Water (Special Measures) Bill [HL]

Lord Roborough Excerpts

Committee stage
Monday 28th October 2024 Lords Chamber

[Baroness Pinnock (LD)]

My Lords, I will address my comments to the amendment in the name of the noble Lord, Lord Cromwell. I agree with him that financial restructuring of companies has led us to where we are now, with Thames Water potentially on the brink of collapse—who knows who is going to have to fund the huge injection of capital that has apparently now been agreed. Other water companies are heavily indebted. Ofwat, which is after all the economic regulator, did not query, question or challenge those decisions made in the early years of water company privatisation.

The consequence is that anything the Government now attempt to do is basically closing the stable door after the horse has bolted—and raced to the other side of the world—because the companies are where they are. Although I agree with the noble Lord, Lord Cromwell, that any future restructuring ought to be put under the microscope of the economic regulator, the current situation is leading us to a potentially very grave position, which the Government are trying to address with the other financial clauses in the Bill. I read the clause referenced by the noble Lord, Lord Remnant, as being directed pointedly at a particular water company.

I support the amendment moved by the noble Lord, Lord Cromwell. I suppose it is better to change the situation now than leave it as it is, but what has happened already is unfortunate.

[Lord Roborough (Con)]

My Lords, Amendment 92 is very simple. Had it been in place when the water companies were privatised, it would have prevented the aggressive financial engineering that has led to the financial distress we see regularly reported in the press, which has provoked much anger in this House and elsewhere over the years.

Before I address Amendment 92, I will briefly comment on Amendment 10 moved by the noble Lord, Lord Cromwell. It coexists neatly with my amendment, allowing regulators to be better informed on issues with the financial structures of the companies they regulate, and to be aware of future problems. I am pleased that the noble Lord has moved this amendment, and I broadly agree that the regulator should have better information about the financial structuring of water companies in the interests of protecting their viability and preventing circumstances in which they become overleveraged.

I will speak to the dangers of overleveraging and the problems we have as a result of the weakness of the regulator, but we on this side of the Committee are interested in the amendment moved by the noble Lord, Lord Cromwell, which takes a fairly moderate step towards having a better-informed regulator. That said, it may be possible to go further, either by reforming the way the regulator works in the water sector or, as I propose in Amendment 92, by implementing statutory rules on borrowing for water companies and taking effective steps to prevent capital being taken out of companies that are overleveraged. We need to make the water sector attractive to investors so that they bring more capital into it to fund investment in cleaner and better water infrastructure.

I add my whole-hearted support to the amendment proposed by my noble friend Lord Remnant. It seems grossly unfair that a company that has behaved responsibly should be penalised by the actions of another in the sector. I am aware of precedent in the financial services sector, but that is to protect the integrity of the financial system, which is in all participants’ interests. In this case, each water company is a unique entity whose actions have little or no impact on others. Without this amendment, one bad actor could contaminate the industry.

I add my concerns about the wording that my noble friend Lord Remnant seeks to remove from the Bill. This new subsection as drafted applies the duty to render “relevant financial assistance” to any other company that holds, or held, an appointment under this chapter. This seems to me yet another example of retroactive effects that are littered throughout the Bill and which we will discuss in later groups. Could the Minister explain to the Committee what the Government’s intention is with this retroactive element in the Bill? Will there be a maximum period of time since the relevant company held an appointment for this duty to apply to it? This seems to us to be a concerning power, and we would seek clarifications from the Minister on both the unfairness at the core of this subsection and its retroactive element. I thank my noble friend Lord Remnant for introducing his amendment, and hope that he continues to make progress on this unfairness which exists in the Bill as drafted.

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Moved by

[Lord Roborough]

14: Clause 1, page 2, leave out lines 17 to 19
Member’s explanatory statement
This amendment prevents the new rules from overriding existing employment contracts.

[Lord Roborough (Con)]

My Lords, in moving Amendment 14, I will speak also to my Amendment 15.

As I mentioned in an earlier debate this evening, there are a number of areas in this Bill where its effects are retroactive on existing agreements, but the Bill fails to set out the exact limits of these powers. On these Benches, we have been clear at every stage in the passage of the Bill that we want to see tougher measures to hold water companies to account and to ensure that we have better outcomes for consumers and our environment. However, it would not be right for us to approve this Bill because it has a worthy goal, without scrutinising those areas where it is deficient. We have already spoken about Ofwat’s failures, and noble Lords across the Committee will surely admit that there are improvements to be made to the way that Ofwat itself works. Giving unclear levels of retroactive powers to the regulator is not something that should be accepted by Parliament, and we will scrutinise the Bill very closely on its retroactive impacts.

My Amendment 14 seeks to remove the lines from Clause 1 that seek to empower Ofwat to void existing agreements, including employment contracts. The Bill gives Ofwat the power to issue these rules without proper scrutiny, and in this part of the Bill we see how powerful those rules can be. Retroactively overriding employment contracts may be necessary for the Government’s objective to implement a blanket set of rules on remuneration for senior officers of water companies, but it is surely not an acceptable way to go about regulating the sector. I ask the Minister: what message does it send to a talented person working in the water sector today, as they build their career, to see measures such as this retroactively changing the rules of the game? We on these Benches fear that many talented people may choose to pursue a career outside the sector, for fear that the Government may yet again move the goalposts retrospectively.

I have intentionally tabled my related Amendment 15 separately, to probe whether the Government are willing to move at all on the retroactive impacts of the Bill. Amendment 15 seeks to remove the part of Clause 1 that enables the retroactive deprivation of performance-related pay under the rules. It is surely not right to implement rules now that have effect from the beginning of the year. Our concern is that the lines in the Bill that we seek to remove allow the Government to renegotiate unilaterally an employment contract that has been freely entered into between a third-party employer and a third-party employee. While it is customary that employment legislation often does just such a thing, there is very limited precedent for picking on one class of employees in one particular sector.

