Air Quality: London

Lord Berkeley Excerpts

Monday 3rd July 2017 Lords Chamber

[Lord Berkeley (Lab)]

My Lords, I too congratulate the noble Lord, Lord Borwick, on achieving this debate. It has been an excellent debate with lots of interesting comments and statements.

I start by paying tribute to Simon Birkett, who runs Clean Air in London. He has kept air pollution in the public eye and produced a mass of statistics over many years. If we are to have a sensible debate about air pollution, we have to have the right data. Simon has recently produced what I think he calls a Birkett app. If you have the right type of phone, you can look at the Birkett IndexTM—I suppose that means trade mark—which gives the air pollution levels and the percentage of deaths attributable to PM 2.5 in local authorities and regions of the UK. Simon looks at the average over 10 years or so of deaths attributed to different public health risks. Smoking comes top with 80,000 in England. Air pollution comes second with 29,000 in the UK, so it is not totally comparable. Alcoholism accounts for 15,000 to 22,000 deaths, obesity 9,000 and road traffic accidents just under 2,000. It is important for people to understand the comparators and where the data have come from if we are to have a proper debate.

All the arguments focus on the need to reduce traffic, particularly in London. It is interesting to note that a lot of noble Lords have talked about ways to reduce other people’s traffic so that they can get through quicker, which is a natural reaction. However, we have to ask ourselves whether we have the right to drive in London where and when we like, probably at minimum cost to ourselves. The noble Lord, Lord Higgins, talked about roadworks. However, I think that some of those around Parliament recently have been caused by the utility companies, which are a bit of a law unto themselves.

As many noble Lords know, I am a cyclist. Cyclists have come in for a bit of a bashing tonight from a number of noble Lords. The noble Lord, Lord Higgins, talked about cycling in The Hague. I have cycled in The Hague and it is very nice. There are some cycle lanes and places where you can feel safe. However, one of the things about The Hague is that there is not much traffic around, and that must make it a great deal safer. I cycled across Paris a couple of weeks ago between the Gare du Nord and the Gare du Midi. There is a segregated cycle lane most of the way, very like the cycle lanes here. However, as I think the noble Lord, Lord Higgins, correctly said, the law is different on the continent. If a cyclist gets hit by a vehicle, I think that the driver of the vehicle is already at least 50% liable before the circumstances are investigated. A long time ago in your Lordships’ House, I suggested that we should change the law here. I was given a pretty rough time by some of the Law Lords, who said that would mean that somebody was guilty before they were proved innocent, or the other way round. But it has contributed to the antipathy, which is often there, between cyclists and motorists. It would be much better if there were no antipathy and everybody behaved with respect to other road users. One of the cycling groups I am involved in is starting a campaign to persuade cars to keep at least a metre and a half clear of cyclists on main roads. In London that is of course impossible, because there is too much congestion. However, we have to look at all the types of traffic here. Buses have come in for a lot of abuse today too. Trains have not been abused yet—I will talk about them in a minute.

In the rush hour, that cycle lane along the embankment is very full and congested; I sometimes feel in danger going down it, while at other parts of the day it is less congested, as are the buses and the roads. However, the benefits of cycling start and finish with people not feeling frightened on a bicycle, and the segregation achieves that. They made a mess of the cycle lanes through the Royal Parks, which is one of the reasons why there has been a delay in Great George Street; the Royal Parks bit of the cycle lane was about two years late, whatever you think about it, and that has caused a lot of problems. It is the same with buses; if we had electric buses, people would use them. The concentration of people you can get in a train, a bus or a cycle lane is rather higher than you can get in one car. I therefore come back to the question: should we not restrict people’s ability to drive their own cars around London and other cities?

Nobody has criticised white vans or trucks yet, but maybe some of my colleagues will do that in winding up. They also cause quite a lot of pollution. I declare an interest as chairman of the Rail Freight Group. We are trying quite hard to get more freight on the rails into city centres. Sometimes it comes in passenger trains, sometimes in roll cages—such as supermarkets have delivered—or in the guards’ vans of trains; there are various examples of that, including crabs and lobsters from Penzance. However, where do you transfer the freight from the train into, hopefully, an electric vehicle or possibly even for cycle delivery for the last few miles into the centre of London? That would create a large reduction in emissions, but there needs to be somewhere to transfer the freight, such as a consolidation centre. The cost of land around the mainline stations is high, and that challenge has not yet been addressed.

The last aspect is the building sector. There are concrete mixing plants, which everybody sees around London and other big cities; there is a big one just outside St Pancras station, which supplies a large amount of concrete buildings in London—it might even supply HS2, if it gets built from Euston. The materials come in by rail—that is quite environmentally friendly—but then you have big concrete trucks going around London. They are diesels, and generally pretty efficient, but it is difficult to know how that could be transferred to electric in the short term anyway. But the biggest problem we have is in the link between the policies and the planning, which is a problem in London and many other places.

