Sewage Pollution: Lakes and Rivers

Debate between Baroness McIntosh of Pickering and Lord Douglas-Miller

Tuesday 30th April 2024 Lords Chamber

[Lord Douglas-Miller (Con)]

I thank the noble Baroness for her question. I assure the House that the Government are taking huge steps to improve the quality of our waterways. We have driven environmentally sensitive farming through the environmental land management schemes to reduce pollution from the agricultural sector, introduced a range of new targets and laws, including 100% monitoring of storm overflows, increased Environment Agency resources for inspections and introduced new legislation to curb dividends and bonuses. We have created a water restoration fund and fast-tracked £180 million of new funding to improve infrastructure this year. Perhaps most importantly, we have also created a long-term vision through our Plan for Water, which marks a step change in our approach and will see £60 billion of investment into infrastructure over the next 25 years. Notwithstanding that, as I said in opening, we have met an enormous number of individuals, environmental groups and interested parties, including the Rivers Trust, which the noble Baroness mentioned. I have met that organisation personally on a number of occasions, although not specifically on this issue.

[Baroness McIntosh of Pickering (Con)]

My Lords, does my noble friend agree that a sea change happened when the legal advice from the Environment Agency was made mandatory? Will the Government agree to accord the same legal status to advice from water companies on when it is unsafe for pipes to be connected to the existing sewage works of new build, including major developments of up to 300? When will the Government bring forward regulations to end the automatic right to connect and a mandatory requirement for SUDS, which will ensure that many sewage works work properly and the sewage does not enter lakes, rivers and the sea?

[Lord Douglas-Miller (Con)]

My noble friend raises a very good point; the water companies are consulted on these issues on a regular basis.

Food Security

Debate between Baroness McIntosh of Pickering and Lord Douglas-Miller

Tuesday 26th March 2024 Lords Chamber

[Baroness McIntosh of Pickering (Con)]

My Lords, I beg leave to ask the Question standing in my name on the Order Paper and refer to my entry in the register of interests.

[The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Douglas-Miller) (Con)]

My Lords, I declare my interests as set out in the register. UK food security remains consistently high, and the Government continue to strengthen it by supporting our farmers and food producers. Underlining this commitment, at the NFU conference we announced the introduction of an annual food security index, underpinning the three-yearly UK food security report. The next report will be out before the end of the year, with the first draft of the index set for the second UK Farm to Fork summit this spring.

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[Baroness McIntosh of Pickering (Con)]

My Lords, will my noble friend join with me in paying tribute to and celebrating the work of our farmers in putting food on our plates, in particular the livestock producers on the hills, and tenant farmers especially? Will my noble friend take this opportunity, against the backdrop of increasing challenges to self-sufficiency, to give farmers and consumers alike an undertaking that any imported food and agricultural products will meet the same high animal welfare and environmental standards as those produced in this country?

[Lord Douglas-Miller (Con)]

I thank my noble friend and entirely agree with her on the issue of supporting our farmers and congratulating them on the work they do. I quite accept the premise that a significant change is going on in the agricultural sector. It was clearly signalled when we transitioned away from the common agricultural policy and focused farming on delivering both food production and environmental goals through ELMS. It is entirely understandable that farmers have concerns about this transition, as it requires them to reappraise how they use the entirety of their land. We are guiding and supporting farmers with new technology, new science and improved productivity to not only produce and maintain high quality food but to enrich our soil, reduce pollution and help reverse biodiversity loss.

Environment Agency

Debate between Baroness McIntosh of Pickering and Lord Douglas-Miller

Thursday 7th March 2024 Lords Chamber

[Lord Douglas-Miller (Con)]

The noble Baroness makes an insightful point about these precious and irreplaceable water bodies—chalk streams. Indeed, 2028 is a key date for changing the current system. Specifically, 95 licences have been revoked in chalk stream catchments since 2008. In addition to reducing the burden of abstraction pressures, the Government are protecting chalk streams and have identified them as a priority site in our storm overflows discharge reduction plan. We are also delivering restoration projects amounting to 400 kilometres in chalk stream areas, increasing investment into restoring chalk stream catchments and looking at further options as part of the environmental land management plan. Defra is also working closely with colleagues in Natural England and the Environment Agency on the chalk streams recovery package, which is intended to set out the broader approach to protecting and recovering chalk streams.

[Baroness McIntosh of Pickering (Con)]

My Lords, part of the problem with Environment Agency funding is the arbitrary definition of what constitutes capital spending and operational expenditure. Will my noble friend look very carefully at this in considering a total budget, or at least at getting rid of some of the arbitrary definitions that are in place?

[Lord Douglas-Miller (Con)]

I thank my noble friend. She is absolutely right that there are issues around this. However, there is a degree of flexibility within the capital and revenue budgets. Money is allocated each year to maintain and look after flood defences, and money is allocated for capital expenditure to make future improvements. Only last year, during the very stormy weather in the autumn, the Secretary of State reallocated capital expenditure funding to revenue for this very purpose.