This is a very unfortunate precedent to set, which opens the door to a Government inserting themselves into employment contracts across other sectors to achieve the outcomes they want. That smacks of overreach. Should we seek to remove performance-related pay from software company managers if their software crashes; from insurance industry executives if we do not like their handling of claims; or from airline executives if their flights are late? I am sure that there may be some noble Lords across the Chamber nodding their heads that the Government should be doing just that; however, that is completely against the Government’s claims of being business-friendly. No competent executive would ever want to work for a UK-based company were these kinds of rules to be brought in.

Our amendment does not suggest a better alternative but simply suggests that the current method is unacceptable, and that the employed and the employer also need to be cognisant of the law and agree that these contracts be amended or replaced with agreement to reflect the intent of the Bill.

There is also the issue, which my noble friend Lord Remnant may address in greater detail in his comments, of interference in multiyear contracts, where portions of that payment may already have been earned and yet could potentially be prohibited under the Bill. I draw the Committee’s attention to the Explanatory Notes provided to the House by the Department for Environment, Food and Rural Affairs. Paragraph 79, under “Compatibility with the European Convention on Human Rights”, says:

“Provision relating to remuneration of water company executives is also not considered to result in ‘deprivation’ within the meaning of Article 1 of Protocol 1 to the Convention, as the provision relates to future income. Such income will only constitute a possession once it has been earned”.


I suggest that income in prior years in multiyear contracts has already been earned, just not yet paid. Therefore, I question the Minister on how compliance with the ECHR can be guaranteed in this case.

My amendments are, by their nature, probing. Given that they address an election manifesto commitment, they are designed to produce convincing answers from the Government on how these issues can be addressed. I look forward to the Minister’s reply. I beg to move.

[Lord Remnant (Con)]

My Lords, I am delighted that Amendment 26 in my name falls into the same grouping as those in the name of my noble friends Lord Roborough and Lord Blencathra. Although I very much regret that your Lordships’ time is having to be spent on potentially amending proposed legislation that has retrospective effect, it gives me the opportunity very much to support the arguments advanced by my noble friend Lord Roborough in support of Amendments 14 and 15.

It cannot be right retrospectively to override contract law with respect to employment contracts freely entered into by company and individual in line with relevant legislation and regulations in force at the time. Similarly, to the extent that, today, pay can be recovered from senior individuals under malus and clawback provisions in listed companies’ remuneration policies, such a draconian power can rightly be exercised only in extremely limited circumstances known in advance by the individual. The proposed exercise of the pay prohibition in the Bill retroactively goes way beyond accepted remuneration practice, and unacceptably so.

On my own amendment, I will not repeat the general arguments made by my noble friend against the principle of retroactive or retrospective legislation. I am no lawyer, so I hope that your Lordships will forgive me if I perhaps erroneously use the terms interchangeably. The offending principle, though, remains the same. The general rule in this country, and indeed in most modern legal systems, is that legislative changes apply prospectively. If we do something today, we feel that the law applying to it should be the law in force today, not tomorrow’s backward adjustment of it.

The Bill proposes that the provisions about performance-related pay apply from the financial year beginning 1 April 2024. We are currently some seven months into that financial year, and the Bill will not be enacted for some months hence. In effect we are talking about backdating the provisions for the best part of a year. The remuneration arrangements entered into between senior individuals and their employer will have been agreed under remuneration policies agreed by shareholders well before April for them to take effect from 1 April 2024. It surely cannot be right, whatever the merits of the Bill, for its provisions subsequently to alter those arrangements and the remuneration paid, or to be paid, under them.

Few things concern investors more than retrospective legislation, and listed companies will need to consult with and seek approval from shareholders on changes to remuneration policies at their AGM. Requiring retrospective changes risks companies breaching shareholder-approved remuneration policies. More fundamentally, it will undermine investor confidence at a time when they are being asked to fund a record investment programme.

My amendment would simply change the date from which the performance-related pay provisions come into effect from a historic 1 April 2024 to a mildly prospective 1 April 2025. Is that really too much to ask, to avoid breaching a fundamental legal principle? I do not think so and I hope that the Minister will agree with me.

[Baroness Hayman of Ullock (Lab)]

My Lords, I thank all noble Lords who have stuck with us this evening and carried on the debate. We know that the public have been clear that they want to see change and that where performance is poor, executives should not receive large salaries or bonuses.

I will start with Amendments 14 and 15, tabled by the noble Lord, Lord Roborough. The conditions of existing employment contracts may not align with Ofwat’s new rules. Our concern is that Amendment 14 may prevent Ofwat being able to apply its rules even when performance has not met the required standards. On Amendment 15, it is also right that where companies breach Ofwat’s rules on performance-related pay, Ofwat should be able, if it considers it appropriate, to require the company to recover any payment made in breach of the rules. Linking pay to performance should incentivise decision-making, resulting in improved outcomes for customers in the environment. I reiterate what I said earlier: should companies meet their performance expectations, executives can still be rewarded. So I hope that the noble Lord will understand why we will not accept his amendments.

I turn to Amendment 26, tabled by the noble Lord, Lord Remnant. This legislation will ensure that Ofwat is able to implement rules on performance-related pay in the current financial year. However, I listened really carefully to the speech that the noble Lord just made introducing his amendment. I would really like to understand his concerns better, so I wonder whether he would welcome further discussion on this matter so that we can look at it in more detail. I would very much appreciate it if the noble Lord was prepared to do that. But currently we are not going to accept the amendments as we feel that they would prevent meaningful implementation of the rules.

[Lord Roborough (Con)]

My Lords, I am grateful for the Minister’s reply. We respect that this is an election manifesto commitment and therefore needs to be in the Bill in some form, but my noble friend Lord Remnant and I would both like to discuss further with the Minister, if possible, how we can help to improve this part of the Bill. In the meantime, I beg leave to withdraw my amendment.

Amendment 14 withdrawn.