I will give an example. We have talked about the ultra-low emission zones in London, we have plans to ban older HGVs from London, which is probably a good thing, and there is the transport strategy. However, while the transport strategy acknowledges the future needs of housing and infrastructure development—which means all these building materials—in over 200 pages it includes not a single reference to air quality and the congestion benefits of rail freight. That seems a bit odd.

The last point relating to this issue is that there are many little concrete batching plants around Greater London. The railway delivers the aggregate and sometimes the cement as well, and it is mixed on site and delivered locally, but there are more and more cases, including in Stratford and Bow in east London, where local authorities allow residential developments next door to these plants. The residents then obviously complain about the noise and dust, and they want them closed down. We either have these little terminals around London and city centres that can receive the materials by rail from the batching plants, which make the asphalt and so on, or they are brought in from 50 or 100 miles away by truck. It is a planning and policy issue, and I hope that when the Minister responds, he will say that he will look at it again. I hope that we can have a meeting about it later because it is quite a serious problem. There are these lovely terminals, which have been there for years—working 24/7, as they have to—and then people build a house or a block of flats next door to them and the residents complain and want to restrict the opening hours of the works.

I have very much enjoyed listening to and participating in this debate, and I look forward to the noble Lord’s answers.

Natural Environment

Lord Berkeley Excerpts

Thursday 15th January 2015 Lords Chamber

[Lord Berkeley (Lab)]

My Lords, I welcome participating in this debate and listening to what I think is the start of the Liberal Democrat manifesto from the noble Lord, Lord Greaves, and the noble Baroness. I also welcome another engineer to the House of Lords in the shape of the noble Lord, Lord Callanan. I welcome his speech. There are not many of us and he has added quite a high percentage because of that.

The noble Baroness and my noble friend Lord Whitty made a powerful case for change, which I fully support. I want to outline some of the difficulties that we will have in achieving it, especially when people have the time, energy and resources to fight for or against it. Sometimes, of course, even those who are in favour of a particular green or environmental initiative actually spend more time fighting each other than achieving their objective.

I will give two examples. First, I will say a little more about air pollution, on which the noble Lord, Lord Borwick, gave us some very interesting data. The noble Earl, Lord Selborne, and the noble Lord, Lord Bradshaw, also mentioned this. We started off with a Question on 6 January which I put down about the premature deaths caused by nitrous oxide and the PM2.5 from diesel engines. We can all disagree on the exact number of people who may have died prematurely nationwide. The figure I cited was 55,000 people nationwide, with an average loss of life expectancy of more than 10 years. Other people have different figures, but I do not think it really matters. We can go on discussing the figures ad nauseam, but I think we all agree that the figure is very high and it could be reduced.

Again supporting the statement by the noble Lord, Lord Borwick, Dr David Carslaw, who is a highly respected scientist, has said that the pollution in Oxford Street is the highest in the world. That is a pretty challenging statement to make. I suspect he is right. The NO₂ annual concentrations and the hourly exceedances in Brixton Road may exceed those in Oxford Street in 2014. It is easy just to talk about London, but I think the problem is just as bad in many other cities.

The easy solution is to get rid of the polluting diesels, as the noble Lord has said. But how are we going to know where the problem is? The solution, of course, is by the network of measuring stations that, at the moment, local authorities are required to run. I have it on good authority that, before the London Olympics, the Mayor of London covered up the stations that were reading a bit high. Otherwise, the Olympics would have been performed allegedly in an atmosphere that was worse than that of Beijing four years previously. Whether that is true, I do not know.

Of course, it is much easier to deal with the problem by removing the evidence. I think it is extraordinary that Defra wants to remove the requirement for local authorities to keep maintaining such measuring points. It is going to be very easy for a future Government to say, “Well, there is no evidence of air pollution”. The noble Lord may be right that we will be able to measure it on our mobile phones. However, at the moment, having some official statistics is extremely important, because it is easy to say, “Well, there is no evidence, therefore we don’t need to tackle the problem”. Are the Government really allowing 55,000, or whatever the number is, premature deaths to continue because they will not only not ban diesels in the worst polluting areas but now want to remove the source of evidence as to where they should act?

My second example is railways—no great surprise there—an environmentally friendly type of transport and probably the best one, apart from walking and cycling, if people feel the need to move around. The issue of nimbyism is, I am afraid, as rife as ever. We have seen it in all the debates on High Speed 2. People even complain when the railway is in a tunnel, under- ground, two or three miles from their house; they say it will still affect them.