Waste Enforcement (Fixed Penalty Receipts) (Amendment) (England and Wales) Regulations 2023

Debate between Baroness McIntosh of Pickering and Lord Douglas-Miller

Tuesday 5th March 2024 Grand Committee

[The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Douglas-Miller) (Con)]

My Lords, these regulations were laid before this House on 10 January.

Litter and fly-tipping harm the environment and blight local communities. In a recent survey, 61% of the public thought that litter and dog fouling were a problem in their area, and 49% thought that fly-tipping was a problem. Street cleansing, including clearing up litter and fly-tipping, cost councils in England £822 million in 2022-23. There is clearly a need for more action to deter people from committing these offences, and to ensure that those who cause these problems face the consequences.

Councils already have a range of powers, including issuing fixed-penalty notices to those who litter, fly-tip or pass their household waste to someone without the proper licence. But we know that some councils are not using these powers, even where they have significant fly-tipping problems. In his anti-social behaviour action plan, the Prime Minster made it clear that councils should take a tougher approach to enforcement and make greater use of these fixed penalties. The Government have already taken steps to help councils do just that, including publishing new league tables providing transparency on how councils are using their enforcement powers for fly-tipping. Furthermore, the maximum fixed penalty councils can issue has been increased from £400 to £1,000 for fly-tipping, from £150 to £500 for littering, and from £400 to £600 for householders using an unlicensed waste carrier.

Income from these fines is retained by councils and currently ring-fenced for various functions related to waste management, including sweeping, emptying bins and household waste collection. We know that in a minority of councils, fixed-penalty receipts are absorbed into general council budgets or are spent on other neighbourhood functions. The Government believe that revenue received through payment of litter and fly-tipping penalties should be reinvested in expanding or improving councils’ enforcement functions and cleaning up the consequences of this anti-social behaviour. The instrument will ensure this by amending the qualifying functions on which councils can spend income from fixed-penalty notices issued for littering, fly-tipping and breaching the household waste duty of care, to enforcement and clean-up only.

By improving their enforcement capabilities, councils should be able to catch more perpetrators and deter others from offending, which should lead to cleaner streets, parks and the wider countryside. Enforcement functions could include employing more officers, investing in CCTV and signage and improving the use of data. Clean-up functions can include collecting and disposing of litter and fly-tipping, and restoring land which has been harmed. The instrument also retains the Secretary of State’s ability to make provisions by legislation in future on how local authorities in England use their fixed-penalty receipts.

Although this new ring-fence will apply to councils in England only, the instrument does include consequential amendments relevant to Wales to ensure that no changes are made to how local authorities in Wales can spend fixed-penalty receipts.

The instrument also makes consequential amendments to the Local Government (Structural Changes) (Further Transitional Arrangements and Staffing) Regulations 2009 to ensure that arrangements pertaining to the merging of authorities in England are not affected. Consequential amendments are also made to the Littering From Vehicles Outside London (Keepers: Civil Penalties) Regulations 2018, meaning that no changes are made to how authorities can spend income from these civil penalties.

In conclusion, this instrument will ensure that all councils in England reinvest the money they make from those fines into expanding or improving their enforcement functions and cleaning up the consequences of this anti-social behaviour. This should help deter people from harming our public space and make it more likely that those who do so face the consequences. I hope noble Lords will support these measures and their objectives. I commend these regulations to the Committee.

[Baroness McIntosh of Pickering (Con)]

My Lords, I congratulate my noble friend on bringing forward these regulations and, in particular, on ring-fencing the money raised through the fixed-penalty receipts. I will raise one issue with him. If I have understood it correctly, this still applies only to public land. If so, this is a missed opportunity. In incidents of fly-tipping on private land, as I am sure my noble friend may be all too aware from his home estate, we are increasingly seeing an element of criminality, with people taking construction waste and literally dumping it on private land.

I worked with the Environment Agency when I was an MP and a shadow Minister in the other place. It has a very good mechanism of cameras in strategic places—I know it does not always want it publicised—which can catch the perpetrators of this crime to very good effect. That makes it much easier for it to bring them to book. My concern is that there was a very powerful response from the NFU, among others, and I am sure that the CLA and the TFA would have responded in the same vein. In its response to the original consultation, which is the basis of these regulations, the NFU asked for

“greater consistency across how local authorities, the Environment Agency and the police engage with private land managers who are victims of fly-tipping. We believe it should not be the sole responsibility of the land managers to deal with this crime, when it is a community-wide issue”.

I would like to understand why, if that was in the consultation, the department chose not to apply the regulations or ASBOs to private land and what the basis was for that. The NFU concluded that

“it is imperative that these proposals are not limited to fly-tipping and littering incidents solely on public land”.

I am sure that my noble friend and others in the Committee will have seen the graphic images on television of people now taking matters into their own hands because the Environment Agency and the police do not always turn up. There was a very good example of how these criminals can be apprehended—although there are dangers attached to this—when four vehicles hemmed in one van that was dumping on to private land all the materials to which I have referred.