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Moved by

[Lord Roborough]

19: Clause 1, page 2, line 39, at end insert—
“(5A) Rules made for the purposes of determining standards of fitness and propriety mentioned in subsection (2)(b) must include criteria that help the undertaker to assess—(a) whether persons have the knowledge, skills and experience to perform the specific role that they are intended to perform;(b) whether, in assessing a candidate for a position within the management body of the undertaker, the management body as a collective possesses adequate knowledge, skills and experience to understand the undertaker’s activities;(c) how relevant and important any matters which suggest a person might not be fit and proper are;(d) whether appointed persons on temporary absence continue to meet the standards of fitness and propriety.(5B) The criteria in subsection (5A) are to be treated as guidance and may be applied in general terms when the undertaker is determining a person’s fitness and propriety.”

[Lord Roborough (Con)]

My Lords, I will attempt to be brief, in view of the hour.

Amendment 19 provides a clear definition of the criteria that will be used in determining whether someone is fit and proper to hold a responsible role in the water industry. As currently drafted, there is no definition and, as such, it is likely that everyone consulted would have their own different definition of what “fit and proper” might look like. There is precedent in another industry for such a test, which was undoubtedly in the back of the drafter of the Bill’s mind, in the financial services industry. My amendment is an edited version of the Financial Conduct Authority’s definition of a “fit and proper person”. As I was previously a senior manager in an investment management business under the FCA’s senior manager regime, I have first-hand experience of this test.

Even as laid out by the FCA, there was considerable debate about the application of the tests. I also question whether Ofwat is really the right place for such an assessment to be made. In the financial services sector, it is for the member firm to make its own determination and express its view to the FCA when seeking to register a new employee. The FCA could then query that view and potentially overturn it. Should Ofwat be required to do this, it is likely to use less professional help and real-world experience in forming that view and will require dedicated infrastructure to process applications. If the undertakers are responsible, overseeing those applications becomes relatively straightforward.

This may not be a long debate, with only one amendment, but it is an important amendment to consider when giving effect to the Government’s intentions in this Bill. In providing clarity to the undertakers, what is intended by this provision? I am most interested in the Minister’s response and hope that, if she is not happy with my amendment, she might set out who she considers a fit and proper person and how that will be communicated to Ofwat and the industry. I am also most interested to hear why the Bill’s proposal for how to implement this is different from the financial services industry, despite a reasonably long and moderately successful record within that industry. I beg to move.

[Baroness Hayman of Ullock (Lab)]

My Lords, how nice to have a quick last group. I thank the noble Lord, Lord Roborough, for introducing the last group of today with his Amendment 19, which seeks to specify the criteria to be covered by the rules on fitness and propriety, ensuring that senior leaders meet the public’s expectations.

I have mentioned Ofwat’s consultation on remuneration and governance before, and I would just like to confirm to the noble Lord that this consultation references similar criteria to those proposed by his amendment. Ofwat’s consultation seeks views on whether it would be appropriate to include a concept of “ability” in the new test, defined as an individual having adequate knowledge and understanding of the duties of the undertaker. Ofwat has stated its intention to design a fit and proper person test with criteria that will improve public trust and company culture in the water sector, having considered how other sectors are regulated around these same principles. I hope this captures the noble Lord’s concern that standards of fitness and propriety will need to be relevant and encompass concepts of knowledge and understanding. Of course, we feel that Ofwat’s independence is an important part of the trust that companies have in the regulatory regime.

The noble Lord asked why we felt Ofwat should be setting these criteria. We think it is right that Ofwat has the opportunity to consult on these criteria and that companies then have the opportunity to respond and perhaps propose different criteria. It needs to be a situation where Ofwat can then tailor these fitness and propriety standards to the water industry, rather than having prescriptive standards set out within the primary legislation. It is important that Ofwat’s independence is clearly upheld, because it will support its ability to hold senior officials to account for their actions.

Ofwat also notes in its consultation that the 16 largest water companies have a licence condition that requires them to meet the four objectives of its board, which are leadership, transparency and the governance principles. These objectives include the requirement for boards and board committees to have the appropriate balance of skills, experience, independence and knowledge. I hope the noble Lord is content that this is already being looked at; I hope that he will look at the consultation and therefore see that his amendment is no longer necessary.

[Lord Roborough (Con)]

My Lords, I am grateful for the Minister’s reply, and it is certainly very helpful. Perhaps something I could have brought out more in my initial comments were the concerns over accountability. When I look at the FCA’s senior manager regime, and the fit and proper tests, none of that is here—nowhere is there any accountability to Parliament. We will take the Minister’s comments away and give this further thought. I beg leave to withdraw the amendment.

Amendment 19 withdrawn.

Waste: Incineration

Lord Roborough Excerpts

Tuesday 22nd October 2024 Lords Chamber

[Baroness Hayman of Ullock (Lab)]

The noble Baroness makes a very good point around food waste: it is a real challenge. I know from talking to my counterparts in the department that, as part of our review of how we manage waste going forward, looking at food waste is critical, because there are so many different complex aspects to it, such as what is included, what is not included, and how we work with supermarkets and with local government. She is absolutely right to raise that issue and I will be discussing it further with my department.

[Lord Roborough (Con)]

My Lords, in line with the Government’s climate commitments and, given energy from incineration is now our most CO₂-intensive generation, will the Government consider prioritising incineration plants for their £21.7 billion package of carbon capture and storage funding? Is it not better to fix an existing problem than create new problems around hydrogen production to fix?

[Baroness Hayman of Ullock (Lab)]

Obviously, the noble Lord knows that we have the new CCS—carbon capture and storage—facilities open. We see that as a critical funding decision that we need to be working on to move forward in this area. It is also important to think about how we regulate in this area going forward and how we recover the energy from this. It a very big picture that DESNZ is working on to ensure that we have sufficient energy capacity in the future, particularly around industry, and that that energy capacity is produced in a way that fits in with the circular economy and decarbonisation, so that we can meet our climate change targets.