I have heard a more recent example in Bath, which I think is more serious. Noble Lords will know that the Great Western railway is being electrified. When you are putting wires above the trains, you need extra height, which means that you either lower the tracks or you raise the bridges. There is a very famous tunnel, which Brunel built, called Box tunnel, where the tracks have to be lowered to get the wires in. The problem is that there are bats in the tunnel. I love bats and have many friends who love bats. They seem to have survived and prospered in this tunnel for 150 years or so, even when 125 miles per hour trains are rushing through every 15 or 30 minutes.

The only time that Network Rail is allowed to lower the tracks in this tunnel is in July and August, due to the bat breeding season or something—it will do a lot of other work at the same time, which I could explain but will not now. That means that the railway through Bath has to be closed for two months in the summer. Bath, as we all know, is a World Heritage Site and summer is a good time of the year for tourists from around the world to come to Bath. However, because there are no trains, and Network Rail obviously finds it necessary to help move passengers around, it has to use buses. I am told that there will be 200 buses going in and out of Bath for two months in July and August.

We have to have a specially designed catenary because it is a World Heritage Site. We have to drop the track, which may end up on an old Roman ruin, which will probably close the line for another six months while the archaeologists dig. The question is: what price progress? This is one of the reasons why the cost of electrification has doubled around there. It is not Network Rail’s fault, because it has been told to do it this way, but one rather thinks that if the people of Bath and the people who are requiring all these changes do not want electrification, we should give them a steam train instead. We can let the people of Bristol get to London on the other route through Bristol Parkway and have a chuff-chuff between Bristol, Bath and Chippenham. They can pollute their town with smoke instead. Is it really justified for the bats, which clearly have to be protected to the extent that they can have a tunnel dug up only in August, although they survive all the rest of the year round with all this noise going through?

It is a question of what price we pay for progress, a debate that we will continue to have for a long time. There is an added cost and there are a lot of people who feel very strongly about this, but we have to have a balance. I hope in the future we will get a better balance.

Milk Production

Lord Berkeley Excerpts

Thursday 15th January 2015 Lords Chamber

[Baroness Miller of Chilthorne Domer (LD)]

My Lords—

[Lord Berkeley (Lab)]

My Lords—

[Baroness Miller of Chilthorne Domer]

This side. This side.

[The Lord Privy Seal (Baroness Stowell of Beeston) (Con)]

Order. We need less of the shouting of “This side, this side” during Question Time. If we are going to follow the convention of sides, which is not the only convention we follow at Question Time, it is the turn of the Labour Benches, so we should hear from the noble Lord, Lord Berkeley.

[Lord Berkeley]

I am grateful to the noble Baroness. Does the Minister agree that one way of reducing the cost of production would be to introduce mega-dairies and very big units in the way that has been done for poultry and pigs? Does he have a view on that and what sort of size would the Government welcome?

[Lord De Mauley]

Certainly, my Lords, some producers are able to produce milk at a much lower rate—I met a farmer the other day who claimed to be producing milk in the mid-teens. We do not have strong views on the size of units of farms. What matters is stockmanship.

Health: Diesel Engine Pollution

Lord Berkeley Excerpts

Tuesday 6th January 2015 Lords Chamber

Asked by

[Lord Berkeley]

To ask Her Majesty’s Government what plans the National Health Service has to reduce the number of premature deaths caused by the combined impact of nitrogen dioxide and fine particles emitted by diesel engines.

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

My Lords, the plan to reduce emissions and pollution is set out in the Sustainable, Resilient, Healthy People & Places strategy. This encourages walking and cycling, which have direct health benefits, and reduces emissions of air pollutants and carbon dioxide. Key to reducing the health impacts of air pollution is reducing emissions at source. We are investing billions of pounds in measures to reduce air pollution, including incentivising low-emission vehicles and sustainable transport.

[Lord Berkeley (Lab)]

I am grateful to the Minister for that Answer, but is he aware—I am sure he is—that, according to Clean Air in London, 55,000 premature deaths a year nationally are attributable to NOx and fine particulates? Already, monitors in Oxford Street and other parts of London have shown that NOx hourly limit values have been breached for the whole of 2015, which is not bad in six days. Why then is Defra consulting on proposals to remove the obligation for local authorities to monitor such pollution? In the absence of that evidence, are the Government trying to avoid blame for denying those 55,000 people their 10 extra years of life, which they could achieve if the policies were implemented?

[Lord De Mauley]

It is helpful that the noble Lord has asked that question. It gives me the opportunity to clarify that nothing in the consultation could lead to the closure of monitoring stations. It is essentially about streamlining and simplifying the reporting system to reduce unnecessary burdens and speed up delivery of air quality action plan measures to tackle pollutants such as NO₂ and particulate materials. We are not proposing a reduction of monitoring by local authorities, but decisions on local air quality monitoring are for them, so ultimately it is up to them to decide what level of monitoring they wish to undertake.

