Water Companies: Failure
Debate between Lord Douglas-Miller and Lord Sikka(2 months ago)
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Lord Douglas-Miller (Con)
I do not actually agree with the noble Lord fully. I accept that a number of the water companies are not performing to the right standard. The Government have been very clear that what is going on is unacceptable, but there is a huge legacy issue here. Simply renationalising water companies or stopping their chief executives from getting their pay, bonuses and all the other things—as is now in place—is not going to solve that problem straightaway. It is a long-term legacy issue which the Government have a fully funded plan to address.
Lord Sikka (Lab)
My Lords, in 1990, Thames Water had net assets of £1,329 million. By 2023, they had increased to £1,435 million, which is a paltry increase of 8%, or a total of £106 million, mostly due to accounting abuses. This means that, over 33 years, Thames Water shareholders have provided little or no new equity at all, which is a major reason for its financial instability. Everyone knows that Ofwat is negligent and incompetent; what is the Government’s excuse?
Lord Douglas-Miller (Con)
The noble Lord cited a number of very detailed figures, which I know he is prone to doing, so forgive me if I do not know the detail on that. Since privatisation, the private water sector model has unlocked about £215 billion of investment. This is the equivalent of around £6 billion annually in investment—almost double the pre-privatisation level. This has delivered a range of benefits. Our bathing waters continue to improve—in 2023, almost 90% were classified as good or excellent. Water companies have invested £25 billion to reduce pollution from sewage and water company investment in environmental improvements has been scaled up to over £7 billion since 2020.
Fly-tipping
Debate between Lord Douglas-Miller and Lord Sikka(2 months, 1 week ago)
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Lord Douglas-Miller (Con)
My noble friend makes an extremely good point and, under the new regulations that we are just about to bring out, we are looking at exactly how those permitted to use these regulations have to display the relevant permit, where they display it and how they advertise it, to make it much more clear to those using these facilities whether they are acting legally.
Lord Sikka (Lab)
My Lords, fly-tipping has increased because many councils do not have weekly refuse collection and charge people for taking items to the local refuse collection centres. A major reason behind this is that council spending power as funded by the Government fell in real terms by more than 50% between 2010-11 and 2020-21, and this has not been restored. What responsibility does the Minister accept for creating an environment for fly-tipping?
Lord Douglas-Miller (Con)
No, I do not recognise that at all. Defra grants have helped over 30 councils across the country to tackle fly-tipping at hotspots, such as by installing CCTV and putting up fencing. Further grants to support even more councils are due this summer. Furthermore, councils retain all income from fixed-penalty notices, the upper limit for which has recently been increased to £1,000, and this is ring- fenced for local enforcement and clean-up.
Water Companies: Licence Conditions
Debate between Lord Douglas-Miller and Lord Sikka(2 months, 3 weeks ago)
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Lord Sikka
To ask His Majesty’s Government what estimates have been made of the distributable reserves of each water company now that OFWAT has taken powers under the Environment Act 2021 to change their licence conditions, including whether they can pay dividends.
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. The best proxy for distributable reserves is retained profits. This is the profit and loss reserve on a company’s balance sheet. Company boards are responsible for determining how much of their profit and loss reserves is distributed. The Government have not carried out an exercise to calculate each company’s distributable reserves. Where a company in cash lock-up breaches its licence by paying a dividend, Ofwat will take enforcement action.
Lord Sikka (Lab)
My Lords, as I have previously pointed out in this House, water company accounts are not only massaged but cooked and roasted with abusive accounting practices. Ofwat and the Government have said that under certain circumstances they will block the payment of dividends, which presupposes that they know what the legally defined distributable profits of each company are. The Minister has just said that the Government have not got a clue; therefore, there is no way of knowing whether any of those dividend payments is actually lawful. Can the Minister explain why the Government announce policies when they do not have the basic data to implement them?
Lord Douglas-Miller (Con)
The Government have a very clear idea about the information that they are reviewing because every single water company, like every other public company, has its accounts audited. That information is publicly available, and I refer the noble Lord to the public audited accounts of all those water companies.