I accept that there is an inevitable cost to local authorities and the Environment Agency in finding the perpetrators and, for public land, removing this material, but we are missing the fact that most fly-tipping is increasingly on private land. I would like to understand why it was excluded from this. If we are to go down the path of people individually trying to apprehend perpetrators on private land when they are in the middle of a crime, that will bring inherent dangers and I am sure the Government do not wish to encourage it. In the instance to which I referred—I cannot remember which part of the country it was—they apprehended the perpetrator and he was brought to book. The police attended and criminal charges followed.

I applaud everything that the Government are doing to make these regulations, firm up government policy and make sure that the receipts are ring-fenced, but the weakness is that most fly-tipping is on private land and we seem to have left that out.

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[Lord Douglas-Miller (Con)]

My Lords, I thank all three noble Baronesses for their contributions to this debate. I will start with fly-tipping on private land, which they all raised. The Government appreciate the difficulty that fly-tipping poses to landowners. As was pointed out, it is indeed deeply unfair and places a huge and unreasonable burden on private landowners. The Government are working with a wide range of stakeholders, such as the NFU, through the National Fly-Tipping Prevention Group, to promote and disseminate good practice, including how to prevent fly-tipping on private land.

Furthermore, in April last year, the National Police Chiefs’ Council established a new National Rural Crime Unit to support police forces nationally in responding to rural crime, including fly-tipping. Defra has awarded the National Rural Crime Unit a grant of £100,000 to fund a dedicated 12-month post, which started last month on the Northumberland-County Durham border, to explore the police’s role in tackling fly-tipping and how this can be optimised, with a particular focus on rural areas. Outputs from this will include training for police officers and working on intelligence-sharing across borders and between authorities.

Defra is also funding councils across the country to directly intervene at fly-tipping hotspots, including in rural areas, through the fly-tipping intervention grant scheme. For example, in Herefordshire, councils have seen a reduction in fly-tipping of over 90% across areas where CCTV—another issue raised by noble Baronesses —and signage have been installed, and they have developed stronger relationships with local farmers and landowners. If any noble Baroness has further specific questions on that issue, I will write to them.

[Baroness McIntosh of Pickering (Con)]

Why was it excluded from the regulations before us today?

[Lord Douglas-Miller (Con)]

I will write to my noble friend on that because I do not have that detail in front of me.

The noble Baroness, Lady Bakewell, stated quite a strong view about the Government passing this burden, if you like, on to local authorities. Interestingly, that was in fairly stark contrast to what my noble friend Lady McIntosh had previously said. That illustrates to me that there is no right or wrong way to do this; it is probably just a personal choice. Everybody will have a view about how it might be best done, but the Government’s view is that this is the best way to do it. I appreciate that that will not get much traction or be very well received, but it is the Government’s position, and that is where we will be heading.

The noble Baroness, Lady Bakewell, mentioned the powers of the Secretary of State. The Secretary of State already has these powers but due to the drafting required to retain the status quo, it has been necessary to restate them. This is linked to retaining the status quo in Wales. She also asked why there is a difference in the value of littering and fly-tipping. That is largely related to the volume associated with fly-tipping. It tends to be much greater and has the potential to cause much more damage to the land. Sorting out that problem usually takes a little more time and costs a little more money.

The noble Baroness also asked about the date of the draft consultation. I will write on that, because I do not have that detail with me.

The noble Baroness, Lady Hayman, asked whether the SI had been laid, withdrawn and then relaid. She is absolutely correct; this is the exactly the same thing, but there have been a number of changes since then. There were some typographical errors in the last one which this seeks to address. I think she also asked why it has taken so long. The best answer I can give is that it is due to pressing parliamentary business. Other questions related to the number of officers employed and why the West Midlands do not feature in the consultation. Again, I am afraid I cannot give any details on that but will write.

I hope I have answered your Lordships’ questions and that all noble Lords share my conviction of the need for this instrument. As I outlined, it will help move more income from fixed-penalty receipts to building enforcement capability and capacity within English councils, meaning that more offenders are brought to justice. At the same time, the increased deterrent effect should make people think twice before ruining the local environment for the rest of us. I commend these regulations to the Committee.

Packaging Waste (Data Reporting) (England) (Amendment) Regulations 2024

Debate between Baroness McIntosh of Pickering and Lord Douglas-Miller

Tuesday 5th March 2024 Grand Committee

[The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Douglas-Miller) (Con)]

My Lords, we have an afternoon of waste regulations today. These regulations were laid in draft before the House on 17 January. They amend the Packaging Waste (Data Reporting) (England) Regulations 2023. Since June last year, when those regulations were first amended, there has been significant change and development of the collection and packaging reforms. This includes a 12-month deferral to the full implementation of the packaging extended producer responsibility scheme, in order to focus on stakeholder engagement, and a delay to the Scottish deposit return scheme. These events have caused several issues that now require amendments to producers’ data reporting obligations.