Thames Tideway Project: Contingent Guarantees

Lord Berkeley Excerpts

Tuesday 14th October 2014 Lords Chamber

Asked by

[Lord Berkeley]

To ask Her Majesty’s Government why they have indicated the availability of contingent guarantees in support of Thames Water; and whether this complies with their policies on offshore financial instruments, governance and taxation.

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

My Lords, to be clear, the Government are not providing a contingent guarantee to Thames Water. The Thames tideway tunnel project will be financed and delivered by a competitively tendered infrastructure provider which is an entirely separate entity to Thames Water. Details of a contingent government support package for this entity, which complies with all relevant government policies, were announced in a Written Ministerial Statement on 5 June.

[Lord Berkeley (Lab)]

My Lords, I am grateful to the Minister for that reply. Every week the Government tell us that they intend to outlaw aggressive taxation and leverage policies. The Minister says that Thames Water is not going to be in receipt of these funds but the Thames tideway tunnel project will be. Why are they allowing that to be financed in a tax haven while also promising it a government guarantee? Is there not a conflict of interest here somewhere?

[Lord De Mauley]

My Lords, I have comprehensively answered the noble Lord’s point about tax in earlier short debates on this subject. Perhaps we will come back to that later, but I will address his point about the appropriateness of offering a government support package. The contingencies covered by it are set out in the Written Ministerial Statement. It is common for Government to provide support of some kind to major infrastructure projects—for example, the PFI projects under the previous Government. The government support package here will cover low probability but high impact risks that the market could not take on at a reasonable cost to customers. The infrastructure provider will be incentivised not to call on it and it will exist only during the construction phase. The important thing to bear in mind is that the infrastructure provider will pay for the cover. Furthermore, the financing for the project is sought competitively to help minimise the cost—and that means the cost to customers.

Thames Tideway Tunnel

Lord Berkeley Excerpts

Wednesday 14th May 2014 Lords Chamber

Asked by

[Lord Berkeley]

To ask Her Majesty’s Government whether they have discussed with Thames Water the additional annual charge to its customers to fund the development and construction of the Thames Tideway Tunnel and the duration of this charge.

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

My Lords, the Government have indeed been working closely with both Ofwat and Thames Water to ensure that the Thames tideway tunnel is delivered in a way which minimises the impact for customers and taxpayers.

[Lord Berkeley (Lab)]

I am grateful to the Minister for that Answer. Will he confirm that the latest figure for how much it will cost all Thames Water’s customers—from Swindon to Witney, and Newbury to London—is about £70 or £80 per year extra for the next 50 years? Is that reasonable, given the fact that the tunnel may become redundant in 20 years because of the Government’s own Flood and Water Management Act and the requirement for sustainable urban drainage systems? Is not the best thing now to abandon the tunnel completely and save all this taxpayer and government money?

[Lord De Mauley]

My Lords, of course not. Government estimates at 2011 prices were for a maximum bill impact range of between £70 and £80 per year. These figures remain valid as an upper bound and would take Thames Water customers’ sewerage bills to around the national average. The construction costs are currently out to tender with consortia of contractors. We also consulted last December on a competitive procurement approach for the financing costs, although no decision has yet been made.

Flooding: Somerset

Lord Berkeley Excerpts

Thursday 6th February 2014 Lords Chamber

[Lord De Mauley]

I am sure that my noble friend did not mean exactly what the Opposition thought he meant. The Army is on standby if necessary, as I have said. High-volume pumps have been deployed from the National Asset Register and they are in place to prevent further increases in levels of flood water. The pumping operation is in fact one of the largest that the country has seen. My right honourable friend the Secretary of State has asked for a clear action plan for the sustainable future of the Somerset Levels and moors to resolve the problem for the next 20 years. Noble Lords will be aware that I am repeating a Statement later to deal with extra funds for repairs.

[Lord Berkeley (Lab)]

My Lords, has the Environment Agency got its priorities right on the floods? It says that it does not want to do any dredging. I was told by one of its officers that there is no point in dredging, because there is a high tide and the water is coming in, but it must understand that there is also a low tide and it can go out. I had an e-mail this morning from the Environment Agency about the Dawlish Warren, and as we know the railway will be closed for six weeks. The agency says that it will study the bird movement on the beach over the next year to see whether it can move any sand back there. Are we looking after birds before humans?

[Lord De Mauley]

My Lords, the agencies are working together to ensure that measures such as dredging can proceed as rapidly as possible and meet the existing environmental requirements. The Environment Agency, Natural England and the local authorities are working together to expedite this.

Peatlands

Lord Berkeley Excerpts

Wednesday 8th January 2014 Lords Chamber

[Lord De Mauley]

I was not quite sure which noble friend was going to ask me a question then. The point on greenhouse gas emission reporting is that the metrics and technology are at a relatively early stage. We are still working on that, but noble Lords may rest assured that it is a key focus for us, and we will not rest until we have achieved that.