Rural Communities

Lord Roborough Excerpts

Tuesday 15th October 2024 Lords Chamber

[Lord Roborough (Con)]

My Lords, I declare my farming and land interests in Devon and Scotland as set out in the register. I add my congratulations to the noble Lord, Lord Elliott of Ballinamallard, on his maiden contribution, in an area where he clearly has significant expertise. I am most grateful to my noble friend Lady McIntosh of Pickering for securing this debate and to all noble Lords who have made contributions.

It is clear today that those living in rural communities have little idea what His Majesty’s Government regard as priorities for their benefit and desperately need reassurance. As my noble friend Lady McIntosh mentioned, the Government have made several significant commitments to developing renewable energy and energy transmission, as well as new housing. How can this be achieved while ensuring that local voices and rural areas are still heard in those decisions? I add my request to the Minister for an update on the land use framework and the NPPF.

The rural economy needs greater investment by the Government, rather than the rumoured cuts, in the short term to address food security and water quality, adapt to climate change and deliver our nature recovery obligations. I join other noble Lords in asking the Minister to fight to protect and increase the Defra budget and to commit to the continued rollout of ELMS, including the advanced SFI options that appear to be making limited progress. This is a critical segue into introducing private capital into creating these public goods. The Government can act as a catalyst for private sector investment, reducing that call on the Government in the medium to longer term and creating greater rural and societal prosperity providing they invest now as we work through our green finance strategy, ELMS and other measures.

The rural land-based economy has a tremendous opportunity from the introduction of private finance into natural capital. To allow this, Governments have to step in and create these markets to help to turn public goods into something the private sector will pay for. The fundamental requirement to develop these markets is that standards have integrity and can adapt to improving technology that allows better targeting and monitoring over time.

Our Government were working with the British Standards Institution on developing these standards. We had already created the woodland carbon code and peatland carbon code, which stand level with best standards globally. It is critical that the Government commit to similar standards for other aspects of natural capital that underpin market confidence. In a Written Answer, the Minister stated that this is:

“Subject to the outcome of the Spending Review”.


That is somewhat disappointing, and words we may hear repeated later today.

Confidence in payment for developing key aspects of natural capital follows from the integrity of the standards. If the WCC and PCC enter into the UK Emissions Trading Scheme, land managers can have confidence that there will be a liquid market for the carbon management we are undertaking. We were told in a Written Answer from the Minister that we must wait until 2025 before we receive the government response to consultation on this. Please can we move faster?

We need similar financial incentives for other goods such as flood prevention and water quality. Can we provide incentives for the water companies to buy these goods and services from land managers? Can we require corporates, under the recommendations of the Taskforce on Nature-related Financial Disclosures, to invest in nature recovery?

Land managers are businessmen, and if we enable the right incentives they will act accordingly. In the words of my noble friend Lord Benyon, Defra must

“weaponise farmers and land managers”,

as they are the ones who will deliver sequestered carbon and biodiversity, and aid better water management. The most efficient and effective way of doing that is to enable trustworthy and liquid markets for those goods. A thriving natural capital market will bring a new advisory and financial services industry that we can lead the world in, and export high-value, rural, private sector jobs and tax revenue. I urge the Government to move at pace to continue investing and developing these markets.

Water (Special Measures) Bill [HL]

Lord Roborough Excerpts

2nd reading
Wednesday 9th October 2024 Lords Chamber

[Lord Roborough (Con)]

My Lords, I am delighted to speak at Second Reading of this important Bill, which is being followed closely by concerned members of the public across our country. I thank the Minister for her exemplary engagement with me and all Peers with an interest in this area. I am sure that we can continue to have these conversations to make the Bill as effective as possible.

We on this side of the House are committed to cracking down on pollution by water companies and we will support the Government to deliver effective measures that bring polluters to justice. While government can always do better, we are proud of our record. We increased the number of storm overflows monitored across the network from 7% in 2010 to 100% today. The Thames Tideway tunnel is now complete. This is a £4 billion project that happened because our Government faced down opposition from Ofwat and others, including Members of this House, in guaranteeing the scheme by Act of Parliament. Aided by improved monitoring, we took firm action against persistent polluters, delivering the strictest targets ever on water companies to reduce pollution from storm overflows. The Environment Agency can now use new powers to impose unlimited penalties for a wider range of offences. The effectiveness of these measures was shown this week when water companies in England and Wales were told to pay £158 million in penalties to customers, having failed to meet their targets.

In this Bill, we intend to work with the Government and the House to create the right balance of stakeholders’ interests. While the Government may not be willing to accept all our proposals for the current Bill, we hope they will get further attention in the promised further legislation.

Consumers have a right to expect affordable, clean drinking water and clean rivers, lakes and beaches. Our overall concern for consumers in this Bill is that it will add significant compliance costs to the industry that will then need to be passed on to those consumers. There is not enough clarity in the Bill on the potential fees that regulators and the Drinking Water Inspectorate will be able to charge, and we would like to understand what those fees will be and how they will impact consumer bills.

The measures on special administration orders appear to give the Government the power to change a water company’s charges paid by consumers to whatever level they wish to recover costs. It will be important to understand what work the Government have done to establish the impact these measures might have on consumer bills. The Minister mentioned that increases would be taken very seriously, but we may need more reassurance than that.

It is also relevant to raise the question of to whom water companies should pay their fines. We on this side of the House would be interested to hear whether Ministers agree that when water companies fail to deliver a service to customers that is safe and does not pollute our rivers, they are failing their customers and should compensate them accordingly. Ofwat already acts on behalf of the consumer, so can the Minister explain what assessment the Government have made of the impact of consumer involvement on decision-making? What responsibility will those consumer representatives take for such involvement given the dire consequences of failure laid out in this Bill? The noble Duke, the Duke of Wellington, made a number of suggestions which we are likely to be interested in supporting.