I turn to the details of this instrument. These regulations introduce two key changes, but I assure the Committee from the outset that these changes are not a change of policy intent; instead, they address the delay to the Scottish deposit return scheme and stakeholder concerns. First, this SI removes the exemption from data reporting on drinks containers that would have been obligated in a Scottish deposit return scheme. The delay to that scheme, combined with the exemption from the data reporting regulations, meant that 180,000 tonnes of packaging would have gone unobligated for a number of years under both the deposit return scheme and the packaging extended producer responsibility. This amendment accounts for this development and ensures that all packaging supplied in the UK will attract a recycling obligation. The new provisions will exempt this material again once a deposit return scheme is operational.

Secondly, this instrument responds to stakeholder feedback on the definition of household packaging. These amendments address two key aspects of this feedback, broadening the definition to allow for more packaging to be exempt from disposal fees. The first update to the definition concerns packaging, or a packaged product, designed only for use by a business or a public institution: for example, a 50-litre beer keg. Under the current definition, if this beer keg is sold to a wholesaler before being supplied to the pub that uses it, this packaging would have to be reported as household packaging. However, large beer kegs are unlikely to end up in household bins. Our amendments introduce an additional test that offers producers the opportunity to exempt such packaging from being treated as household packaging.

The second update widens this “business only” exemption to include packaging or a packaged product that is supplied to public institutions, such as hospitals or schools, and is unlikely to end up being disposed of in a household bin, such as packaging for an ultrasound scanner or restricted medicines. These amendments allow for more packaging to be fairly exempted from being defined as household packaging and therefore not attract packaging extended producer responsibility disposal cost fees. However, all packaging, regardless of whether it is household packaging or not, will remain subject to packaging extended producer responsibility recycling obligations, as at present. This requires producers to purchase evidence from recycling facilities and those who export packaging for recycling; this is then used as proof that their recycling obligations have been met.

In addition to the two key areas that I have discussed, these regulations also make a number of other changes. There are four amendments that were identified not long after the original regulations came into force in early 2023. We were not able to include these in the amendments midway through the 2023 data collection year as they would have retrospectively increased obligations. We therefore always intended to make these changes starting from the 2024 reporting year.

This includes an amendment to clarify that the packer or filler is obligated for branded packaging if the only brand on that packaging relates to the packaging itself, not the product inside. For example, if a packer or filler puts their product in a branded “Jiffy bag” but does not add their own brand to it, the packer or filler is obligated, not Jiffy. I hope that is clear.

A further amendment to the regulations clarifies who is responsible for packaging where ownership is retained by an overseas producer while a UK-based third party imports or manufactures the product on their behalf. Once the ownership is passed to a UK-based client, that person, as the first UK-based owner, becomes obligated for that packaging. This could be a supermarket or wholesaler. This amendment ensures that packaging does not go unobligated.

The third amendment addresses a loophole to ensure that distributor producers retain their obligations where they sell empty packaging to large producers that then sell the packaging onwards without filling it, for example where a distributor makes coffee cups and sells them to a wholesaler, and then that wholesaler sells them on to a small coffee shop. In this scenario, the amendment will make the distributor the obligated producer for those coffee cups.

The regulations also amend the data reporting requirements on the nation in which packaging is sold. The regulations already require reporting by nation of packaging sold from a business to a consumer. This fix extends this requirement to ensure that data on the nation in which packaging is sold from one business to another is also collected. This was always the intention and will help enable recycling rates to be tracked individually in each nation. In addition, we are making an amendment that will aid distributor producers to comply with the regulations. It does this by requiring the Environment Agency to publish a list of all large producers that have reported data, supporting distributors to identify which of their customers are obligated producers in their own right.

Finally, the SI includes some minor amendments to correct drafting; some provisions to accommodate for the transition from the Producer Responsibility Obligations (Packaging Waste) Regulations 2007; and some changes to help avoid the reporting of one piece of packaging by two producers. These amending regulations will apply to England only, but similar amending regulations are being progressed in Wales, Scotland and Northern Ireland. My officials have worked closely with the relevant departments in the devolved Administrations in the development of this legislation.

In conclusion, I emphasise that the measures in these regulations are crucial for enabling the effective implementation of extended producer responsibility for packaging and realising its associated environmental benefits. I commend these draft regulations to the Committee.

[Baroness McIntosh of Pickering (Con)]

My Lords, I thank my noble friend for tabling these regulations. I have two quick questions.

First, throughout the Explanatory Memorandum, a key theme is the link between the regulations before us and the extended producer responsibility regulations. When might we expect to see them? The two fit quite closely together. I do not know whether my noble friend can give us a date, but I understand that those regulations will contain guidance relating to the ones before us.

Secondly, I looked up the cost-benefit analysis and if I understand it correctly, the costs are about £1,200 million per year, presumably to producers of the packaging —I do not know whether that includes local authorities—and the benefits are zero. If so, is that beneficial going forward, on the basis of that cost-benefit impact assessment?

Peatlands

Debate between Baroness McIntosh of Pickering and Lord Douglas-Miller

Thursday 22nd February 2024 Lords Chamber

[Baroness McIntosh of Pickering (Con)]

My Lords, given the role that peatlands play in flood defences, as the noble Baroness said, will the Minister pay tribute to all those involved in the Slowing the Flow pilot scheme in Pickering? Will he ensure that more private sector funding, either from water companies or others, can also be factored in to speed up the programme to which he refers?