[Lord Berkeley (Lab)]

My Lords, the Minister said that they were looking for sponsorship for the management of these peatland areas. Does that mean that the only new areas that will get managed will be those sponsored by McDonald’s, et cetera?

[Lord De Mauley]

No, my Lords; that is why I mentioned the new environmental land management scheme.

Thames Tideway Tunnel

Lord Berkeley Excerpts

Thursday 24th October 2013 Grand Committee

Asked by

[Lord Berkeley]

To ask Her Majesty’s Government what assessment they have made of the proposals for the Thames Tideway Tunnel.

[Lord Berkeley (Lab)]

My Lords, I am pleased to have the opportunity to debate this important project. It is not the most popular time in the House of Lords weekly calendar, but it is still good to have the opportunity. We have had a number of Questions in short debates over the months and years, but I think it is timely to put some markers down because the Tideway tunnel is at the IPPC for determination. There is a new report from the Environment Agency on SDS—it is interesting, the delay in publishing; I know it has been around for several months. Perhaps this debate has hastened its publication. There is a call by Thamesbank, the Environmental Law Foundation, supported by Sir Ian Byatt, the former director general of Ofwat, and many others for a review of the national policy statement for waste water. It seems a good time to have a debate.

I think the project of the Thames tunnel has become a kind of rollercoaster with its own momentum, but it is based on some seriously flawed and out-of-date data and the failure to properly consult or to consider alternatives which could put £70 to £80 a year on Thames Water’s customers’ bills for perhaps 100 years. It could also possibly incur a large amount of taxpayers’ money because Thames Water’s finances are in a pretty unhealthy state. Before the Government commit to such an expensive project, I believe it is essential that an independent and wide-ranging assessment be made of the alternatives using the latest data—and I mean the latest data. It should take into account the contribution that can be made by better sewer maintenance, the combinations of engineering solutions that can achieve the desired environmental objectives without involving excessive costs, the financial options available to pay for these solutions, the interaction between the choice of scheme and the method of financing, and of course the insertion of conditions that would prevent the recurrence of the payment of excessive dividends by Thames Water.

What are the issues? The first issue is that the data on which all these studies have been based are out of date, and I would suggest they are inaccurate. The baseline goes back to the Thames Tideway Strategic Study group, which worked between 2000 and 2005, when the chair was Professor Chris Binnie. On the basis of this information the Government in 2007 announced that they were going to promote this project and the national policy statement was based on the Thames Water 2010 needs report.

There are a number of serious errors in these reports. It is extraordinary that the Thames Tideway Tunnel website says there are going to be 39 million tonnes of untreated sewage flushed into the Thames in a typical year. Professor Binnie, in his latest report—which I think the Minister now has—points out that, after the various upgrades already in hand, and when the lead tunnel is complete, this will fall to 17 million tonnes. That is less than half. The problem has halved. So why is Thames Water still saying it is 39 million?

Mogden sewage works has been upgraded. It originally had about 110 CSO spills a year. It now has about nine. That is quite surprising because the European Commission has suggested a maximum of 20 spills a year as acceptable, so Mogden passes the test. Binnie also states that Thames Water assumes that sewer flows will increase by about 13% up to 2021. This of course depends on the water delivered to customers which then go to sewage flows, and there is the issue of leakage in the sewer systems. The Thames Water Resources Management Plan says that, despite the population rising in 2021, the water delivered—hence, the discharge to the sewers—will go down, as will the leakage and, presumably, the sewer infiltration. This is another 23% reduction.

Professor Binnie states:

“In my view … the sewer system model should be looked at again to see what would be needed to meet the EC criterion, particularly with the water delivered to households and non-households, and water pipe leakage reducing, and hence sewer flows, reducing in the years ahead. This would provide more sewer capacity available to cater for storm flows, hence spill frequency would reduce further”.

The problem is that Thames Water seems to be in denial about the volume of leakage and the effect of meter installation. It is also failing to maintain the sewers properly to maintain the necessary storage capacity. I recently met Dr Jean Venables, former president of the Institute of Civil Engineers, who commented about the Kingston “fatberg”—noble Lords might like to know was made of wrongly flushed festering food fat mixed with wet wipes—which reduced the capacity of the sewer to 5%. Is Kingston special or is this a common occurrence? We do not know but perhaps we should.

I am convinced that Thames Water and the Government have failed to look at alternatives. The only study of alternatives relied upon was the SuDS Evaluation for Example Areas by Professor Richard Ashley, which is included in the planning application but is not for comment. Professor Ashley recently stated very clearly that the terms of reference were too narrow and the time and resources dedicated to it were inadequate. I could go through the terms of reference but I think that in the time available I should not. He said they were really too narrow and the results could not be relied upon.

