Plastic Pollution Reduction
Lord Sikka Excerpts(1 week, 3 days ago)
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Baroness Hayman of Ullock (Lab)
The noble Baroness makes a really good point. One thing that is often confusing about recycling and composting is definitions, what the material does and how it breaks down. She makes extremely good points, and I will take them back to the department.
Lord Sikka (Lab)
My Lords, an enduring legacy of the last Government is potholed roads in every city, town and street. This can be fixed by partially replacing bitumen with plastic waste, which makes roads cheaper, smoother and more durable. Can the Minister say what proportion of plastic waste is recycled for road building and what plans the Government have to encourage its greater use?
Water Companies: Fines
Lord Sikka Excerpts(3 months ago)
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Lord Sikka
To ask His Majesty’s Government how many of the fines imposed by regulators on England’s water companies in 2024 and 2025 are yet to be paid in full.
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Baroness Hayman of Ullock) (Lab)
My Lords, Ofwat has imposed fines to the value of £122.7 million on Thames Water. There is a payment plan in place, with the first 20%—that is, £24.5 million—paid last year. The remaining 80% is due by 31 March 2030 at the latest. Fines following EA enforcement action total £4.6 million, and we are not aware of any unpaid fines. Fines are only part of the enforcement toolkit, however, with over £164.6 million of enforcement undertakings announced over the same period.
Lord Sikka (Lab)
My Lords, it is shameful that water companies, with nearly 1,200 criminal convictions, are permitted to negotiate the amount and timing of fines. Some will not pay the headline-grabbing fines announced in 2024 until 2030, while others will not pay any of the announced fines. No statement to that effect has been made to Parliament. Can the Minister explain why the Government continue to indulge criminal organisations?
Large-scale Waste Crime
Lord Sikka Excerpts(3 months, 2 weeks ago)
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Captain of the Honourable Corps of Gentlemen-at-Arms and Chief Whip (Lord Kennedy of Southwark) (Lab Co-op)
We will hear from the Lib Dems next, then from my noble friend.
Baroness Hayman of Ullock (Lab)
The Environment Agency’s exceptional decision to progress works to entirely clear the site at Kidlington of waste followed new information and advice from the fire and rescue services that indicated that there was an increased possibility of a fire at the site, which is why it moved in to do it. It was the scale of that fire risk that set it apart from other illegal waste dumps in England. That is why it became an overriding public imperative. Regarding the other site, investigations and work are going on there, so it is difficult for me to comment specifically, but I am happy to look at what I am able to share with the noble Baroness and put it out in writing.
Lord Sikka (Lab)
My Lords, there is waste crime in plain sight. For decades, England’s water companies have illegally dumped sewage in rivers, lakes and seas. Companies have nearly 1,200 criminal convictions, but their directors receive mega bonuses and rewards. Despite promises, no director has been prosecuted or disqualified from acting as a director. Can the Minister explain why the Government continue to indulge criminal entities and elites?
Baroness Hayman of Ullock (Lab)
My noble friend knows that water companies are private companies. He also knows that we have a criminal justice system that the Home Office and the Ministry of Justice work in. The law is there to be used when appropriate, and I would hope that it will happen.
Energy Market Reforms
Lord Sikka Excerpts(5 months, 4 weeks ago)
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Baroness Hayman of Ullock (Lab)
As I have said, one of our key priorities is to reduce bills for consumers, particularly for vulnerable customers. We will look at all aspects of how best to do that.
Lord Sikka (Lab)
My Lords, energy companies made £30 billion profit last year, which is over £500 per household. This fuels inflation and poverty. Some 128,000 people die in fuel poverty each year. There is an urgent need to end profiteering by excluding gas-generated electricity from Ofgem’s marginal pricing formula. Can the Minister explain why, after 35 years, Ofgem’s pricing formula has not been reformed?
Baroness Hayman of Ullock (Lab)
My noble friend asks about marginal pricing and refers to gas, because gas and electricity prices have been coupled together for many years. The market currently operates on the principle of marginal pricing, and the cost of electricity often tracks the cost of gas because gas generation frequently sets the wholesale price. It is a complex area. There are good reasons why the electricity market operates on that basis. Comparable countries tend to operate in this way as well. Over time, we need to rely less on gas, which means that electricity prices will become increasingly detached from the price of gas and be more frequently set by other generation, such as renewables. We see that as the way to bring prices down to support vulnerable people and to enable them to pay their bills. That is why our focus is on increasing renewable energy.