Our natural environment deserves to be treated better than it has been for many decades and the industry must continue to clean up its act. It is clear that those who focus on protecting our natural environment are not wholly impressed by this Bill. There have been a number of representations from River Action, Surfers Against Sewage and, as the noble Lord, Lord Lipsey, eloquently pointed out in respect of the River Wye, among others on how the Bill could be improved. We will monitor those and other suggestions with interest.

On pollution incident reduction plans, we agree that water companies need a clear plan of action to deliver positive change. However, it would be useful to know what assessment the Government have made of the practical benefits of the plans to ensure those documents have the desired effect.

We will also be looking at the measures to increase reporting of overflow events. Do the Government intend to make any distinction between events caused by third parties, such as run-off from roads, and those that are a result of failure within a water company?

I turn to employees. This sector creates livelihoods for 100,000 of our fellow countrymen and women, and we must ensure that this remains an industry that is an attractive place to build a career, while we also root out offenders. We support tough sentences for those who break the law but, to slightly repeat my noble friend Lord Remnant’s point, can the Minister explain why sending water executives to prison, under the measures in Clause 4, is really the best use of our prison capacity when current pressure on our prison estate has led to the Government implementing a prisoner early-release scheme? I ask the Minister to publish the Government’s justice impact assessment to understand the impact of this clause.

Clause 2(4) places a serious obligation on those qualifying as being authorised by the agency, and in turn will require a significant compliance effort to ensure that all those impacted are aware of the law and what their obligations are. My noble friend Lord Sandhurst has spoken about a number of other measures that touch on justice-related matters, and it is important we get this right in the Bill. I will not repeat his arguments, but we will certainly be looking to improve the Bill in those areas as it passes through your Lordships’ House.

I would also be grateful if the Minister could confirm that the measures in this Bill on remuneration and performance-related pay are designed to be retroactive, to take effect from the beginning of the financial year prior to the Bill becoming law. In addition, how will this interference in existing employment contracts work in practice? I would also agree with my noble friend Lord Remnant’s points— echoed by other noble Lords, including the noble Lord, Lord Sikka—about unintended consequences, as seen in the financial services industry, that this may simply mean that basic salaries increase dramatically.

The Bill also lacks clarity on the fit and proper person test for senior water executives. I am very familiar with how this works in the financial services industry but, in relation to this industry, I ask the Government to publish exactly how it will work, before the Bill reaches Committee. It is crucial we have more clarity on these issues, as water companies may now need compliance departments to comply with additional regulations. This will also have an impact on customer bills. What assessment have the Government made of the impact of introducing a fit and proper test and these other regulatory requirements on consumer bills? As other noble Lords have pointed out, shareholders and debt holders are essential to providing the long-term investment the industry needs, with £88 billion targeted. Returns must be sufficiently attractive and predictable to attract that capital.

We are concerned that the offences specified under Clause 6 are not listed in the Bill. The Government need to include these in the Bill rather than setting them down later in secondary legislation which noble Lords cannot amend. We would very much like to see a draft of these offences prior to Committee. As other noble Lords have pointed out, there are significant delegated powers provided in this Bill, and I echo all the comments for “More disclosure, please”.

As the noble Duke, the Duke of Wellington, and my noble friend Lord Douglas-Miller and many others mentioned, Ofwat and the Environment Agency may not be the right bodies to deliver the additional monitoring, penalties and enhanced regulatory regime required by this Bill. We would be very grateful to know what assessment Ministers have made of the performance of Ofwat and the Environment Agency before pressing ahead with a Bill that grants those regulators more powers. I particularly take note of the comments made by the noble Lord, Lord Whitty, on this subject.

We are concerned that, under the recovery of costs provisions in a special administration regime, the Government may be able to recover costs incurred in action on one company from the wider industry. That represents a risk that shareholders should not be exposed to, and I would welcome clarification from the Minister on this point.

While the Bill makes significant provisions to increase the accountability of directors, companies and employees to the Government, we would really prefer to give this accountability of management, and performance-related pay, to shareholders, by adding more clarity to the impact of regulatory actions on shareholder returns. That is likely to lead to more coherent and efficient thinking throughout these businesses and less onus on government enforcement. It is also far more likely to achieve the change in culture that many noble Lords have demanded.

The Government should not be placed in a position where they may be forced to step in and correct market failures. Given the failures of regulation to protect the industry from aggressive financial structures, we think it is appropriate to introduce a cap on the leverage that a regulated water company can have within its operating company. Should shareholders and debt investors choose to put additional leverage on these companies above the operating company level, it will be at their own risk as we cannot allow these regulated monopolies providing essential services to be threatened in that delivery. Contributions from many Members suggest this might be a welcome move.

While not within the scope of the Bill, we would also like to see water companies incentivised to work with land and waterway managers on ecosystem restoration, bringing cleaner water and better flood resilience. I very much support the comments and questions on this area from the noble Earl, Lord Devon. Within that context, I also draw the House’s attention to my interest as a land and river owner.

In conclusion, we on these Benches firmly support the Government’s ambition to deliver the cleaner rivers, lakes and beaches we all want, but we will be holding Ministers to account on the measures in the Bill in Committee, to ensure there is more clarity both for noble Lords and for the sector before the Bill goes for scrutiny in the other place. Once again, I thank the Minister for her engagement to date and I look forward to much constructive discussion about the Bill in the coming weeks.

Wild Atlantic Salmon

Lord Roborough Excerpts

Thursday 12th September 2024 Grand Committee

[Lord Roborough (Con)]

My Lords, I draw the Committee’s attention to my interest as set out in the register of owning fishing rights on six salmon rivers in the UK. We should all be embarrassed that the IUCN has classified the wild Atlantic salmon as endangered in the UK, and the causes are manmade. This is an indicator flashing red about the health of our ecosystem, on land and sea.

I urge the Minister to address the points raised today. In particular, what pressure and action will the Government bring to bear on salmon farms, given these are on Scottish Crown Estate property? What research is being done to understand pelagic fishery by-catch impact and drive protective action? Could salmon be reclassified from fresh water to marine to require proper by-catch recording at sea?

