Pollution in Rivers and Regulation of Private Water Companies

Baroness Bakewell of Hardington Mandeville Excerpts

Thursday 29th February 2024 Lords Chamber

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[Baroness Bakewell of Hardington Mandeville]

That this House takes note of (1) the state of pollution in rivers, and (2) the case for regulation of private water companies.

[Baroness Bakewell of Hardington Mandeville (LD)]

My Lords, the House is sadly becoming used to Questions and debates on sewage overflows, the quality of waterways and water company CEOs’ pay. I do not apologise for raising the issue again.

Water companies continue to discharge sewage into rivers, lakes and coastlines. At the same time, the Government are watering down environmental protections and allowing sewage discharges to continue until 2050. Liberal Democrats are calling for this to end much sooner in order to improve the quality of the water in our rivers, lakes and beaches. England’s sewerage companies have been allowed to get away with discharging sewage into our waterways for far too long.

In England, over the last three years, 2020 to 2023, there have been 1,760,659 overflows, lasting for 7,523,601 hours. Over the summer, beaches across the south-west were closed because of sewage pollution, impacting holidaymakers and tourists alike, while national parks, such as the Lake District, have not been spared spills. Meanwhile, over the same period, water company executives have paid themselves £73 million in remuneration, including £41.2 million in bonuses. In 2022, the then head of the Environment Agency even suggested that executives might deserve to go to prison.

The Conservatives have done nothing to stop water companies dumping sewage into our rivers. They have consistently voted against tougher action to stop sewage overflows, while the water regulator Ofwat said that only three of the 11 sewerage companies were top performers and had met their sewage overflow targets.

The Conservatives’ plan to reduce these sewage discharges is a licence to carry on as normal. Under their plan, water companies will be permitted to continue discharging sewage until 2050 and bill payers will see hikes in their bills to pay for it. The Government are even watering down environmental regulations, such as nutrient neutrality rules, which is likely to make the sewage problem even worse. Liberal Democrats are calling for an end to sewage dumping. Water executives should be banned from paying themselves bonuses until illegal sewage overflows stop on a regular basis.

The Secretary of State is proposing to block payouts to executives of firms that commit criminal acts of water pollution with effect from the financial year beginning this April. Can the Minister say how this information will be collected and monitored? What will be the criteria for preventing payouts?

The Liberal Democrats are calling for four actions. First, England’s water companies should be transformed into public-benefit companies. Secondly, Ofwat should be abolished and replaced by a new regulator which has effective powers to intervene. Thirdly, a sewage tax should be introduced to fund the clean-up of the most polluted lakes, rivers and coastlines. Fourthly, compensation should be introduced for swimmers who fall sick after swimming in dirty waters.

In Wales, things are no better. There have been 287,836 overflows, lasting for 2,290,674 hours over the last three years. The bosses of Welsh Water have been paid £3.5 million, including £841,000 in bonuses, benefits and incentives. The top executives of Wales’s other water company, Severn Trent, paid themselves £15 million, including £11.2 million in bonuses, benefits and incentives. In Wales, Welsh Water is not-for-profit and is still responsible for vast amounts of illegal sewage discharges. The Labour Government in Cardiff Bay are responsible for the regulation of Welsh Water and sewage overflows within Wales. Labour has systematically underfunded Natural Resources Wales, which is responsible for monitoring water quality, and has provided nowhere near enough oversight of Welsh Water. Liberal Democrats are also calling for a ban on sewage bonuses for directors in Wales.

Up in Scotland, illegal sewage discharge is also a problem, but its sewerage company, Scottish Water, is publicly owned by the Scottish Government. Over the last three years, Scottish Water allowed sewage overflows 37,396 times into Scottish rivers, lakes and coastal areas, lasting 403,230 hours. However, of the 3,614 overflows in Scotland’s 31,000-mile sewerage network, only 4%—that is, 144—are currently monitored. The Ferret website made a freedom of information request and, on 22 September, revealed that more than half of Scotland’s bathing waters—49 out of 87—have been contaminated with sewage. Meanwhile, Scottish Water’s top executives took home £2.9 million in remuneration, including £1.13 million in bonuses, benefits and incentives over the last three years. This is unacceptable. However, the SNP and its Green Party partners have failed to tackle sewage discharges, despite being directly responsible for them. Due to their failure to monitor, we do not even know the full extent of the problem.

Liberal Democrats are calling for an end to sewage discharges and a ban on bonuses for Scottish Water bosses until the discharges end. Scottish Liberal Democrats have also called for targets to be set to reduce discharges. Renationalisation will not be effective and would make no difference to the issue. Scottish Water is publicly owned, and we simply do not know how many illegal sewage overflows are taking place. At least in England, according to the Government, 100% of sewage overflow outlets are monitored. However, it is unclear who is doing this monitoring. Can the Minister give information on this please?

We need strong action from the Government to regulate these water companies to stop illegal sewage overflows, coupled with a truly independent water regulator, to ensure that companies are held to account with transparent reporting, plus the acceleration of measures to upgrade sewerage systems and tackle overflows.

In the 2023 round of accelerated infrastructure delivery decisions, we sadly saw a number of nature-based solution project proposals rejected by Ofwat for not being able to reach technical specifications designed for concrete engineering. Ofwat needs to wake up and ensure that it is getting a lot more for its money than just carbon-creating concrete solutions.

Government communications are also not helping. Last July, the Secretary of State sent a communication to water companies through the EA, raising concern about the affordability of environmental investments and encouraging deferral of these investments to keep water bills low. I begin to wonder why the Government spent so much time getting the Environment Act through if they were going to undermine it from the start.