Deforestation
Lord Sikka Excerpts(7 months, 2 weeks ago)
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Baroness Hayman of Ullock (Lab)
It is a very good question. We have to look at what waste from forest is used for. We are supporting the timber industry in this country; that is important, because at the moment we import an enormous amount of timber. It needs to be easier, quicker and more financially viable to grow trees in this country, so that is one aspect of reducing the waste that comes from importing. At the same time, we need to ensure that we manage the waste from our own imports and our own homegrown timber effectively. We relaunched this year the Timber in Construction Roadmap. We need to be able to meet demand, but at the same time manage the waste issues to which the noble Lord refers.
Lord Sikka (Lab)
My Lords, successive Governments have facilitated deforestation abroad. A good example is Drax, which has received billions in subsidies for burning wood pellets to produce electricity that is twice as expensive as electricity produced from gas. Drax has a record of lying about the use of primary forests for burning wood. The company reported a profit of over £1 billion last year, paid out £97 million in dividends and another £300 million in share buybacks to shareholders. Can the Minister explain why this company continues to be subsidised?
Baroness Hayman of Ullock (Lab)
Electricity generators—and that does include Drax—receive subsidies only for the electricity they generate from biomass which has demonstrated compliance with the Government’s sustainability criteria. We have strengthened the sustainability criteria for large-scale biomass generation by increasing the proportion of biomass that must be obtained from a sustainable source from 70% to 100%, excluding core material from primary forest and old growth areas, and by tightening greenhouse gas emission requirements in line with European best practice.
Plastic Pollution
Lord Sikka Excerpts(7 months, 2 weeks ago)
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Baroness Hayman of Ullock (Lab)
Our ambition at the moment is to try to get the global treaty that we have been pressing for. We believe that the more countries that we can bring into that treaty, including those that produce the plastics and the materials for them, the more likely we are to have a larger global impact. But we are considering all options, because we need to move forward in this space.
Lord Sikka (Lab)
My Lords, can the Minister explain what assessment the Government have made of the pros and cons of requiring road builders to replace some of the fossil fuel-based bitumen with plastic pellets?
Baroness Hayman of Ullock (Lab)
At the moment, I am not aware of Defra having had such conversations. It may be that the Department for Transport has, so I will go back to my department, ask for more information on this subject and write to the noble Lord.
Independent Water Commission
Lord Sikka Excerpts(9 months, 1 week ago)
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Baroness Hayman of Ullock (Lab)
The noble Baroness is correct: we have ruled out nationalisation. But if she would like to share the paperwork, I would be more than happy to look at it.
Lord Sikka (Lab)
My Lords, Ministers claim that public ownership of water would somehow cost £100 billion, which is a totally unsound claim. Let me explain. The £100 billion figure is generated by Ofwat, which calls it “recognised capital value”. It is calculated by taking the value of the company at the time of privatisation, adding the annual investment and multiplying it by the annual rate of inflation. It adds that 35 times—that is, over 35 years—and comes up with the figure of £100 billion, which does not represent anything. On the same basis, a £10,000 Reliant Robin bought by Del Boy in 1990 would now have a value of over £50,000. There is no way that Del Boy would be able to sell it for £50,000, because that figure has absolutely nothing to do with value. So, can the Minister explain why the Government consider £100 billion to be a credible figure for the cost of public ownership?
Baroness Hayman of Ullock (Lab)
I would just say to my noble friend that we have discussed this on a number of occasions, including with officials in the department. I am sure that we will continue to discuss it.
Thames Water
Lord Sikka Excerpts(10 months, 4 weeks ago)
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Baroness Hayman of Ullock (Lab)
Any future operating model will be part of Sir Jon Cunliffe’s review that is currently taking place—I am sure the noble Baroness will be aware that the interim report is out. That will be part of the work being carried out by Sir Jon and others.