[Lord Douglas-Miller (Con)]

My noble friend makes a very good point on the involvement of private companies. It is one of the Government’s aims to involve them more and get a bigger response from them shortly.

Animal Welfare (Livestock Exports) Bill

Debate between Baroness McIntosh of Pickering and Lord Douglas-Miller

2nd reading
Wednesday 21st February 2024 Lords Chamber

[Lord Douglas-Miller (Con)]

The noble Baroness makes a very good point. Once animals have passed into the Republic of Ireland, that is outwith the jurisdiction of the Bill. That is the current position.

I would like to address the issues eloquently described by the noble Lord, Lord Dodds, and the noble Baroness, Lady Hoey, concerning Northern Ireland and the Bill. I hope they will appreciate that I am somewhat constrained in this respect. Perhaps I might write to them separately on the issues they have raised.

The noble Lord, Lord Dodds, raised the question of negotiations with the EU on veterinary medicines going into Northern Ireland. The Government are committed to seeing a long-term, sustainable solution ahead of December 2025 that will properly support the flow of veterinary medicines into Northern Ireland from Great Britain on an enduring basis. It remains our priority to find a solution, through technical talks with the EU, that removes the barriers to supply of veterinary medicines into Northern Ireland. The Government are very clear that, in all scenarios, it is imperative to safeguard the supply of veterinary medicines into Northern Ireland. If necessary, we will deploy all available flexibilities in line with our legal obligations.

The noble Lord, Lord Carrington, and the noble Baroness, Lady Hayman, asked about the impact of this legislation on farmers and businesses. The current position is that we expect the ban to have minimal impact. We published an impact assessment in 2021, which can be accessed via the Bill’s Explanatory Notes. We estimated the direct cost to businesses of ending live exports to be around £5.2 million across the 10-year appraisal period, or around £500,000 per year. As there have been no exports for this purpose since 2020, the impact will have further decreased.

My noble friend Lady McIntosh, the noble Baroness, Lady Young, and the noble Lord, Lord Carrington, also asked about border control posts on the northern coast of France. EU border control posts can be operated only with the approval of the competent authority in the relevant EU member state. The majority of BCPs are privately operated, and the main barrier to date for the establishment of a BCP for livestock is the commercial viability of such a site. We have encouraged our counterparts in France to do more to support commercial efforts to construct and operate a BCP for livestock, and we continue to engage with them to try to resolve this issue.

[Baroness McIntosh of Pickering (Con)]

My Lords, may I press my noble friend on that point? Across the European Union, most ports are owned by the state. Is there any wriggle room whereby my noble friend and the Government could ask the Government of France to look into providing some sort of help? It looks like a rather protectionist measure as it stands.

[Lord Douglas-Miller (Con)]

I understand my noble friend’s point. I assure her that our officials are working very hard on this issue, but it is not going at pace at the moment.

My noble friend Lady McIntosh also asked why the Bill had been brought forward, given that there are other issues facing our farming sector. It is important that we put a permanent end to this unnecessary trade. Although there have been no exports of livestock for slaughter recently, given that there is demand from the EU for sheep from Great Britain, we would expect that trade to restart in the future if we did not legislate to ban live exports now. She also asked whether there were any plans to introduce a corresponding ban on animals imported for slaughter and fattening. There has never been a particularly significant import trade for either: for example, in 2019, only 91 cattle and 178 sheep were imported for slaughter or fattening from mainland Europe.

The noble Baronesses, Lady Bakewell and Lady Hayman, reflected on the Government’s broader animal welfare commitments. I take this opportunity to reassure them that we remain committed to our other animal welfare manifesto commitments, which are to crack down on illegal puppy smuggling, ban the keeping of primates as pets, and prevent livestock worrying.

On the question that the noble Baroness, Lady Hayman, raised on poultry, when we consulted on banning live exports for slaughter or fattening, we were clear that we were not proposing to extend the ban to poultry. There have been no exports of adult poultry for slaughter in recent years. I appreciate that the poultry industry and breeding companies export around 25 million day-old chicks every year, but no welfare concerns have been identified with this practice.

I once again thank all those who have spoken for their thoughtful and valuable comments. It has been hugely encouraging to hear the broad consensus throughout the debate on the importance of protecting and enhancing the welfare of the animals in our care. It is also clear that we can agree on the core aims of the Bill.

Environment Agency: Flood Defence Expenditure

Debate between Baroness McIntosh of Pickering and Lord Douglas-Miller

Tuesday 20th February 2024 Lords Chamber

[Baroness McIntosh of Pickering (Con)]

I beg leave to ask the Question standing in my name on the Order Paper and declare my interest as co-chairman of the All-Party Parliamentary Group on Water.

[The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Douglas-Miller) (Con)]

My Lords, I declare my interests as set out in the register. In the 2021 spending review, the Government increased funding for flood defence maintenance by £22 million annually, bringing the total investment to more than £200 million a year. Additionally, the Government switched £25 million from the capital programme to use on maintenance this financial year. As a result, 93.3% of flood defences are at the required condition, protecting over 240,000 properties in recent storms.

