Water Industry (Financial Assistance) Bill

Andy Slaughter Excerpts

Wednesday 14th March 2012 Commons Chamber

[The Chairman of Ways and Means (Mr Lindsay Hoyle)]

The good news is that I am not going to judge the speech or the ring main.

[Mr Andy Slaughter (Hammersmith) (Lab)]

I will, I hope, be a little briefer than the right hon. Member for Bermondsey and Old Southwark (Simon Hughes). I just want to make a few remarks arising from his comments and amendments.

I am absolutely with the right hon. Gentleman on the general principle that in going ahead with the Bill, which I believe has all-party support—I am not sure about him but he is not pressing his amendment—we must protect both public money and the money of the public. By public money, I mean, first, any underwriting of major capital schemes, such as the Thames tunnel. Secondly, this is a large private multinational company—I appreciate his research into its holdings and complex structure—and we must ensure that it pays taxes in the UK.

At the same time, however, we must also look after the money of the public and ensure that not a penny more is paid in increased water charges, particularly given that water charges are already rising above the rate of inflation for all water users across the UK, including Thames Water customers. I was somewhat reassured on Second Reading when the Minister said that the Government shared those concerns and that he was sceptical about the project—at least about whether its financing was what Thames Water said it was. There would be broad agreement on that.

I also agree with many of the comments of the right hon. Member for Bermondsey and Old Southwark about Thames Water, particularly under the ownership of RWE. During my first two or three years in the House, Thames Water was my bête noir, partly because of how it dealt with leaks—digging up roads all around London in a completely ad hoc, unconcerned way and leaving workings for months at a time—while still not getting to grips with the problem. Furthermore, the problem of sewer flooding, particularly in west London, has been a blight on people’s lives. Year on year, thousands of basement and ground-floor properties in my constituency are flooded by sewers, yet little attention is paid to it. And, indeed, there are Thames Water’s financial arrangements, which the right hon. Gentleman spoke about.

It is only right to balance that, however, by mentioning that Thames Water’s performance has improved markedly in the past few years in many of those areas, although we should continue to be concerned about its financial structures. A lot has been written in the papers in the past few days about the current drought and impending hosepipe ban and other possible measures, and the water companies are rightly under scrutiny. I note that in total—this is not just Thames Water—water companies are likely to report annual profits of £1.5 billion and that they are currently leaking about one quarter of the water they provide. They provide about 14.6 billion litres daily, and about one quarter of that is being leaked. It has been pointed out quite correctly that the hosepipe ban will save only 20% of the water being leaked daily.

The water companies, then, have a long way to go. Many of their problems were caused by the botched privatisation under the then Conservative Government and the fact that, as the right hon. Gentleman said, there has been an incentive for companies to beef up their profits to make themselves ripe for takeover, to sell on at a profit and not to worry during those years about their consumers and the cash cow that comes from having an effective local water monopoly.

Everyone will be grateful for the research that the right hon. Gentleman has done into the financing structures. I am less sure, however, that his amendments would deal with that. I will not spend long on this because I suspect that the Front-Bench spokesman, my hon. Friend the Member for Luton South (Gavin Shuker), will explain, not as eloquently as me but forensically and analytically, how the Labour amendments would provide the necessary safeguards in a less prescriptive and detailed but more effective way to ensure that if any projects come forward for financial assistance, they are tested in the House first to ensure that the assistance is necessary.

I depart from the right hon. Gentleman in respect of the effect that his amendment might have on the clause. In the end, we need a project in London that will resolve the daily, sometimes weekly, regular flow of huge quantities of sewage into the Thames. On this, I am not sure where he is coming from. When we debated this matter last September in Westminster Hall, he said:

“I also put in a short response to the private commission that was set up by some interested local authorities and chaired by Lord Selborne.”—

in fact, it was set up by Hammersmith and Fulham council—

“The commission has argued that we must have a totally different direction. I am not persuaded by that. The Thames tunnel is the best direction. The previous Government came to that view and the present Government have held to it.”—[Official Report, 14 September 2011; Vol. 532, c. 316WH.]