Now we have this Environment Agency report, published just yesterday. It needs careful study, but it appears to repeat many of the errors that have made since 2005. Most importantly, it presents SuDS as the only solution. I do not think anybody has really said that SuDS is the only solution; it is a contribution to the solution but there are other things, some of which I have mentioned and some of which Professor Binnie has mentioned, which could also be used. The report does not really help in either way. Before embarking on a £4 billion-plus project, there should be an obligation on government to provide up-to-date and independently verified data, along with an objective comparison with alternatives. We do not have that at the moment.

So what is to be done? I have outlined the strongly expressed views of a number of experts who believe that the problem is much smaller than was originally believed. It is possible to start SuDS in a way that would work in this country. It is a pity that the Environment Agency did not talk to the people in the US—maybe it did but it is not in the report—about the successes in Philadelphia: technical, engineering, and of course the legal and property issues as well. I have talked to the Americans and I think it could be done in this country. Thames Water could lead, fund and organise it, overseen by Ofwat, using separate arrangements for domestic properties, commercial properties and local authorities, with incentives built in through their sewerage charges. I suspect that Thames Water would be highly unenthusiastic about this but it is a regulated industry.

This leads to me to Thames Water the company, and what Ofwat is doing to ensure that the company is fit for purpose. We have discussed its financial situation in this House several times before, but it is odd that there is a problem over who will actually do the work, who will fund it and what the risks are. Martin Blaiklock, an independent consultant who has worked on this, believes that the Government and Ofwat will face an uphill task in financing such an expensive and long drawn-out project with a very high construction/completion risk. Of course, there is also the revenue risk and one has to ask: who is the customer? How much will the tunnel be used? Where is the revenue stream? Should there be a separate tunnel company? If so, what should be its relationship with Thames Water? What happens if the customers do not pay?

I think there is a question of whether such claimants, if they did or did not happen, would be seen as a contingent liability for Thames Water? That could have an indirect negative impact on its financial strength and threaten its investment grade status. Mr Blaiklock even suggests that because the tunnel option is a Thames Water concept derived out of its licence, many will say that the liabilities for this, as an independent company, should reside with Thames anyway. Any proposed structure as set out above may have echoes of Enron economics, which I am sure we do not want to see.

Perhaps it is not surprising that the Government, Thames Water, Ofwat and the others are taking so long to decide how this should be done. Martin Blaiklock concludes that given the alternatives to the tunnel option, which are gaining reality daily, for example SUDS variants, a prudent Government should forget the tunnel and choose the course of lowest financial risk and cost to Thames' customers and the taxpayer. I cannot but agree with him. It really is time for a wide-ranging study of the alternatives.

--- Later in debate ---

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

My Lords, this has been a most interesting and informative debate, with a good exchange of views on many aspects of the Thames tunnel project. I thank the noble Lord, Lord Berkeley, for his assiduousness in pressing the Government on this subject. I will try to address as many of the issues raised as I can, but before I do that, I also thank the noble Lord, Lord Stoddart, for his thoughtful contribution, but no one do I thank more than the noble Lord, Lord Grantchester, for confirming that the Opposition support the project.

I believe that there is widespread acceptance that it is unacceptable for a leading European city in the 21st century to have a major river flowing through it that is increasingly taking on some of the characteristics of an open sewer. However, this situation in London is not new. We have known about it for well over 10 years. In that time, there has been much consideration and study of possible solutions to the problem, from all angles by a range of experts.

The noble Lord, Lord Berkeley, asked what assessment the Government have made of the proposals for the Thames tideway tunnel. A tunnel-based solution first emerged from the Thames tideway strategic study. That group, which was established in 2001 and reported in 2005, comprised the Greater London Authority, Defra, Thames Water, the Environment Agency and Ofwat, in an observer capacity, with an independent chairman. The group considered a range of alternative solutions, drawing on the technical expertise of numerous bodies and professional advisers, before arriving at its conclusion that a full-length tunnel was the preferred solution for reducing the number of combined sewer overflow spills and meeting the environmental objectives for the river.

In 2007, the then Government published a regulatory impact assessment of sewage collection and treatment for London which examined these and a range of other proposed options. The overall conclusion was that only a full-length tunnel would provide a cost-effective solution that met the tideway environmental objectives for the river within a reasonable timescale. Accordingly, the then Government asked Thames Water to proceed with developing detailed proposals for a tunnel. Since then, Thames Water has refined its proposals and consulted extensively on them.

