Water (Special Measures) Bill [HL]

Baroness Pinnock Excerpts

2nd reading
Wednesday 9th October 2024 Lords Chamber

[Baroness Pinnock (LD)]

My Lords, as many have said, this Bill makes the first tentative steps in the right direction toward reforming the water industry, and it was good to hear the Minister recognise that this is just a start. There are many challenges facing the water industry such as the impact of climate change, which is expected to result in serious water shortages in some parts of the country; the requirement to meet the needs of a growing population, and the consequences for our environment. One of the strategic questions facing the industry and the Government is whether those challenges are better met by requiring the 11 water and wastewater companies, along with the further five water-only companies, to work more closely together in the interests of all of us as customers.

So far in this debate there has been a danger of treating water companies as if they are all behaving in the same way—something we ought to resist. Some companies are efficient and effective both in their operations and in their wider concern for the environment, but some are far from fulfilling the needs of their customers, let alone the needs of the environment. The thrust of this Bill is to force significant improvement of those companies in the latter category. I support what the Government are attempting to do; I am not saying that it is perfect, but it is in the right direction.

Privatised water companies provide an essential public service, which means that there is a delicate balance of responsibilities for each of them to achieve. On the one hand are the shareholders and investors wanting a return, rightly, on their investment, and on the other are customers wanting affordable bills and the environment to be protected and enhanced. It is this balance that, in some cases, has got considerably out of control. As many noble Lords have remarked, the righteous national outrage at the flagrant breaches of the use of storm overflows is just one indicator of an industry that has lost sight of its fundamental purpose.

The rot for some, but not all, companies started with the financial models adopted in the years following privatisation, where owners were able to extract value from the assets but leave the water company with a significant debt ratio—the total debt of the water companies currently exceeds £68 billion. Latterly, Ofwat has recognised that water companies have been too debt-laden and has forced a reduction of the debt ratio at each price review. However, that has been at the margins and has left companies—notably Thames Water—forced to concentrate their business on paying debt interest, perhaps paying down debt, at the expense of the basic public service of the company. This fundamental failure of governance and regulation has resulted in the various unacceptable behaviours that many noble Lords have cited. Clause 1 seeks to address some of those issues.

At this point, I declare that I was a non-executive member of Yorkshire Water for 10 years, fulfilling the role which the Bill identifies as being a voice for communities and customers. That this is a role which all boards should include is welcome, although I accept the argument made by the noble Lord, Lord Remnant, that it is not one we should define as is indicated in the Bill—that will not work.

Aside from the financial models, the problem is Ofwat. As the prime regulator—though not the only regulator—it needs to be abolished and replaced with a body that has more powers. Some of those powers are set out in the Bill, but fundamentally there needs to be a different regulator. As was previously said, we have a revolving-door syndrome whereby executives of water companies become executives of Ofwat, and sometimes back again. That is a malaise that has to be stopped; it reinforces bad behaviours and no new thinking comes into the sector. Perhaps as a result, Ofwat has failed to regulate the sometimes overly high profits to shareholders and bonuses to executives. Furthermore, as other noble Lords have mentioned, Ofwat has no powers to force water companies to improve environmental water quality, which includes preventing storm overflows being used as a cost-saving measure.

One of the inherent challenges in reforming wastewater treatment is that the public sewer system also takes the flows of surface water from the road network—something that the noble Baroness, Lady Browning, spoke about. The Government in their drive for more housing need to ensure that sustainable urban drainage is a part of any new housing development, and that, if need be, surface water attenuation tanks or ponds are part of preventing water surge into the public sewer system.

Finally, I urge the Government to consider ownership as well as financial models of water companies in developing a better approach to this essential public service. As part of that thinking, I urge them to develop the concept of a national water grid. It is surprising that areas where there is perhaps too much water are not used to push water down the systems of various companies to help those who are increasingly going to be short of water.

The system, as it is, is not doing its best; some say it is failing the customers and failing the environment. Some companies, in the drive for profits and investment, have lost sight of their sole purpose, which is to provide an absolutely essential public service. This Bill makes small steps in the right direction, but fundamental changes in approach are still needed, and I look forward to the Minister solving all those problems.

