Water Supply Licence and Sewerage Licence (Modification of Standard Conditions) Order 2017

Baroness Parminter Excerpts

Thursday 9th March 2017 Grand Committee

[Lord Deben (Con)]

My Lords, I rise merely to pursue a continuing degree of pressure on the Government not for what is in these statutory instruments but for what ought to be in them. We in Britain have a system that enables us to regulate the charges for connection—I notice that in effect it is referred to here under “Connection charges”—but connection itself is statutory. That means that even though a water company is not a statutory consultee, it can be required to provide connections when such a connection significantly overloads the provision of sewerage or allows the building of homes in places where such building should never take place.

It is some time—two years, I think—since the Committee on Climate Change sub-committee that is dealing with preparing ourselves for the immediate effects of climate change pointed out that it is an unacceptable situation that, first, the water company is not a statutory consultee and, secondly, it has to do something that is clearly contrary to our interests when it comes to flood prevention and dealing with adaptation to climate change. I know that my noble friend the Minister will say this is neither the place nor the time to do this, but if I do not go on reminding the Government that there has to be such a place and a time then it will not be done—and it needs to be done. It is a pity to take up parliamentary time for what is, frankly, a pretty unnecessary series of crossing “t”s and dotting “i”s when there is so much more to be done if we are to make the changes that the whole world, irrespective of party, religion or any other device, believes to be necessary. I am very sorry that the department has still not come forward with proposals in this area.

[Baroness Parminter (LD)]

I shall come to the aid of the noble Lord and say that it is an absolutely appropriate time for this to be raised. He will be aware that Defra is undertaking a review of sustainable urban drainage, so if we cannot raise this issue now in advance of the review, when can we raise it?

We have raised this issue frequently: in the Housing and Planning Act last year, when discussing automatic connection rights; and noble Lords will know that we have been addressing this issue rather more recently in the Neighbourhood Planning Bill. It is an absolutely fundamental issue that underpins not only the building of houses that are sustainable in the future but addressing the water shortages that we will face, given the challenges of climate change and population growth in the foreseeable future.

Will the Minister say a few more words about the likely timing of the department’s review to ensure that it is in advance of the Adaptation Sub-Committee’s forthcoming review in May? If it is not, that will be a seriously detrimental step. While, as the Minister said, these are small measures pertaining to delivering better solutions for our water industry, we must look at the bigger issues around automatic connection and sustainable urban drainage and, in the future—I hope this will be in the White Paper—a Bill on abstraction. If those things are not addressed, the Government are seriously failing in looking at the water challenges of the future.

[Baroness Jones of Whitchurch (Lab)]

My Lords, first, I am very pleased to associate myself with the comments of both the noble Lord, Lord Deben, and the noble Baroness, Lady Parminter. They have raised a very important issue, which I know we have debated on other occasions. I would be very happy to continue to add to any pressure we can bring to get the Government to take this issue seriously. The noble Lord set out the case extremely well as to why it was such a huge urban and rural challenge in terms of planning, flood prevention, and so on. Both noble Lords made the case extremely well.

I guess it now falls to me to make some comments about the actual regulations before us, which I fear will not be as interesting. I am grateful to the Minister for setting out the purpose of the three regulations. As he made clear, they are all consequent on the Water Act 2014, which received very detailed scrutiny in your Lordships’ House. The opening up of the new non-household retail market in April 2017, and the ongoing challenges of delivering greater competition in retail water and sewerage systems, will inevitably need modification and refinement. In this context, we accept that these new regulations are both technical and necessary.

However, I have a couple of questions for the Minister. First, the water supply licence and sewerage licence orders are mainly concerned with the percentage of licensees that must agree Ofwat’s decision to amend licence conditions, as the Minister spelled out. We agree that a 20% level of objection is a reasonable requirement to trigger a referral to the CMA. However, the consultation on that regulation also flagged up some concerns about the way in which sewerage licences were to be calculated, given that there is very little metering of wastewater output from premises. I do not disagree with the rather pragmatic conclusion that in the absence of metering of sewerage, it is best to base the calculation on the clean water supply to the premises. Given that there is an overarching environmental need to encourage businesses to manage and limit wastewater, the department could do more to encourage people to manage water supply—I am talking about both clean and dirty water—and put in place more effective processes for charging for wastewater disposal in the future. There are good initiatives out there but many businesses are happy to pour very highly polluted water down the drain in large quantities.

Secondly, the water industry designated codes regulations set out the arrangements for appeals to the Competition and Markets Authority. Again, I do not disagree with the rather pragmatic approach taken in these regulations, which suggests that we need to establish a fast-track appeals process, similar to the energy code appeals. However, these are short-term pragmatic solutions that are necessary to get the new system up and running in time for the April start.

However, we need to see how the codes and appeals bed down and whether—as is often the case—their application has unforeseen consequences. I would be grateful, therefore, if the Minister indicated how the operation of these regulations, and the others to which he has referred, will be kept under review as the retail market matures. In response to the consultation on the codes, the Government said:

“It is to be expected that the regulatory structure around a healthy, well-functioning market may need to evolve when competition has become long-established”.


We agree with that, but it would be helpful if the Minister set out the process by which this evolution will be monitored and how Parliament can best be enabled to play a full role in that review. I look forward to the Minister’s response.