Water (Special Measures) Bill [HL]

Debate between Earl Russell and Baroness Jones of Moulsecoomb

Committee stage
Monday 4th November 2024 Lords Chamber

[Earl Russell (LD)]

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

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

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3.6 million hours of untreated sewage discharges in England alone, yet few water and sewage discharge licences have been revoked as a direct result of sewage spills.

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

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

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

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

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

I beg to move.

[Baroness Jones of Moulsecoomb (GP)]

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