Water (Special Measures) Bill [HL]

Baroness Pinnock Excerpts

Committee stage
Monday 28th October 2024 Lords Chamber

[Lord Remnant (Con)]

My Lords, I must admit to having experienced a degree of trepidation on discovering that I was to share a group of amendments with the noble Lord, Lord Sikka, and with him alone. Having listened to his views on the Bill in general, so eloquently expressed at Second Reading, I feared that we would find little common ground when debating particular aspects of it. Imagine my surprise, therefore, when I compared his Amendment 4, to which he has just spoken, with my Amendment 18, to which I am about to speak, to discover that we might have more in common than I had thought.

I think that some of the rationale behind Amendment 4 is misplaced. While I agree with the noble Lord that all members of the board under company law are held to account, performance-related pay is in practice paid only to executives, while non-executives are remunerated by way of fixed fee. Given that the provision to which Amendment 4 relates is in respect of performance-related pay, the inclusion of non-executive directors is of no practical importance. Notwithstanding this, Amendments 4 and 18 effectively would achieve the same practical impact in respect of the individuals to whom these remuneration rules apply. Amendment 4 would remove the reference to senior roles and replace it with a reference to directors of the company, while Amendment 18 would retain the concept of senior roles but effectively define them as directors of the company.

I do not believe that it is right for Ofwat to extend the rules to

“such other description of role”

as it specifies. Not only would such an extension be wider in scope than the current disclosure requirements of Section 35A of the Water Industry Act 1991 but it would be difficult to implement in practice, as different water companies will have individuals described differently by title and role. Nor would such an extension be consistent with the general remuneration and corporate governance rules for listed companies, which do not extend to individuals below board level.

I hope the Minister agrees that, through the adoption of my amendment, this additional power conferred on Ofwat by the Bill should be removed. If we wish to attract and support the next generation of leaders in this vital industry from middle management, this will not be achieved by extending these restrictive remuneration practices to them.

[Baroness Pinnock (LD)]

My Lords, I start by reminding the Committee that I have an experience, rather than an interest, as I was a non-executive director for a number of years on the board of Yorkshire Water. I reassure the noble Lord, Lord Sikka, that I never had a bonus during that time, for the reasons that the noble Lord, Lord Remnant, has explained.

This group of amendments follows on neatly from the previous discussion about performance-related pay and the remuneration of senior directors of water and wastewater companies, so I thought it was worthwhile to draw out a bit more of the debate around this issue. The fundamental problem lies in the fact that water and wastewater companies are regulated by a number of different institutions. Ofwat is the economic regulator and, because of the way that the water Act was written, is primarily looking at the financial performance of the water companies. That inevitably leads to a disregard for the environmental outcomes of water companies as a priority. Consumers, who see that their rivers, lakes and coasts are being heavily polluted by these water companies, are astounded to see the same water companies giving huge bonuses to their directors. That is because the two issues are not related in the mind of Ofwat. That is why my party wants a single regulator for water companies, so that all the issues that are the responsibility of water and wastewater companies are taken into account. Part of that debate was reflected in the first group of amendments, discussed earlier.

We need to remind ourselves that remuneration in companies is decided by boards of directors. They will look at the financial objectives of the company and the outcome of the price review agreed by Ofwat and come to conclusions, whether or not objectives have been achieved or considerable benefit to the company accrued by the actions of directors.

That is part of the problem. As the noble Lord, Lord Sikka, has attempted to describe, the price review is a tussle of words and figures between the companies on the one hand and Ofwat on the other. I remember the discussions. If you are in a company and you want to make sure there is a good outcome for your owners and shareholders, you make sure that the submissions you make in a price review to Ofwat enable profits to be made. That is the whole purpose of a private company. It is at the heart of all the discussions we are having about water companies, their performance and their remuneration and bonuses. The 1991 Act was designed for them to be private companies with shareholders, who were going to receive dividends as a consequence. If that is the prime duty, and the main regulator oversees that prime duty, the other issues that water companies ought to be taking into account—the environmental issues in particular, as we heard earlier—become less important.

I hope that, when we come to Report and discuss these issues more closely, the Minister will think about a government amendment that strengthens the duties of water companies, and of Ofwat as the regulator, to take into account these other issues. For me, that is at the heart of the discussions we have had on this group and the previous group. I agree with the amendment from the noble Lord, Lord Remnant. You cannot try to control pay awards further down the company; those often very talented people need to be attracted into water companies if we are to improve what is a sad state of affairs.

[The Duke of Wellington (CB)]

My Lords, I support Amendment 18 in the name of the noble Lord, Lord Remnant, which simply deletes new subsection (5)(c) on page 2. It seems to me that we cannot allow the authority—whatever it may be in the future, after the review, or even from now on—to start getting involved in the remuneration of those below board level. That really becomes too much intrusion into the way a company is run.