The big issue is that fundamentally this a private company. It for the company to solve the issues of financial resilience. It is not for us to tell a private company how to manage its finances. That is really important. But, having said that, we have to be prepared for all eventualities across regulated industries and Thames Water has clearly had some pretty serious problems. If it comes to a SAR, creditors cannot ask the debt to be repaid during that special administration regime. If it did come to that, there is a moratorium on legal proceedings during a SAR and that would take away the creditors’ ability to enforce any debt repayments.
Lord Sikka (Lab)
My Lords, while the Government are dithering about the future of Thames Water, its debt has increased by £3 billion, it is spending £200 million a year on its business advisers and one-third of a customer’s bill basically covers the interest payments. Is it not time that the Government recognise that privatisation has failed and that the only way of giving the water industry firm footing is through public ownership?
Baroness Hayman of Ullock (Lab)
As I have said previously, the Government are not going to be renationalising the water companies. The Government are not dithering. This is a private company that has some serious debt problems. It is not for the Government to tell a private company how to manage its finances. If it comes to it, we are prepared to ensure that customers continue to receive high-quality water through their taps, because that is what is really important, and that the systems stay in place.
Thames Water: Bids
Lord Sikka Excerpts(1 year ago)
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Lord Sikka
To ask His Majesty’s Government what guarantees they expect to give to, or receive from, any bidder for Thames Water.
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Baroness Hayman of Ullock) (Lab)
I had almost relaxed then.
My Lords, it would be inappropriate for the Government to comment in detail on a company’s commercial regulations. Ofwat notes that the company has now moved to the next stage in its equity raise process, and it continues to engage with the company to ensure the delivery of the financial and operational turnaround that both customers and the environment deserve. Any investors will be expected to show that Thames Water will meet its statutory and regulatory obligations.
Lord Sikka (Lab)
My Lords, I thank the Minister for her Answer. Let us look at the facts. Thames Water was put on the road to ruin by private equity. Now its shareholders have designated KKR, another private equity group, as their preferred bidder. KKR’s business model is profiteering, high leverage, low investment, asset stripping and high cash extraction. That will inevitably multiply Thames’s problems. The Water Industry Act 1991 gives the Secretary of State powers to vary the licensing conditions. We need to know precisely what the Government will demand from the new owners of a company that already has 187 criminal convictions.
Baroness Hayman of Ullock (Lab)
Regarding the company choosing KKR as its preferred bidder in the ongoing equity raise process, clearly Thames Water is a commercial entity engaged in a public equity raise, and it would therefore be completely inappropriate for the Government to comment on that. However, I note that the company had a number of potential bidders to choose from, which indicates that a market-led solution to the financial resilience of the company is a possibility.
Thames, Yorkshire and Northumbrian Water: Ofwat Proposed Fines
Lord Sikka Excerpts(1 year, 3 months ago)
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Lord Sikka
To ask His Majesty’s Government how many of the £168 million fines proposed by Ofwat on 6 August 2024 against Thames Water, Yorkshire Water, and Northumbrian Water have been collected.
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Baroness Hayman of Ullock) (Lab)
My Lords, it is important to make clear when answering this Question that we are talking about proposed fines, and legislation specifies the process that Ofwat must follow before it can impose the fines or an enforcement order. Ofwat has the option of accepting regulatory settlement in lieu of imposing an enforcement order and/or fine. If Ofwat decides to impose a fine, it will issue a notice to the company specifying the date of payment. This must be after 42 days from the date that notice is served on the company.
Lord Sikka (Lab)
My Lords, I thank the Minister for that reply. We seem now to have a category of fines which are not really fines. A £168 million fine for past sewage dumping was announced nearly six months ago but has still not been agreed and collected. The normal practice is that habitual criminals are not permitted to negotiate the extent and timing of fines with judges or anybody else. These three water companies between them have over 400 criminal convictions, but they are being allowed to negotiate the amount and timing of their fines. Why does the Minister think that this is a good and moral practice?
Baroness Hayman of Ullock (Lab)
It is important to be clear that Ofwat has to act within existing legislation. It is also important to point out that the Government are absolutely clear in wanting to clean up the water industry, which is why we have set up the commission. Since 2015, the Environment Agency has concluded 66 prosecutions against water companies, which has secured record fines of over £150 million. Meanwhile, in the last five years, Ofwat has secured a total of around £38 million in rebates to customers, in addition to another £150 million in other undertakings, as a result of its enforcement action.