[Baroness McIntosh of Pickering (Con)]

My Lords, given the constraints on flood spending, does my noble friend agree that resources could be spent differently, possibly better? Does he recognise the importance of regular maintenance and dredging of watercourses and the role of farmers and drainage boards in performing them? Will he agree to look at the possibility of merging the flood spending budget into one total budget, instead of artificially dividing capital and operational expenditure? That one measure alone would prevent arguments taking place during a flood about what constitutes capital or operational expenditure, meaning that the funding could be achieved quicker.

[Lord Douglas-Miller (Con)]

My noble friend raises a good point. With over £200 million per year spent on maintenance, and a £5.2 billion capital investment for the 2021-27 years, flood defences are well resourced. There is a degree of flexibility between the two pots. By way of an example, last autumn the Government switched, as I said, £25 million from the capital programme to use on maintenance, given the severity of the storms. Resource funding to maintain existing flood defences is prioritised and allocated on a risk basis, focusing on assets protecting the greatest number of people and property. My noble friend also asked why we have a maintenance and a capital budget allocation. There are two separate budgets here: one for annual maintenance and one for flood defences. This approach is not specific to flood expenditure, but relates to how the Government account for public expenditure based on the Treasury guidelines.

Water Industry (Special Administration) Regulations 2024

Debate between Baroness McIntosh of Pickering and Lord Douglas-Miller

Monday 19th February 2024 Grand Committee

[The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Douglas-Miller) (Con)]

My Lords, these regulations and the Water Industry Act 1991 (Amendment) Order are part of a package that updates the water industry special administration regime legislation. The package is made up of two commencement orders and three statutory instruments. The first commencement order was made on 11 January and the two affirmative statutory instruments being debated today were laid in draft on 15 January. The second commencement order and the negative resolution statutory instrument will follow shortly after the affirmatives are debated.

The purpose of these statutory instruments is to enable the Government to facilitate a more effective water industry special administration regime. They apply to England and Wales, and ministerial consent has been secured where necessary. The Government already have powers in the Water Industry Act 1991 to apply to the High Court for a special administration order. However, updates are required as the current legislative regime is outdated and modelled largely on the Insolvency Act 1986, which has since been modernised. The most notable legislative updates were the Enterprise Act 2002; the Small Business, Enterprise and Employment Act 2015; and the Insolvency (England and Wales) Rules 2016. These updates to insolvency legislation are not automatically applied to the legislative framework of the water industry special administration regime. Instead, the Government must assess how to adapt these insolvency law changes to each industry’s specific special administration regime. Legislation relating to special administration regimes is laid periodically; recent examples of this are the Payment and Electronic Money Institution Insolvency (England and Wales) Rules 2021 and the Energy Act 2023.

It is vital that the Government are prepared for a range of scenarios, particularly regarding the continued provision of public services. This is why an updated water industry special administration regime is so important. I want to make it clear that the two main grounds on which a water company can enter special administration are unchanged by this legislation. They are insolvency, where a company may be unable to pay its debts or its liabilities are greater than its assets; and performance, where the company has failed to carry out its statutory functions or licensed activities to such an extent that it is inappropriate for the company to continue to hold its appointment or licence. During a special administration regime, customers’ water and wastewater services will continue to be provided.

The first statutory instrument for noble Lords’ consideration is the draft Water Industry Act 1991 (Amendment) Order 2024. This order implements hive down provisions through amending Schedule 2 to the Water Industry Act, which makes provision about transfer schemes upon the termination of an appointment or the transfer of a licence for a water industry company and is amended by this order to include provisions about transfer schemes in cases where there is a transfer by hive down. This amendment is necessary to ensure that the hive down provisions commenced last month by the Flood and Water Industry Act 2010 (Commencement Order 10) Order 2024 are fully operable. Hive down is a common commercial restructuring practice to ring-fence value and attract potential buyers. This amendment allows the administrator to hive down the regulated business to a subsidiary in order to protect its business and facilitate a sale process that may be more attractive to a potential buyer.

The second statutory instrument that I ask the Committee to consider today is the Water Industry (Special Administration) Regulations 2024. This instrument will apply, disapply and modify general insolvency provisions as they apply in relation to water companies, including licensed infrastructure providers, and special administration orders made in respect of those water companies under the Water Industry Act 1991.

These regulations make general modifications to the Insolvency Act 1986 and other enactments about insolvency provisions, alongside specific modifications to Schedule B1 to that Act. The amendments adapt Parts 26 and 26A of the Companies Act 2006 via specific modifications for the purpose of the water industry special administration regime and amend Section 26 of the Water Industry Act, and Schedule 1 to the Water Industry (Specified Infrastructure Projects) (English Undertakers) Regulations 2013. In addition, this set of regulations will give government the power to lay a negative statutory instrument in the coming weeks, which will revoke the Water Industry (Special Administration) Rules 2009, replacing them with updated special administration rules for water companies, based on the 2016 general insolvency rules.