The noble Lord, Lord Sikka, is entirely correct that, in the end, a director of a company is a director, whether executive or non-executive, as covered by the Bill; it mentions “a director” of the company. It seems to me that, while senior role remuneration should have some guidance from the authority, that should be restricted to the chief executive and other executive board members. There is no point entering into a discussion about non-executive directors, who clearly do not participate in performance-related pay or bonuses or anything like that. I think the noble Lord, Lord Remnant, is right; it would be appropriate to delete new subsection (5)(c) and include in this clause only the chief executive and any other executive director.

--- Later in debate ---

[Baroness McIntosh of Pickering (Con)]

My Lords, I will speak also to Amendment 8 in my name. These amendments are in a group looking at exemptions from the rules under Clause 1. My particular concern relates to the obligations being imposed by Clause 1, and indeed the rest of the Bill, on water companies where they may not and could not possibly be held responsible for the activities they are undertaking because the fault lies with others who are not currently within the remit of the Bill.

The purpose of these amendments is to reflect the fact that water companies should be held responsible under the terms of the Bill, in particular Clause 1, only for those activities within their specific responsibility. Clearly, for example, where there are missed connections between wastewater pipes and major developments, water companies should not be held responsible if they are obliged to fit these new connections into inadequate, antiquated pipes that simply cannot take the amount of waste coming.

The background to this very simple measure follows from the Pitt review—the noble Baroness will recall that I raised this at Second Reading—following the severe floods of 2007. I think it is worthy of note that Sir Michael Pitt is from East Yorkshire, which is more vulnerable to coastal flooding than just about any other part of the country. His 2007 review identified, for the first time, surface water flooding as well.

In connection with surface water flooding, the two most consequential amendments set out that mandatory construction of sustainable drainage systems in major developments should take place so as to contain floodwater and prevent it mixing with sewage through overflows into the combined sewers.

Further, and this is where the developers should have a responsibility and not the water companies, I ask the Minister to look favourably at ending the automatic right to connect, which has so far never happened. That one measure alone would mean that misconnections—whereby the existing infrastructure is deemed to fit the amount of wastewater coming from major new developments—would simply not happen in the future. Most of these developments are made up of four or five-bedroom homes with, dare I say, four or five times the amount of sewage coming out of them into inadequate Victorian pipes. Currently, under the planning rules, developers and local authorities deem those connections to be safe and refuse to put in appropriate infrastructure to ensure that a safe connection can be made. Were the water companies to be recognised in the planning application process as statutory consultees, on the same basis as the Environment Agency comparatively recently has been, those misconnections could be averted. The simple measure of making water companies statutory consultees, on the same basis as the Environment Agency, would help in that regard.

When she looks at these amendments in summing up, would the Minister agree to obliging developers to have sustainable drains fitted to take excess rainwater into a soakaway, pond or culvert to prevent it mixing with sewage water in combined sewers, which is currently leading to sewage overflows? It is not fair to make the water companies responsible for that. Were they to be statutory consultees, they would probably argue that the wastewater will not fit the pipes currently in place.

This has led to some very perverse sewage spills. I remember when I was in the other place there was a school in Filey that suffered £1 million-worth of damage to its swimming pool and, I think, the maths department. Existing developments had to be evacuated for six to nine months because of the public health aspect of sewage coming in. Precisely because a small development of only 30 houses was pumping out so much sewage, the rainwater when mixed with it had nowhere else to go and it went into the school and the existing developments. I am sure noble Lords could give other examples of this.

I ask the Minister to review the way in which highways currently contribute to pollution through rainwater running off the road surface, taking with it oil, brake fluid and other pollutants. When this combines with floodwater, it enters the combined sewers and then often goes into homes, causing huge damage and a public health disaster.

I hope the Minister will agree that water companies should be held responsible for those activities within their control but cannot be held responsible for circumstances which are outwith their control. These two small, tightly-drawn amendments would fit that purpose.

I conclude by asking the Minister this. If these amendments are not added to the Bill, what mechanism do the Government intend to use to ensure that water companies will be held responsible under the Bill only for activities under their direct control and not those under the control of others, such as developers and highways authorities, which are currently excluded from the remit of the Bill? I beg to move.