Defra officials are working closely with Ofwat and Thames Water to ensure that the costs are tightly controlled, so that customer bill increases over time to pay for the financing of the tunnel are kept as low as possible and provide value for money. In addition, in November 2011 Defra published an updated assessment of the proposed options to address sewage in the Thames and an updated cost-benefit assessment. These were entitled Creating a River Thames Fit for our Future—A Strategic and Economic Case for the Thames Tunnel and Costs and Benefits of the Thames Tunnel.

In 2012, Parliament considered and approved the Government’s National Policy Statement for Waste Water, with debates in both Houses. This set out the need for major wastewater infrastructure, compared the alternative solutions for the Thames, and concluded that a tunnel was the preferred solution. The National Policy Statement for Waste Water will be used by the Planning Inspectorate in considering Thames Water’s current application for a development consent order for the tunnel. In 2012, my department also published its Thames Tunnel evidence assessment, to ensure that due consideration had been given to the full range of evidence available on all the proposed options to address the problem of sewage pollution in the River Thames. This included an annex listing all 36 of the relevant supporting studies and reports.

Earlier this year, in view of representations being made by the noble Lord, Lord Berkeley, among others, that some US cities were implementing sustainable urban drainage systems, or SUDS, and green infrastructure to address their overflow problems, we asked the Environment Agency to carry out an assessment of the evidence on whether SUDS could deliver the environmental standards set for the River Thames. The review, published last week, concluded that all the available evidence, comprising more than 70 relevant studies, shows that SUDS alone could not achieve this.

The noble Lord, Lord Berkeley, referred to Philadelphia. If I may, I will dwell for a moment on what some major US cities are doing, because the US has federal standards which are not dissimilar to those set by EU law. Washington DC has just started boring a deep five-mile tunnel of similar dimensions to the Thames tideway tunnel. This is part of a 12-mile tunnel system that aims to reduce combined sewer overflows by 96%, a similar standard to that proposed for the Thames tideway tunnel.

Major storage and transplant tunnels are also a key feature of solutions put in place to tackle combined sewer overflows in Milwaukee and Wisconsin. Pittsburgh is attempting to achieve a similar standard through the 25-year implementation of sustainable drainage systems. In Portland, Oregon, SUDS have been used to remove approximately 8 million cubic metres of storm water a year. This is 35% of its total sewer overflow volume, but tunnels still prove necessary to meet the required levels of control. Philadelphia aims to tackle 85% of its sewer overflow discharges using SUDS over a 25-year period. The work has been going on for five years now, but a tunnel solution may still be necessary to meet the required environmental standards.

Unlike London, Philadelphia and Portland have a geology which is suitable for SUDS. The soils underlying the cities’ SUDS areas are more porous and more able to soak up excess rainwater. The main point is that each solution reflects the particular building density, geology, rainfall patterns and existing sewer system of that city.

There does not therefore appear to be any case to revisit the case for the tunnel as it is set out in the national policy statement. I have also seen compelling recent evidence of the scale of the problem with wastewater discharges into the Thames, and I am advised that the serious rainfall event last weekend resulted in more than 1 million tonnes of wastewater being discharged into the river over a very short period of time. A tunnel would have captured these discharges, and transferred them for treatment in time to handle any subsequent heavy rainfall events. I do not believe that supporters of SUDS as an alternative to the tunnel have demonstrated how they would handle events of this type.

The noble Lord, Lord Berkeley, also referred to the work of Professor Binnie. We believe that the environmental criteria set in 2007 remain robust, are not gold-plated, and should not be downgraded. Alternatives such as a shorter western tunnel combined with SUDS would not meet the environmental objectives for the Thames tideway in an acceptable timeframe or at lower cost than the full-length tunnel.

A further important factor is the 2012 European Court of Justice ruling that the UK was in breach of the urban waste water treatment directive in London, which means that there is an increased likelihood of very significant infraction fines if we do not comply within a reasonable period of time. The risk of fines has been reinforced by the very recent fines ruling against Belgium for not complying quickly enough with a previous adverse court judgment with regard to waste water collection and treatment.

The noble Lord, Lord Berkeley, asked what the tunnel solution will deliver. The Thames tideway tunnel would reduce the frequency of spills from the 34 combined sewer overflows in London intended to be caught by the proposed tunnel from around 50 to 60 to just three or four times a year during extreme rainfall events, with the estimated overflow volume falling from around 18 million to 2.5 million tonnes. That would improve water quality, with benefits for wildlife and river users. It will also ensure that we continue to meet the UK’s obligations under the urban waste water treatment directive and the water framework directive. We are clear that the overflow volume to be addressed by the tunnel is 18 million tonnes, not the 39 million stated by the noble Lord, Lord Berkeley, as quoted by Thames.