That was in September. In February, he said:

“I am now clear that, since the end of the first round of consultations in 2011, the arguments for a review of the full tunnel proposal and possible alternatives have substantially increased.”—[Official Report, 29 February 2012; Vol. 541, c. 391.]

I am not sure what happened between September and February. This is important because we must find an effective solution. There is no point putting forward half measures.

[Jeremy Corbyn (Islington North) (Lab)]

I have met Thames Water and looked at the situation. Pollution of the Thames is totally unacceptable—as are the levels of sewage going into the Thames. There has to be a better drainage system to ensure that that does not continue. However, does my hon. Friend agree that after this process we need much tougher regulations to deal with the paving over of large areas of London and the Thames basin, which leads to excessive water run-off from rainfall, which then joins the sewage, becoming a sewage surge in the Thames? That water should be replenishing ground water, not being flushed away with the sewage and thus causing pollution in our river.

[Mr Slaughter]

My hon. Friend is absolutely right. The schemes that he describes, which are collectively known as SUDS—

[Heidi Alexander (Lewisham East) (Lab)]

Sustainable urban drainage systems.

[Mr Slaughter]

I am grateful to my hon. Friend for that prompt. Local authorities have woken up to the possibility of SUDS, albeit perhaps somewhat late in the day. Many are now insisting in planning applications that there should be no more paving over, while many are rightly taking enforcement action where those conditions are disobeyed. However, it is quite wrong to think that SUDS on their own will be a solution to the problem; rather, they offer additional assistance. The idea that we can suddenly convert road surfaces and pavements into permeable surfaces across London is highly impractical—look at the problems we had with simply replacing the water mains—and it would also cost four or five times more than the highest estimated cost for the tunnel. However, we must use SUDS, and indeed other measures

I am grateful to my hon. Friend the Member for Islington North (Jeremy Corbyn) for his intervention, because he brings me back to the point that I was making. I was pleased to receive an invitation from the right hon. Member for Bermondsey and Old Southwark to attend a meeting on 6 March in this place. This perhaps draws attention to the point that the hon. Member for Cities of London and Westminster (Mark Field) raised, because although probably 140 to 150 MPs would have been invited if the right hon. Gentleman had asked all those with an interest in Thames Water, I think only three turned up—me, the hon. Member for Hendon (Mr Offord), who is in his place, and my right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford), who was here a moment ago. That perhaps shows a certain lack of interest among some of our colleagues. I am sure that the hon. Member for Cities of London and Westminster would have been there, had he not had a more pressing engagement—I am sure that it was not the Campaign for Real Ale reception that was on at the same time, but there we go.

The invitation asked us to come and listen to Chris Binnie, the engineer who served as the independent chair of the Thames tideway strategic study steering group, which recommended the full tunnel solution. He was going to be present to explain

“why he now believes the costs have exceeded the benefits, and why there are quicker and cheaper solutions that should be considered urgently.”

I am familiar, as many Members are, with Mr Binnie’s proposal, which is what he has called the “Binnie Bubbler”, It is designed to aerate the Thames in a way that prevents the death of the fish and other livestock—if that is right phrase—in the Thames. I have read the arguments for and against the “Binnie Bubbler”, and I have always been rather sceptical about it, because I am not sure that it is suitable for the tidal Thames—it has apparently worked in Cardiff bay in a lagoon area—and also because I do not think it acceptable to allow raw sewage into the Thames at current levels and then simply to try to aerate it and possibly skim off the worst of it.

I therefore went along to the meeting—although I am sorry that I could not stay for the entire time—to see whether Mr Binnie had something more to say on that issue. It would be fair to say that he had something quite surprising to say. I appreciate that I am about to read from a note about the meeting that was written up by a supporter of the tunnel—I had left by this stage—but it says:

“Chris Binnie announced that he had changed his mind again and now supported Thames Water’s view that we should implement the single Thames Tunnel option. Wow! You could hear the gasps around the room and Simon Hughes’ chin nearly hit the floor.”

