Water Companies: Pollution Penalties

Baroness Altmann Excerpts

Wednesday 22nd February 2023 Lords Chamber

[The Duke of Wellington]

To ask His Majesty’s Government what plans they have to reconsider their proposal to increase to £250 million the maximum penalty for serious pollution incidents by water companies; and what assessment they have made of the reported remarks by the chair of the Environment Agency describing the proposal as “crazy”.

[Baroness Altmann (Con)]

My Lords, the noble Duke, the Duke of Wellington, apologises for being absent today as he is on a parliamentary delegation to Madrid. On his behalf, and at his request, I beg leave to ask the Question standing in his name on the Order Paper.

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

My Lords, I declare my farming interests as set out in the register. Defra is preparing to consult on plans to expand the use of, and raise the cap on, penalties that the Environment Agency can impose on water companies for serious breaches of rules, as the Prime Minister and our Secretary of State have made clear. All options are on the table, including a £250 million cap. The Environment Agency’s chair supports the review of penalties and is working closely with Defra as the consultation progresses. We will ensure that our regulators have all the powers they need to hold polluters to account.

[Baroness Altmann (Con)]

I thank my noble friend for his Answer. The noble Duke would like to ask: is the department contemplating resiling from the Government’s current position stated at the Dispatch Box that water companies will incur very heavy fines of up to £250 million for breaking the law on illegal discharges? My noble friend will recall that two years ago Southern Water was fined £93 million for serious illegal discharges; there were warnings at the time that the fine was too low, and indeed the company was not deterred from continuing to discharge sewage. Does my noble friend think it appropriate for the chair of the Environment Agency to state publicly that a proposed £250 million fine is “crazy”, and does he share my concern that the chair of our main regulator should express such lack of confidence or belief in the regulatory regime that he oversees?

[Lord Benyon (Con)]

I think that if the chair of the Environment Agency was here, he would hope that I could voice more clearly his views and the distinction that is understood between unlimited fines, which the EA can pursue through the courts, and penalties which can be delivered by the Environment Agency and Ofwat. We are absolutely not resiling from anything that has been announced. It is right, for example, to look at the variable monetary penalties. They are currently capped at £250,000, which we do not believe is a significant enough deterrent. However, very serious fines can and should be a sanction for water companies that knowingly break the law. There is the criminal sanction as well.