These statutory instruments update the water industry special administration regime legislation to ensure that, should a water company ever be required to go into special administration, a modern, efficient water industry special administration can be implemented. I am grateful for the support of the Committee and am happy to take questions, which I will endeavour to answer in my closing speech.

[Baroness McIntosh of Pickering (Con)]

My Lords, I am most grateful to my noble friend Lord Douglas-Miller for setting out the content of the SIs before us. I am in great support of them and have just a couple of questions to press my noble friend on.

When my noble friend set out the circumstances behind these instruments, he seemed to indicate that we are just putting into effect existing legislation here and updating it. I would just query the timing of this, which was also queried in the House of Commons when these measures were debated there. At the moment, there are additional investments that we are, rightly, asking water companies to make and which are of a very high order: £60 billion of capital investment over 25 years for storm overflows and other investments such as the self-monitoring programme, which was embarked on under the Labour Government and which we vigorously and enthusiastically pursued. Might these additional responsibilities on water companies be causing the Government some concern, or is it literally about putting in and updating the background, as my noble friend set out? Obviously, we all want to ensure that the water companies are fulfilling the legitimate investment that we have asked them to make.

I have a rather cheeky question. My noble friend knows of my interest in Schedule 3 to the 2010 water Act. Why has Schedule 5 been preferred to be implemented before us in these instruments, and when might we get the orders implementing Schedule 3 to the same 2010 Act? That would put into place the sustainable drainage systems and end the automatic right to connect, which has been called for since the Pitt review and surface water flooding of 2007. That is my rather cheeky interjection, which my noble friend might either want to respond to today or write to me on.

Parallels have been drawn in the report before us with energy companies. When energy companies have failed over the last two or three years, the existing customers of a company which was asked to take on the customers of a failed energy company have found, regrettably, that their tariffs and charges have gone up. This is obviously a matter for Ofwat, but can the Government give any undertaking to customers in the event of a water company failing—which, heaven forfend, we would not wish to see—so that, essentially, what happens in the water sector will not be what we saw happen in the energy sector?

--- Later in debate ---

[Lord Douglas-Miller (Con)]

I thank noble Lords for all their questions, which I will now endeavour to have a go at, and for their very welcome support for these instruments. As I mentioned in my opening speech, these statutory instruments will enable the Government to facilitate a more effective, efficient water industry special administration regime, ensuring that we are prepared for all eventualities to ensure the uninterrupted provision of vital services. A number of noble Baronesses touched on that today.

I will start with the several questions asked by the noble Baroness, Lady McIntosh of Pickering. I might have three out of four answers for her; the second one probably eluded us all.

Everyone will be aware that there has been some recent instability and speculation around the financial resilience of some of our companies in the water sector. This has led Defra to carry out due diligence work on our water industry special administration regime legislation. This exercise identified unmodernised provisions in the current legislative framework. These statutory instruments update water industry special administration regime legislation to ensure that it reflects modern insolvency practices, as is the case for special administration regime legislation for other public services. Ensuring that legislation on special administration takes account of modern insolvency and business practices is important, regardless of the financial resilience of the sector, to ensure proper preparedness.

The noble Baroness, Lady McIntosh, also asked whether customers will be paying for water companies’ failures. I think that was the gist of her question, which cropped up in a number of noble Lords’ concerns. I want to make it clear that we will always act to protect consumers as a priority. Any intervention that puts pressure on the public purse will be considered very seriously and only as a last resort. The purpose of being able to utilise a more efficient insolvency practice is to protect consumers and ensure not only that they do not pay for those mistakes but, more importantly in the short term—a point raised by the noble Baroness, Lady Hayman—that we can provide that service. We can have an argument later about who paid for what and whether somebody needs some money back, but it is crucial that that service—water and wastewater—is delivered for everybody. That would be critical if we had to go through an insolvency, so I reassure the Committee on that front.

The final question that I can answer from the noble Baroness, Lady McIntosh, is whether the public would end up paying to bail out a company in special administration. I again make it clear that we will always act to protect consumers as a priority and that, as I have said, any intervention that puts pressure on the public purse would be considered very seriously and as a last resort.

The noble Baroness, Lady Bakewell, asked a lot of questions. I am not sure that I will get to all of them but I will reflect on the ones I have missed and make sure that she gets a written response. The first question was about the Government’s position on Thames Water. As the noble Baroness is probably aware, water companies are commercial entities; it is not appropriate for me or any member of the Government to comment on the position of a specific company. It is for the company and its investors to manage the company’s financial resilience in the context of its licence and broader statutory obligations.

The second question was about why no companies are listed in Ofwat’s leading category, or how many are failing—I think that was the gist of the noble Baroness’s question. It is clear from Ofwat’s performance report that there has been a marked decline in the performance of a number of water companies over the past year or so. This has been driven by company-specific factors but also by the effects of extreme weather, including an unusually hot, dry summer and a winter that brought multiple freeze-thaw events in 2022 and 2023. There are also live enforcement cases against six companies, which precludes a leading rating where an enforcement case is under way. Specifically, there was a question on how many companies we think are going to fail; I am not aware of any companies that are about to fail. I do not have any information on that at all.