What work is being done to return water to river systems from historic extraction rights, as well as removing manmade obstacles from the beds of rivers, as we have seen SEPA do successfully in Scotland? What would this Government consider appropriate to limit predation on salmon throughout its life cycle?

Can the Minister reassure us that she will investigate ways to accelerate riparian planting? The Atlantic salmon evolved with extensive tree protection on every river, and much of this has been removed. Can we put it back please?

What role can the Atlantic salmon play in defining nature recovery, given its totemic status and ease of measurement? Could the water industry be incentivised to invest more in habitat as part of its catchment management? Finally, will the Government continue to support investment in farms to limit effluent?

I am most grateful to my noble friend Lord Forsyth of Drumlean for securing this debate and to all noble Lords who have spoken. I pay tribute to my noble friend Lord Douglas-Miller for his exceptional leadership of the Atlantic Salmon Trust and for the important work he did as Defra Minister in this House. This debate emphasises that the Government must lead in repairing the damage done to the Atlantic salmon. The breeding cycle and the number of eggs it spawns mean that it is not too late. If this Government are serious about nature recovery, the Atlantic salmon would be only too happy to oblige within a short timeframe.

Hunting Trophies (Import Prohibition) Bill

Lord Roborough Excerpts

Committee stage
Tuesday 12th September 2023 Lords Chamber

[Lord Robathan (Con)]

I am grateful to my noble friend because I will come on to a compromise in a minute.

This Bill is of course a manifesto commitment left over from 2019. It was probably put in, rather surprisingly, by a former Prime Minister to placate somebody close to him. As somebody who was a Member of the House of Commons for 23 years, I can promise those who talk about 86%—or whatever it is—of people asked about trophy hunting not approving of it that this is not something that exercises most people on the streets of London, Manchester Blaby or Leeds. Furthermore, the Bill ignores the advice of the Government’s own body, the Joint Nature Conservation Committee.

I go back to what my noble friend just raised. Let us have a compromise that promotes conservation—I am absolutely a conservationist on my farm—fulfils the manifesto commitment to ban the importation of endangered species and listens to the Africans and others who oppose this Bill. Let us not listen to the arrogant zeal of activists.

I turn to the specific amendment. It goes to the heart of the issue, which is conservation, and asks us to listen to the International Union for Conservation of Nature’s red list, which concerns species that are seen as threatened by trophy hunting—if they are. The Minister just mentioned CITES. Let us stick with that, then; that would be something useful, although I do not think that you are allowed to trade in anything that is on a CITES list anyway. Let us stick conservation at the heart of this Bill, not the sort of patronising, arrogant zeal that we see from a lot of people on this. I beg to move.

[Lord Roborough (Con)]

My Lords, I rise to speak in support of my noble friend Lord Robathan’s Amendment 5. I declare an interest, as stated in the register, as a partner in a sporting estate in Scotland.

I note my noble friend the Minister’s earlier words. However, I echo other noble friends in the Chamber: this is a critical amendment that would return the Bill closer to the original Conservative Party manifesto commitment and ban imports from the trophy hunting of endangered animals. When Henry Smith proposed this Private Member’s Bill, he stated:

“The world’s wildlife faces an extinction emergency of extraordinary proportions. We have to do everything we can to support conservation”.


We now understand that we all support that, but I am familiar with the high importance of hunting, which can involve taking trophies in financing conservation efforts and in the protection and restoration of habitats and ecologies that support the species being hunted.

In this country, it is of limited national economic benefits, but it can make a material impact at a local level in relatively disadvantaged communities. When we look overseas—to countries in Asia and Africa, for example—the impact is much greater. Revenues from hunting can be the key financial support for conservation efforts. I understand that hunting may be distasteful to many, but conservation efforts funded by that hunting are universally welcomed. What right do we in this rich country have to cut off that funding and send a signal to the rest of the world that they should do likewise? Why should we make decisions that put out of work people around the world whose interests are also best served in ensuring a surplus of these species, potentially turning hunters into poachers?

The globally accepted definitive authority on threatened species is the IUCN red list. This classifies species into nine categories according to their level of endangerment, from “not evaluated” to “extinct”. The amendment identifies “threatened”, which incorporates “critically endangered” and “vulnerable”. That is one more than the manifesto commitment. Dr Challender of Oxford University, and colleagues, showed that less than a quarter of the 73 CITES-listed mammal species that have been imported as hunting trophies since 2000 fall into the “threatened” definition and 60% are of “least concern”. The same work showed that nearly 80% of imports were from countries where populations of the hunted species were stable, increasing or abundant.

The amendment brings in the concept of trophy hunting itself as a threat to the species being hunted. Analysis of the red list by Challender, Dickman, Roe and Hart showed that

“legal hunting for trophies is not a major threat”

to any of the species imported to the UK as trophies since 2000. In fact, the analysis concludes that trophy hunting is not listed as a threat to the survival of any species. The positive impact of hunting on threatened species is well illustrated by Michael ‘t Sas-Rolfes and Dr Emslie in their article in the Conversation:

“South Africa and Namibia are the two countries with the most African rhinos. In 1970, before legal hunting was introduced, they jointly held about 1,950 white rhinos … That number had risen to about 16,600 by 2017 … the biological and socio-economic benefits generated by these hunts … can boost conservation performance through enhanced population growth and funding”.


Returning to the Challender analysis, only 10 endangered species have been imported to the UK as hunting trophies since 2000, including ranched animals, which would not have been bred without hunting as an objective. Therefore, I question why this Bill is identifying over 6,200 species. How will our Border Force cope with this burden of determining which species or subspecies an animal part may be from and whether it is a trophy, has been hunted, or where the importer lives? How much simpler and more targeted to rely on IUCN red list designations.

This is an important amendment, returning the Bill to its original intention and supporting conservation efforts globally. Further to comments on earlier groups, these amendments, and this one in particular, are carefully designed to turn a damaging, emotionally driven Bill into legislation which genuinely will support conservation.