That might be slightly unfair: the right hon. Member for Bermondsey and Old Southwark is unfazed even by things greater than engineers changing their minds, for the second time. However, this issue draws attention to an important point in the argument about the Bill, and brings us back to the financing. I think everybody—certainly everybody present in the Chamber today and most other Members of the House, albeit with certain exceptions, my neighbouring Member of Parliament being one of them—supports the idea that something must be done to relieve sewer flooding of the Thames in a substantive way that will last us, we hope, as long as the Bazalgette solution did.

[Simon Hughes]

I do not want to prolong this unnecessarily, but would like to say clearly that my presumption has always been that something needed to be done. I started from the view that the Thames tunnel was the right solution. However, I want to be sure—not just for myself, but for my constituents, for the reasons that have been set out—that we are not about to embark on an expensive project if it is not entirely needed and has not been objectively assessed to be the right solution. Hence, I come to this issue with a “Let’s check and be certain before we press the button” approach. That was my view before I went to the Binnie meeting and when I came out of it, and it remains my view today.

[Mr Slaughter]

I am grateful for that clarification. I have never signed up to the concept of the tunnel uncritically or without reservations—or, indeed, at all—because I have always held open the option that there might be a better solution, and if that is what the right hon. Gentleman is saying, then we are on all fours with each other. That is why I have looked in some detail at proposals such as the “Binnie Bubbler”, SUDS and the idea of separate rainwater and sewerage networks, which would also create the problem of huge disruption and much additional cost. Some of those projects, including water conservation, can be done and should be effective, both environmentally and from a cost perspective; the difficult thing is to find an alternative that does what the Thames tunnel would do.

[Jeremy Corbyn]

My hon. Friend represents a riverside constituency, and therefore must have studied the issue in detail. I understand that the tunnel will not last for all time and will become overloaded within the next three or four decades. Therefore, we need to examine how we use water and how drainage systems operate, rather than hitting another crisis in three or four decades’ time.

[Mr Slaughter]

I agree, and something that is effectively a large sewer pipe stuck under the River Thames can sometimes look like old technology in some ways. There has to be a more organic and continuing process of developing solutions to avoid tunnelling, but it remains the case, first, that this solution has been preferred in many other capital cities around the world and, secondly, that at the end of the day, it is the simplest, clearest and most effective solution. Therefore, as well as considering other, additional measures, all our attention should be focused on how the Thames tunnel can be contained as a project, particularly financially, but also in terms of the disruption that it would cause.

However, I take my hon. Friend’s point entirely, and conclude by going back to basics and why we need this project. When I spoke on Second Reading last week, I invited my hon. Friend the Member for Luton South to join me last Saturday on the foreshore of the Thames by the CSOs—combined sewer overflows—in Hammersmith for the Thames21 clear-up. I was very disappointed to see that he obviously had pressing constituency business, because he would otherwise have joined me and about 100 of my constituents—although they might have been from Bermondsey and Old Southwark or Cities of London and Westminster. However, they were all hard-working people—they worked longer than I did. Together, they cleared up several skips of industrial, commercial and consumer waste—if I can put it that way.

[Jeremy Corbyn]

I rise to intervene on my hon. Friend for the last time and to thank him, because I visited the Hammersmith shoreline on Saturday evening, and it was absolutely brilliantly clean. I looked over that pristine area of mud and sand, and thought, “This is amazing! This is how the Thames can be. I wonder which guardian angel has been here and cleaned it up”—and now I know.

[Mr Slaughter]

Modesty forbids; all I would say, without going into too much graphic detail, is that when I left, I washed everything that I was wearing, yet it was still Monday morning before I got the smell out of my nostrils. Unfortunately, I did not go and wash everything I was wearing immediately, because I had to go canvassing for Mr Livingstone in between. I cannot think how many votes I must have lost in the condition I was in, following my outing on the foreshore.

It is a lot cleaner on the foreshore, and I appreciate absolutely what the Thames tunnel coalition, Thames21, has done, and all the fantastic consumer groups involved, in organising the clear-up. I pay tribute to them, although I wish that they did not have to do that work in those appalling conditions.