I am sure the Minister will tell the House that Ofwat is independent. However, a recent article in the Guardian of 1 February indicated that water company executives and the chairs of Ofwat and the Environment Agency went for dinner at an exclusive private members’ club to discuss how to quell public anger over rising bills and sewage spills—at an estimated cost of £1,200. It does not appear to me that either the Environment Agency or Ofwat are independent of the water companies—quite the opposite. A cosy chat over dinner about how to alter public opinion, without addressing the root cause of the problem, hardly seems likely to reassure the public.

On Tuesday this week, Southern Water was fined £330,000 over a raw sewage spill at a rural beauty spot. That killed more than 2,000 fish, with staff ignoring an alarm about the emergency for five hours. The YMCA Fairthorne Manor, an outdoor activity centre popular for school trips, had to stop water activities for 10 days after the incident and cancel more than 1,000 sessions. The health implications of sewage are why Liberal Democrats have previously called for sewage sickness victims to receive compensation, and we repeat that call today. It is not right that, as water companies make large profits, swimmers get sick. If someone is poisoned by sewage, they should be compensated for it.

A recent report by Surfers Against Sewage found that the number of people who fell ill after entering water between October 2022 and September 2023 was 1,924. This is three times the number reported in the previous year. The sewage spill that Southern Water was fined for on Tuesday, and many other spills like it, show the need for an effective Environment Agency.

Defra is heavily dependent on the monitoring and intervention of the Environment Agency. However, cutting the Environment Agency’s budget from £170 million in 2009-10 to £76 million in 2019-20 is not likely to assist this hard-pressed organisation to act effectively. A general rule of life is that you get what you pay for. It is essential that the Environment Agency is provided with adequate funding to conduct inspections and take remedial action.

According to a Guardian article on 13 February, the Levelling-Up Secretary, Michael Gove, proposed an amendment to the then Levelling-up and Regeneration Bill that would strike at the directive on preventing extra sewage going into waterways in sensitive areas by either updating infrastructure or buying biodiversity credits. The Secretary of State’s action would allow developers to ignore the rules that were so strenuously fought for in this Chamber by the noble Duke, the Duke of Wellington, and others. The Government are not taking this issue seriously. There is then the issue of axing the right of developers to connect to already overloaded sewerage systems, which is not currently anywhere on the horizon.

On Tuesday afternoon, as I sat in this Chamber waiting for the next business, a message came through to my private email from Southern Water, of which I am a customer. The heading was, “Tired of hearing about storm releases? Us too”. There then followed some excellent nature-based solutions that it is prioritising. Obviously, it was trying to head off criticism. However, when I got home and watched the local television news—delayed due to the football overrun—I saw the news of Southern Water’s fine, to which I referred earlier. This sewage discharge was in the next village to where I live. The worst aspect of this is that it took from 2019 until this week to come to court and be dealt with. No wonder water companies include the cost of possible fines in their business plans. To them, it appears to be all part of their operation.

The country cannot wait any longer. The countryside and our waterways are submerged by pollution. A radical overhaul is needed of the way in which water and sewage companies operate, and a more accountable replacement Ofwat needs to be delivered without delay. I beg to move.

--- Later in debate ---

[Baroness Bakewell of Hardington Mandeville (LD)]

My Lords, I thank all those who have taken part in this debate, especially the Minister for his response. I appreciate that he has inherited this problem, and I thank him for his very detailed response, which I shall study in Hansard. We have had a very varied debate; at the same time, there has been much agreement across the Chamber in condemning the overspills of sewage when there have been no unusual weather conditions requiring them. Until quite recently, water companies have discharged sewage and untreated water on hot, sunny days with impunity. We have heard how this has affected different people. I believe that we may possibly be on the cusp of a change.

I am grateful to my colleagues, who have spoken so passionately, knowledgeably and entertainingly on this subject. It is often overlooked that, at the point of privatisation, water companies were debt free. The noble Baroness, Lady Jones of Moulsecoomb, and my noble friend Lady Harris of Richmond also raised this. The noble Lord, Lord Sikka, makes a really excellent forensic accounting contribution—there is a role for him in another place if he should decide that this is enough. Although the water companies were debt free when they went private, that changed when the new private owners saw the glint of money for themselves and borrowed money to increase share dividends. Not all water companies followed that course, but many did. Some invested in the infrastructure, but this was often based on concrete solutions instead of the cheaper and more carbon-efficient nature-based solutions. The noble Baroness, Lady McIntosh of Pickering, has been campaigning for nature-based solutions for a considerable time, as has the noble Duke, the Duke of Wellington, who is not in his place.

I am grateful to the noble Lord, Lord Teverson, for raising the issue of farmers and phosphate discharge. Farmers have a role to play in improving the quality of our waterways, at the same time as producing food. The noble Duke, the Duke of Wellington, referred to the role of farmers.

I do not intend to return to the debate and run through every contribution, but I draw attention to one particular contribution. My noble friend Lady Miller of Chilthorne Domer has referred to the SUAR sludge. Many of the chemicals that she listed are known as forever chemicals. We need to deal with this problem, because it is extremely worrying that these chemicals should be on the land for ever.

All sides of the House are concerned about sewage pollution of rivers and waterways. The Minister referred to the Victorian sewer infrastructure, as did my noble friend Lady Pinnock. However, surely it is time that we had a better solution than the Victorian sewers. The regulator is not fit for purpose and needs to be replaced. I am not sure that it is comforting to know that everyone in the House agrees on this issue, but the power in numbers is considerable. I hope that the Minister is listening and will act accordingly, although I know that he is doing as much as he possibly can. It is time to introduce more stringent measures to improve the quality of our water, which should be crystal clear and gurgling in the streams instead of brown, sluggish and smelly.

Motion agreed.