[Lord Mancroft (Con)]

My Lords, I support this amendment. We have been told that the motivations behind this Bill are the manifesto commitment and public opinion. I am not particularly enthusiastic about either of those things, but there is no doubt that this amendment does return the Bill to the manifesto commitment that was given. If that is what the Government are hanging their hat on, as they appear increasingly to have done during the summer, then they should accept this amendment. If they say, “Well, we can’t do that because that will return the Bill to the House of Commons”, well, they have had the timetable for this Bill, as they have for any Bill, in their gift throughout, so it is their fault and not ours that we are debating it at this late hour.

A point was raised earlier about public opinion. We have had “public opinion” thrown at us—that 80% or 90% of people support this. The reality is that the people support it because they think it is a conservation measure. When it is explained to them—as it has been by the IUCN, with its rather more nuanced and in-depth research into public opinion—that actually, it does not help conservation, less than 50% support it. The number goes right down.

The polls that put it up at 80% or 90% are the usual incredibly biased animal rights polls, which we have seen for 20 or 30 years in this country. They say, “Do you want to rip a small animal to shreds and enjoy every minute of it, relishing in its blood?” You get 99% on that one; if you have these sorts of ridiculous questions, of course you do. The reality is that we should not and must not run our country by public opinion poll.

Land Use Commission

Lord Roborough Excerpts

Monday 22nd May 2023 Lords Chamber

Asked by

[Lord Roborough]

To ask His Majesty’s Government what assessment they have made of the report of the Land Use in England Committee’s recommendation to establish a Land Use Commission to help landowners and managers make the most appropriate decisions for their land.

[The Minister of State, Department for Environment, Food and Rural Affairs (Lord Benyon) (Con)]

My Lords, I declare my farming interest as set out in the register. We welcome the committee’s report and agree with many of its findings. The land use framework programme led by Defra is aligning thinking on land use across departments. We have yet to be convinced of the value of a commission.

[Lord Roborough (Con)]

I thank my noble friend for his Answer and refer to my interest as a landowner, as set out in the register. The Royal Society recently highlighted that government policies could require up to one-third of England’s land to be repurposed by 2050. England is a densely populated nation with multiple overlapping stakeholders on every acre of our country. That makes change in land use complex, time-consuming, expensive and risky for the land manager. How else can the Government help to streamline this process and highlight the optimal uses of different types of land to those who manage it?

[Lord Benyon (Con)]

My noble friend raises really important points. In its Multifunctional Landscapes report, published this year, the Royal Society referred to the UK rather than England; of course, we have to operate within the system that we have. It bases its assumptions about the total areas required by government targets on figures that it describes in the report as “illustrative”. However, we do not want to prescribe particular uses to landowners or land managers from a national level. We would rather make sure that they have the information and guidance they require to make efficient decisions based on local knowledge. I give the example of local nature recovery strategies, which help to steer nature restoration projects to the areas where they can be most beneficial.

Direct Payments to Farmers (Reductions) (England) Regulations 2023

Lord Roborough Excerpts

Tuesday 28th March 2023 Lords Chamber

[Baroness Bennett of Manor Castle (GP)]

I thank the noble Baroness for the reassurance. I hope that farmers around the country will hear and feel that there is a degree of certainty, because that is what they need, as I said.

I will now get to the part where I criticise the Government. With these kinds of policies, we need a method of policy-making by consensus. In other countries, particularly those with proportional representation electoral systems, there is decision-making that is arrived at by consensus. It would have been better if this had been constructed in a more stable and secure way, in consultation with all parts of our political system, to deliver the certainty that farmers need. As has been said from all sides of your Lordships’ House, that is not the position that farmers are in today.

[Lord Roborough (Con)]

My Lords, I declare my interest as a farmer and landowner. Despite my position as a loser of financial support under the Government’s current policies, I am against these amendments.

Small farmers in this country, particularly upland farmers, are dependent on predictable government support to plan their businesses and to enable investment to achieve positive environmental outcomes. Many of those farmers are on a financial knife-edge, and these amendments would throw the plans for those embracing change into turmoil. I am familiar with the finances of typical upland farmers in my home county of Devon and their reliance on consistent and predictable government support. Changing that government support now is not helpful.

Genetic Technology (Precision Breeding) Bill

Lord Roborough Excerpts

Report stage
Wednesday 25th January 2023 Lords Chamber

[Lord Trees (CB)]

My Lords, I will make one or two points, particularly with respect to the comments made by the noble Lord, Lord Winston.

Regarding imprecision, conventional breeding is totally imprecise. Mankind has been breeding animals for thousands of years, just looking grossly at the phenotype, the way animals look and so on. Recent research on pigs has shown that if you breed two pigs —a boar and a sow—and do whole-genome on sequencing on all their progeny, there will be at least 100 mutations in the DNA of each of those progenies which are not represented in either parent. Every time we breed every animal now, on every farm, in every house, in every stable, we have a very imprecise system which is constantly throwing up genetic variation.

Applying this more precise breeding will be done under very controlled conditions in research establishments which will be thoroughly looking at the changes in the genomes of the animals long before they are released. Remember that when we market animals for breeding, we control the breeding. We have had assurances that mechanisms such as gene drive will not be included in this legislation. Every precision-bred animal that is genetically edited and put on the market will be bred by humans controlling that breeding.

Lastly, regarding ethics, there are counter-ethics, and the bus has already left the station on this. The noble Lord, Lord Krebs, mentioned the work on PRRS. There is some very encouraging work coming through which indicates that we may be able to create poultry with a degree of resistance to avian influenza. An Israeli research group has published information on being able to produce only female chicks from layer breeder flocks, thus preventing the unnecessary destruction of half the chicks born for laying purposes because they are male. When we have the potential to reduce the burden of disease in animals which are under our control, is it ethical not to take up that opportunity?