The noble Lord, Lord Berkeley, also asked about the financing of the project. The Government believe that the private sector can and should finance this project. Although the Government can provide financial assistance in any form in relation to the tunnel, we have stated that this will be contingent financial support for exceptional project risks, to help ensure the cost of financing the project is kept to a minimum and offers best value for money for customers and taxpayers. However, we will want to be assured, when offering this contingent support, that the taxpayer is appropriately protected by measures that minimise the likelihood of these exceptional risks materialising.

The noble Lord, Lord Stoddart, asked about customers outside London paying for the tunnel. It is worth saying that London customers have helped to finance major sewerage investments outside the capital that serve a much smaller population. When improvements are needed, for example, in rural Oxfordshire, the cost is spread among all customers of sewerage services, including those living in London. This approach, which is supported by Ofwat, is standard across England and Wales and is the fairest way of apportioning the costs of investment in water and sewerage services.

The noble Lord, Lord Stoddart, suggested that Thames Water should pay for the tunnel from existing funds. Paying for the project from any accumulated reserves would neither reduce the cost to customers nor remove the requirement for some type of government support. This is a major tunnelling project and has a risk profile significantly beyond that typically expected of a water and sewerage company. That is why the tunnel is expected to be financed and delivered by an independent infrastructure provider with its own licence from Ofwat and backed by some form of government support related to exceptional project risks.

The Government believe that the private sector can and should finance the project but accept that there are some risks that are not likely to be borne by the private sector at an acceptable cost. The Government are therefore willing, in principle, to provide contingent financial support for exceptional project risks where that offers best value for money for customers and taxpayers.

[Lord Berkeley]

Can the Minister explain what these exceptional risks are?

[Lord De Mauley]

My Lords, I am sure I will in a minute. We will want to be assured that when offering contingent support, taxpayers’ interests remain a top priority. The taxpayer must be appropriately protected by measures that minimise the likelihood of these exceptional risks. We are working on the detail with Ofwat, Infrastructure UK, Her Majesty’s Treasury and Thames Water to ensure that there is a minimal likelihood of contingent government support ever being called on.

The noble Lord, Lord Grantchester, asked about the status of planning. Given that Ministers have a quasi-judicial role in the planning process, I hope the noble Lord does not expect me to go into detail at the moment.

The noble Lord, Lord Stoddart, asked about bill increases. We have always made it clear that the estimate of £70 to £80 is, indeed, only an estimate and should not be used, as it was in a recent paper, to reverse engineer a notional investor return. If the project is delivered through an infrastructure provider, the actual figure that appears on Thames bills will be set following the competition for the financing of the project. That will ensure best value for money for customers and keep bill increases as small as possible.

The noble Lord, Lord Berkeley, asked just now what contingent financial support really means. The support will occur in the case of unlikely events such as severe debt market disruption, significant cost overruns due to extreme tunnelling conditions and any caps on commercially available insurance.

Over the past 10 years, the Government have undertaken lengthy and thorough assessments of the Thames tideway tunnel project and alternatives. They have concluded that the tunnel represents the most cost-effective, timely and comprehensive solution to the problem of sewage pollution in the River Thames in London.

Thames Tideway Tunnel

Lord Berkeley Excerpts

Wednesday 24th July 2013 Lords Chamber

Asked by

[Lord Berkeley]

To ask Her Majesty’s Government what steps they are taking to ensure that any support provided by HM Treasury for financing the Thames tideway tunnel project has minimal impact on customers’ bills and provides value for taxpayers.

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

My Lords, we believe that the private sector should finance the tunnel. However, there are some risks that it may not be able to bear at an acceptable cost. We are willing in principle to provide contingent financial support that encourages private sector investment and offers an incentive to delivery partners to manage project risks and minimise costs. The Government are working to ensure that the tunnel offers value for money for customers and taxpayers, while being financed and delivered efficiently.

[Lord Berkeley]

I am grateful to the Minister for that Answer. But how will the Government explain to 6 million households that they are required to pay £80 a year extra on their water bills for 100 years or so to a company which last year paid no corporation tax but managed to pay £231 million in dividends to its offshore owner and which has reduced its assets to the extent that it cannot fund the project, with the Government not only guaranteeing it but agreeing to pay for it if they have to? How can this really be good for customers or the taxpayer?

[Lord De Mauley]

My Lords, we are faced with the problem of London’s sewers being at or close to capacity and millions of tonnes of sewage overflowing each year. The solution costs a great deal of money—more than £4 billion—so we need a sophisticated way to finance it. Thames Water pays its tax, and the entity which builds the tunnel will pay its tax, but water and sewerage companies have to make huge investments in infrastructure, the tunnel being a classic example. Therefore, while all companies are eligible for capital allowances, water companies perhaps appear to benefit more from them than others. We expect Thames Water’s customers’ bills to rise by about £70 to £80 a year to pay for the tunnel, which would still leave them paying below the national average. Removing capital allowances would of course mean that those bills would increase further.