One of the people who was working hard there on that morning was a young man called Conor Newman-Walley, aged 15. He and his dad were there, working away. He goes to the same school in Hammersmith that I went to many years ago, and he is in the rowing team. It is a very good rowing team, as it was then. He is a founder member of Rowers Against Thames Sewage—RATS—and this is what he has said to the Thames tunnel organisation:

“In Victorian times, the people of London solved the first sewage crisis by implementing one of the most influential engineering projects of its time. As young people we learn and marvel about these feats in history at school. The challenge of sewage in the Thames today is too big for our generation. We look to those above us to put the projects in place that will solve this problem for generations to come. Our call to you is to build something amazing that our children will learn about in school.”

That attitude is one that we should adopt as we contemplate the Bill.

It is our duty to scrutinise the Bill and, more importantly, when it is passed, to scrutinise the project and any public money that might be committed to it and possibly put at risk. I hope that the amendments are not designed to stand in the way of ensuring that the clean-up of the Thames takes place. For Conor, a regular user of the Thames, this is not a lifestyle question, or a matter of the river looking pretty or smelling nice; it is a question of health, and of whether he can feel pride in his community when he goes to the river to take part in his sport. He needs to be able to take part in that sport without feeling personally inconvenienced or put at risk.

The Thames brings huge benefits to people, particularly my constituents who live alongside it and use it regularly. We have a duty to the public purse, as well as to ensuring that London has a river that is fit to look at, to use and to enjoy. I appreciate the attention paid by the right hon. Member for Bermondsey and Old Southwark’s to the financial detail, but I hope that he has not strayed so far from the path that he cannot also commit to those aims.

[Mark Field]

I do not necessarily regard the proposals as a scandal, as the right hon. Member for Bermondsey and Old Southwark (Simon Hughes) seemed to suggest when moving his amendment, but I share many of his general concerns about the financial engineering. I say that as the very proud Member for the Cities of London and Westminster. I do my bit to stand up for the banking fraternity and for large corporates, many of which are based in my constituency. Deep concerns have been raised by the amendments, however. The amendments will not be put to the vote; they are testing amendments that will enable us to have a useful debate on this matter.

I would not wish this debate to be seen as hostile to Thames Water. I have had fairly positive dealings with it over the significant amount of work that is being done in my constituency, in the City of London and in the City of Westminster. It is carrying out a huge amount of work there, and there is no doubt that it has been very disruptive, but I hope that central London will have a far better water system in the years to come as a result.

Deep concerns have been raised about how necessary it is to spend as much as £4.1 billion. It is quite respectable for the right hon. Gentleman to raise his concerns, although I suspect that he might have been less concerned if the huge amount of building work had been due to take place on the other side of the river, perhaps in Wapping rather than Rotherhithe. We all know that there has been a lot of disruptive work. I have seen it happening in my constituency with Crossrail. I have always been a firm supporter of Crossrail, although I have often said that there were no votes in taking that position. Indeed, votes have been lost through so doing.

We are proposing to spend a huge amount of money on the Thames tunnel, and I am not convinced that that is entirely justified. I do not disagree with what has been said by the hon. Members for Hammersmith (Mr Slaughter) and for Islington North (Jeremy Corbyn). Significant work clearly needs to be done to improve the quality of the water in the Thames, although, compared with early Victorian times, it is now wonderfully clean. That is no cause for complacency, however.

--- Later in debate ---

[Mr Slaughter]

Perhaps we should have more of these short Bills as they provoke such agreement between the two Front Benches. It is slightly surprising that there is such a degree of agreement, given that when the Bill is stripped down, it is about two specific initiatives. I have heard the argument about whether it should be a private or a hybrid Bill. It is a public Bill, but unless the Minister wishes to correct me, we are talking, first, about the subsidy to South West Water customers, and secondly, about the underwriting of the Thames tunnel scheme, both of which potentially commit large sums of public money. Given the rhetoric about public money that we have to hear all the time from the pattern book of this Government, and given the concerns expressed from the Opposition Front Bench, we can say that this must be an important measure or we would not be undertaking those commitments.

My first concern is about the Government’s reluctance to support the amendments tabled by the Opposition. I am at a loss to understand why that is the case. I hear what the Government say about the control of finance, as addressed in clause 2, but it seems to me, without going to the lengths to which the right hon. Member for Bermondsey and Old Southwark (Simon Hughes) went in pinning down the fine detail, it is important that the House continues to have a supervisory role and scrutiny of the finance of projects, particularly given what we have heard about Thames Water, in whatever guise or ownership. The same would apply to other water companies. I believe that the chief executive of Thames Water had a salary package of about £1.6 million last year. There is a lot of money sloshing around in the utilities companies.