[Lord Roborough (Con)]

My Lords, I declare an interest as a dairy farmer and as an investor in a number of agriculture-related businesses around the world. I also declare negligible scientific credentials, unlike many noble Lords who have spoken.

However, I believe that it is essential that farmed animals are included in the Bill without undue delay, and I am very much against any amendment which delays or removes these animals. I have previously mentioned in this House that I could raise the output of my herd by 23% were all my cows blessed with the same genetics as my best cow. As noble Lords have already mentioned, there are disease benefits. Another example is the Roslin Institute’s engagement in gene editing of salmon, which improves resistance to infectious pancreatic necrosis viruses. These are meaningful benefits and I agree that they also improve animal welfare.

I would also add that I do not entirely recognise the world that was described by the noble Baroness, Lady Bennett, earlier. Agricultural productivity continues to increase globally, powered largely by ongoing plant and animal selective breeding. I believe that we have an obligation to unleash this technology of precision breeding to further increase production globally and support a growing global population.

[Lord Winston (Lab)]

Before the noble Lord sits down, I wonder if he might be kind enough to comment on this, seeing as he wanted to breed his best cow with all the other cows to reduce genetic diversity. Can he tell me what happens if a virus comes along to which that herd is susceptible? What do you do then? That is the problem.

[Lord Roborough (Con)]

As a non-scientist, I am not sure that I have a good answer to that. I would rely on the vets.

[Lord Taylor of Holbeach (Con)]

I think my noble friend is quite right: we will depend on increasing productivity and will be able to do that only by breeding. The whole point of the Bill is selective breeding; actually, it is precision breeding. The noble Lord may well have this nightmare that we are releasing something ghastly into the world; I do not believe that is true at all. It is done because of objectives in the breeding programme, which is precise. This is just the sort of thing that I do—and I declare my interest as a horticulturalist, as the House well knows—when we are breeding bulbs and daffodils. But this is more serious; this is not about domestic gardening but is about feeding the world and making it possible for the diversity that exists in gene stock to be harnessed for greater productivity.

Environmental Targets (Woodland and Trees Outside Woodland) (England) Regulations 2022

Lord Roborough Excerpts

Tuesday 24th January 2023 Grand Committee

[Lord Watson of Wyre Forest (Lab)]

My Lords, of the three instruments that we have discussed today, this is the one that gives me the most concern, for many of the reasons just outlined by the noble Baroness, Lady Young. The context of this is that every environmental scientist and data scientist on every continent says that, if we are to reduce global warming and get below the 1.5 degree figure, we need to extract more CO₂ from the atmosphere. The only way we can realistically do that is by planting something in the region of a trillion trees. The UK has a tiny but significant role to play in that.

I have known the Minister long enough to know that, although the dignity of office means that he must respect the collective decisions of the Government, he will be personally hurting inside at this reduction in what was in itself a fairly limited target. Today, he has told us that the Government must set realistic targets. A realistic target with political leadership intent could be 17.5% canopy cover. It requires leadership and resource.

We are in very difficult times but, I have to say, what this represents is not just a cut in ambition but a withdrawal. In my view, this is a resource-led instrument, and one that we cannot afford. The planet cannot afford it. Future generations cannot afford it. I think I know the Civil Service well enough to realise that there is a potential get-out clause or caveat where, while explaining in its response to the Secondary Legislation Scrutiny Committee

“that a canopy cover target of 16.5% is the most ambitious that can currently be set whilst still being realistically achievable”—

I think it is achievable but it will require leadership and resource—Defra says this:

“The first review of environmental targets will be an opportunity to consider whether the level can be realistically increased”.


Can the Minister give some comfort to colleagues here by saying that, if one can be found, there could be a cross-party way for us to work dextrously and quickly to increase that target significantly to 17.5%, perhaps more, after we decide on this instrument today? Can we work together to see whether the parties can come to a solution on this?

[Lord Roborough (Con)]

I thank my noble friend for the targets that he has outlined today. Before I go on, I should apologise in advance; this is one of my first times standing up so I am sure I will make many errors. I declare my interests in developing new forestry plantations and managing forestry, as well as in carbon offsets, so I have a little experience in this area.

In some ways, I want to echo what has come before me but with a different emphasis. I want the Government to continue to work on these targets by addressing the practicalities of what it takes to plant a new forest. Look at our neighbours in Europe. France has 31% woodland cover. Germany has 33%. They are at a similar stage of economic development to us and have similar climates. The UK’s figure should be much higher, but there are many barriers to getting it higher that need to be addressed. I am not convinced about setting targets; I think that the work needs to be on removing the obstacles to developing new forestry—everything from the invasive grey squirrel, which attacks many of our native broadleafs in an early stage of their development, to the cumbersome and restrictive planning process that places undue weight on perhaps poor quality archaeology as an obstacle to planting new ground. We must also develop carrots for the industry and landowners by encouraging more green finance involvement in developing new forests.

Like the noble Baroness, Lady Young, I think that we need to work on the basis of some of the recommendations from the Rock review on how landlords and tenants can engage constructively on freeing up more land for planting forestry.

I want to speak up in favour of conifers. One of the tests for developing new forestry plantation is the economic or agricultural impact assessment, which looks at the employment opportunities. If we take land that currently supports low-intensity agricultural practices and put it into forestry, we need to be sure that we are not costing jobs or the economy. Conifers play a critical role in construction in this country. We currently import most of our construction timber, and it is essential that we plant plenty of conifers.

In summary, I would like the Government to continue working on how we can plant more acres and hectares than the current targets incorporate.

[Baroness Parminter (LD)]

It is a great pleasure to follow the noble Lord, Lord Roborough, with his expertise in this field, and other campaigners with significant expertise. It adds to the calibre of the debate. Like the noble Baroness, Lady Young, I think that this is the SI where I have most concern about the paucity of the targets. I also found it very interesting just how much support there was for increasing the level of ambition, yet the Government have gone down from what they originally proposed.