further parliamentary scrutiny.

[Baroness McIntosh of Pickering (Con)]

My Lords, I congratulate the noble Lord, Lord Cromwell, on his work. I will briefly lend my support to my noble friend Lord Blencathra and put a question to the Minister in regard to the letter that she sent to us on 31 January, where she says that she wishes

“to give parliamentarians the opportunity to engage with Ofwat”,

but she prefers “alternative, non-legislative means”. It is more appropriate to put this in the Bill, as in our original amendment. I urge the Minister to respond favourably, in that regard, to Motion 2A.

--- Later in debate ---

[Baroness Hayman of Ullock (Lab)]

My Lords, I will speak also to Commons Amendments 4 to 9.

I will begin by speaking to Commons Amendments 5 to 7, which amend the commencement provisions for Clause 1. These amendments will see Ofwat’s duty to set rules on remuneration and governance brought into force on Royal Assent, rather than through the use of commencement regulations. This emphasises the Government’s expectation that Ofwat’s rules should be in place as soon as possible following Royal Assent, as well as providing greater certainty to Ofwat and water companies as to when Ofwat’s duty will come into force.

I know that many noble Lords—in particular the noble Lord, Lord Roborough—previously spoke to the importance of ensuring that Ofwat’s rules on remuneration and governance will be set promptly after Royal Assent. I hope that these amendments provide further reassurance that the Government expect these rules to be brought forward at pace, and I hope that the House is supportive of them.

Commons Amendment 3 is another minor and technical amendment, this time to Clause 10. It ensures that the Environment Agency and Natural Resources Wales’s cost recovery powers are broad enough to enable the recovery of costs associated with the enforcement of the requirement on water companies to produce implementation reports.

Noble Lords will recall that this requirement was added to Clause 2 on Report following calls from across this House to strengthen requirements around the implementation of measures set out in water company pollution incident reduction plans. However, an expansion in the regulators’ cost recovery powers—as set out in Clause 10—was not enabled at the same stage, which left a potential funding gap. Commons Amendment 3 addresses the gap, ensuring that the Environment Agency and Natural Resources Wales can recover all costs associated with the enforcement of the new requirements introduced by Clause 2.

Commons Amendment 3 also clarifies that cost recovery powers concerning pollution incident reduction plans and the implementation reports are available for plans covering areas that are wholly or mainly in Wales, as well as plans covering England. I again hope that noble Lords will feel able to support this amendment, which will help to ensure the regulators can carry out their enforcement duties and functions effectively.

I will speak now to Commons Amendment 4, which introduces a new clause to the Bill, and Commons Amendment 8, which is consequential to Commons Amendment 4. During the Bill’s passage through this House, many noble Lords voiced concerns about vulnerable customers and their ability to absorb forthcoming increases in their water bills. I thank all noble Lords who shared their views on this critical matter, particularly the noble Baroness, Lady Bakewell, who worked with her team to ensure that the discussion continued in the other place.

I reassure the House that the Government absolutely recognise and share these concerns. That is why the Government introduced Commons Amendments 4 and 8, which add to existing powers for water companies to provide for special charging arrangements for customers in need. This will enable water companies to provide consistent support for water consumers right across the country, replacing the current postcode lottery of existing support schemes, which vary from company to company.

The new clause will allow for the possible automatic enrolment of vulnerable customers on to future schemes, enabling them to get the full support to which they are entitled without having to proactively apply. This will be enabled through improved information sharing between public authorities and water companies.

The details of any scheme brought forward will be established through consultation, as required by the new clause and secondary legislation. In the meantime, existing schemes will continue to operate to ensure that vulnerable customers across the country are supported. Separately, we remain firm on our expectation that water companies will hold themselves to account for their public commitment to end water poverty by 2030 and will work with the sector to ensure appropriate measures are taken to deliver this. I hope that noble Lords will welcome this addition to the Bill and will support the Government in ensuring that the necessary powers are in place to enable support to be brought forward through secondary legislation.

Finally, briefly, Commons Amendment 9 was tabled simply to remove the privilege amendment made in my name in this place. Tabling such an amendment is standard practice; I therefore believe no noble Lord will oppose the Government doing so.

I again thank all noble Lords for the time and attention that they have given to the Bill. I beg to move.

[Baroness McIntosh of Pickering (Con)]

My Lords, I shall speak briefly to Amendment 4 and the consequential Amendment 8. I support the Government in this regard. I put a question or two to the Minister on the correlation between energy poverty and water poverty. Is this something that her Government will look at closely? The Minister wrote to me with the level of bad debt, which is a staggering figure: between 2019 and 2024, it cost the water sector £2.2 billion. Will this be addressed by the amendments that she has brought before the House? That would be very welcome indeed. Obviously there are those who can pay but will not pay, but there are those vulnerable customers to which she referred, and I welcome the fact that continuity of support will be secured by these amendments. Although I lend my support, I would be grateful if the Minister could address those two brief points.

Avian Influenza

Baroness McIntosh of Pickering Excerpts

Tuesday 4th February 2025 Lords Chamber

[Baroness Hayman of Ullock (Lab)]

Well, in Defra, we work actively with all areas that are affected by avian influenza, including the areas that my noble friend refers to. All I can say is that Newcastle United appear to be having a better season than Leicester City.

[Baroness McIntosh of Pickering (Con)]

My Lords, will the noble Baroness share sympathy with producers of poultry and eggs, who are deeply worried at this time? My noble friend asked from the Front Bench about the status of vaccination. Is she able to say what that status is, at this time, for domestic production?

[Baroness Hayman of Ullock (Lab)]

Yes. The vaccination of poultry and captive birds—clearly, we are not talking about wild birds—is not currently permitted. Avian influenza vaccination is not considered to be a viable option for this season. We have a cross-government and industry task force exploring the potential for vaccination to be used as a preventive measure in the future. In spring this year, we expect the task force to publish its initial report and there will be a statement on that. We realise this is something we need to work on.