Although I do not accept that the Thames tunnel is over-specified or is doing more than is needed for the job, we need to keep a close eye on the project. It is, as I said, an unfortunate outcome of the previous Conservative Government’s privatisation strategy that we have, potentially, people running our utilities who are more interested in their shareholders and their remuneration than in the welfare of their water customers. That gives us a particular responsibility, and I cannot understand why the Government will not accept what we propose.

Water bills are rising, and any project designed to relieve the problems of sewer flooding in London or flooding into the Thames will cost a lot of money and will inevitably add to bills. That is another reason for controlling costs and for protecting those who cannot afford to pay. That was the purpose of new clause 1. Again, I cannot see why that has been rejected by the Government at this stage. It is disappointing and shows a lack of concern on the Government’s part about the potential financial impacts of these measures.

Another concern I have—I shall be brief, as I spoke about this on Second Reading—is about those who would muddy the waters, so to speak, on the Thames tunnel project. If anybody can come up with a cheaper project that will have the same or better effect, I am sure it would be extremely welcome and we would all like to hear about it.

I shall say something nice about Mr Binnie, who has had a bit of a rough ride in the debate. He is, after all, speaking as a professional and, given his previous association with the Thames study, as someone who cares genuinely about the quality of water in the Thames. Even at his most sceptical, before his second road to Damascus conversion, he said:

“The full tunnel would be the best thing for the river…Are there cheaper alternatives for producing similar results?”

The same question was posed by the right hon. Member for Bermondsey and Old Southwark. Mr Binnie’s answer, on mature and professional reflection, is no, there are not.

I do not think that that means we should stop looking for ways of bringing down the cost. Indeed, the cost has already been reduced by adapting the route of the tunnel that was previously envisaged. I hope that the Government will take that on board and not simply accept that the current route, the current combined sewer outflow linkages and such matters are a done deal and a fait accompli. That is important not only with regard to cost, but in relation to the disruption that will be caused where the CSOs are linked to the river—I declare an interest, as one of those CSOs will be in my constituency and two are close by. Substantial progress has been made, because originally many more riverside sites were going to see that level of disruption. We are working on that all the time. Let us not stop working on that and trying to find solutions that will be less disruptive for local communities in London.

As I have said, there are some loud naysayers. I am afraid that the Selborne commission lacked all coherence. Its report did not even contain the proposal for the half tunnel that was in its press release. Anyone who has looked at that proposal will realise that it is simply a non-starter, and for those who live in west London, as my constituents and I do, it would be a complete nightmare. Not only would it cause greater disruption, because there would have to be more storage points—clearly, there is nowhere for the sewage to go once the tunnel fills up—but the sewage would stay in the tunnel and fester for days or weeks before being taken away by the existing sewerage system. I can see why it might have had a superficial attraction for the right hon. Member for Bermondsey and Old Southwark, because it would not have caused disruption in his constituency, but sooner or later we would have had to face up to the fact that we must have something that works.

When I hear the leader of my local council saying that we cannot afford to make the river clean enough for fish, or my neighbouring MP saying that rowers and sailors are seeking a personal benefit by not having the river flooded with sewage every week, I have to ask that they grow up a bit and be a little more sensible. As the shadow Secretary of State, my hon. Friend the Member for Wakefield (Mary Creagh) said when quoting my constituent, Conor, a 15-year-old can put us right and tell us that we ought to have the courage and enthusiasm that our forefathers had when they designed the great civil engineering projects of the 19th century, and indeed the enthusiasm we have in supporting schemes such as Crossrail and High Speed 2, which are much bigger than the Thames tunnel. We must bear in mind two slightly contradictory facts as we go forward. First, cost control is not just important as a matter of probity, but absolutely vital, particularly for those on low incomes who will be paying the bills. Secondly, whatever version of the tunnel is finally approved, it has to be fit for purpose not only now, but for the next 100 years.