The third question was about why the hive down provisions have been introduced. Without them, only a direct sale of assets would be possible. This is likely to be much more expensive and complex to implement from a tax perspective as you would not benefit from the no-gain, no-loss treatment on transfer. It is probably also important to recognise that, if you get to the point of insolvency, the quickest route to providing the services that are absolutely critical is to package up what the company has to deliver in that hive down and get it back into the hands of somebody who can operate the business in the most effective way. Tying it up, with all the debt and the other complications that go with an insolvency, will just complicate and delay the issue.

I turn to the question from the noble Baroness, Lady Bakewell, about breaching environmental standards. As I stated in my opening speech, a water company can be placed into special administration on performance grounds where there is either a serious breach of their principles or statutory duties or an enforcement order that it is no longer appropriate for it to continue to hold its licence. One of the principal statutory duties held by a water company is under Section 94 of the Water Industry Act 1991, which says that a water company has a duty to deal with the contents of sewers effectually and provide the necessary infrastructure for that purpose, including meeting the requirements of the Urban Waste Water Treatment (England and Wales) Regulations 1994. This is key as, without treatment, urban wastewater has significant adverse impacts on our water environment.

Finally, the noble Baroness, Lady Hayman, asked a number of questions. I think I have touched on a few of them as I have gone through here. One of the issues that she focused on specifically was how Ofwat will regulate underperformance. Following the publication of its performance report in November 2023, Ofwat published the financial penalties and payments for all water companies. Ofwat required 13 companies to return £193 million to customers for underperformance in 2022-23. This money will be returned to customers through bills over the 2024-25 year. On the action that the Government are taking on underperformance, industry performance is below the level that the Government and regulators expect and the Government are taking action, alongside Ofwat, as we progress.

[Baroness McIntosh of Pickering (Con)]

Both the noble Baroness, Lady Bakewell, and I asked about the unusual position in which we will find ourselves, where a subsidiary company can be set up, meaning that the company is not competitive or living up to its responsibilities financially. I drew the parallel with chapter 11. Is this the first time that we have done this in the UK or is there another parallel? My noble friend could write to me on this.

[Lord Douglas-Miller (Con)]

It might be easier if I wrote specifically on that. Is my noble friend referring to the special administrator’s duties?

[Baroness McIntosh of Pickering (Con)]

If I have understood correctly, if a subsidiary company is set up for the purposes of the company continuing to act, does that mean, as with chapter 11, that it does not need to pay off its creditors or debtors? Is this the first time that it has happened in this country?

[Lord Douglas-Miller (Con)]

I am a little unsure on that, so perhaps the best thing for me to do is write.

I think we have covered the questions for which I have answers, and I will write to the noble Baronesses on a number of other questions. With that, I commend these instruments to the Committee.

Met Office: 2023 Temperatures

Debate between Baroness McIntosh of Pickering and Lord Douglas-Miller

Tuesday 6th February 2024 Lords Chamber

[Lord Douglas-Miller (Con)]

I believe that it is a Defra responsibility.

[Baroness McIntosh of Pickering (Con)]

My Lords, does my noble friend the Minister agree that, with the changes in weather patterns—intense heat followed by very short, sharp but intense showers—surface water has been identified as an increasing problem since 2007? Will he address the issue of highways authorities not having responsibility for surface water run off? This is one of the greatest causes of pollution in our rivers and it needs to be addressed where it joins with combined sewers and enters people’s homes and our rivers.

[Lord Douglas-Miller (Con)]

It would probably be best if I wrote to my noble friend about this. She has raised a range of issues which I do not have time to go into today. I will write to her in due course.

Water Pollution

Debate between Baroness McIntosh of Pickering and Lord Douglas-Miller

Tuesday 16th January 2024 Lords Chamber

[Lord Douglas-Miller (Con)]

I thank the noble Baroness for her Question. The Government do not believe that there is any collusion. The role of the Environment Agency, as the environmental regulator for water companies, is to provide guidance to help water companies with their water resource management and to ensure that they are complying with the regulations. On FoI and environmental information regulations, water companies are only subject to the Environmental Information Regulations 2004 and not the Freedom of Information Act 2000. For the purposes of the environmental information regulations, water companies are their own legal entity, which means that it is for the organisation itself to tell you why it cannot provide all, or some of, the information requested.

[Baroness McIntosh of Pickering (Con)]

My Lords, I welcome my noble friend to this House and congratulate him on his new appointment. Possibly the best way of preventing sewage entering the watercourses is to ensure the end of the automatic right to connect major new developments with inadequate, inappropriate piping. Will he look into when the consultation will be brought forward to implement Schedule 3 to the Flood and Water Management Act 2010 to ensure that there will be no automatic connections in these circumstances and a better use of SUDS and natural flood defences?

[Lord Douglas-Miller (Con)]

I thank my noble friend for her kind words, which are greatly appreciated. We will be implementing Schedule 3 to the water management Act, as previously announced. I hope that that addresses my noble friend’s question.