[Baroness Pinnock (LD)]

My Lords, I broadly agree with the amendments in the name of the noble Baroness, Lady McIntosh. She raised some important issues, about, first of all, the way that surface water drainage is treated. As the Minister will know, surface water is combined with sewage water in the same pipes in many of our towns and cities, and increasing rainfall and development is putting pressure on that combined drainage system.

The other issue to consider, which the noble Baroness raised, is the pressure put on local authority planning services to agree to housing developments where the existing infrastructure is not appropriate to support them, with developers reluctant to fork out huge sums of money to pay for the additional drainage systems needed. The answer lies in empowering local authorities’ planning services to put conditions on planning consent which specifically require developers to build the appropriate infrastructure to support the development that they wish to build.

There is a related point. I am a local councillor; in my experience, where there is an issue of surface water, the planning services require underwater attenuation tanks to be built to hold that water until it can be released to the natural drainage systems, such as streams. However, the developers are very reluctant to do that, and are seeking to get around it in other ways. Surface water drainage issues and local authorities’ inability to enforce this is something that the Minister may wish to raise with her colleagues in local government when it comes to reforms of the planning system, as it will affect the Minister’s environment responsibilities. I agree with the amendments tabled by the noble Baroness, Lady McIntosh.

[Lord Whitty (Lab)]

My Lords, I was not planning to speak this evening, and indeed I have to go shortly, but this debate raises broader issues.

I agree with the noble Baroness, Lady McIntosh, that water companies should not be pursued by the authority for things which are not their fault and which they are unable to do anything about. However, this underlines the need to ensure that the new authority, whatever it is, is a very powerful authority.

As noble Lords may recall, the noble Duke, the Duke of Wellington, and I suggested that we should have a combined regulator. That has been rejected so far, but we need a regulator that can take steps against not only the water companies but other bodies which make the water companies’ tasks impossible or extremely difficult, and which are themselves primarily responsible for the pollution, flooding or other damage caused by the water.

That applies not only to developers, although I think that developers are probably explicitly the worst in this context, but, as the noble Baroness has just said, to highways authorities and to discharges from agriculture. If there is a water authority that has to deal with the far end of the effects of these discharges or the inadequacy of the piping, that authority should have the ability to take such steps. At the moment, it is either the local authority that does that in terms of planning permission, or it is the highways authority, which pays no attention whatever to water run-off, frankly, or it is the various bits of agriculture regulation. But if we are concerned about making sure that we have less sullied water and no threat of flooding, which may well be caused by people other than the water companies, I would argue that at some stage the Government will have to consider giving powers to the new authority that cover those companies, or particular actions by those companies, as well as the water companies.

Water (Special Measures) Bill [HL]

Baroness Pinnock Excerpts

Committee stage
Monday 28th October 2024 Lords Chamber

[Lord Remnant (Con)]

My Lords, I am delighted that Clause 10 does not appear to envisage a role for Ofwat. The amendments in this group are not really related to each other. As such, I shall confine my remarks to Amendment 86 in my name and I shall be brief.

Under the “Special administration orders” section of the Bill relating to the insolvency of water companies, Clause 10 gives the Secretary of State the power to modify a water company licence in order to recover any shortfall in costs for the Government from its consumers. New subsection (4) extends this recourse to all other companies in the sector.

I hope the Minister will tell me that I am mistaken in my interpretation of what this new subsection is designed to achieve. Does it not force good companies and their blameless customers to bail out failed companies? Can this possibly be justified? It has been a recurring theme of this debate, supported by the comments of many noble Lords, that the sector is in critical need of substantial investment to raise standards across the board and deliver the service that consumers and the general public so rightly expect. Any suggestion of collective punishment for the financial woes of others is to be resisted.

The consequence of imposing an unquantified and unquantifiable potential liability on the sector will at best push up the returns required by investors to inject capital into the water companies, inevitably increasing costs to consumers. At worst, it risks making the sector uninvestable. That is surely not the intention of new subsection (4), but it may be the consequence. My amendment would remove that risk, and I hope the Minister will support it.

[Baroness Pinnock (LD)]

My Lords, I will address my comments to the amendment in the name of the noble Lord, Lord Cromwell. I agree with him that financial restructuring of companies has led us to where we are now, with Thames Water potentially on the brink of collapse—who knows who is going to have to fund the huge injection of capital that has apparently now been agreed. Other water companies are heavily indebted. Ofwat, which is after all the economic regulator, did not query, question or challenge those decisions made in the early years of water company privatisation.

The consequence is that anything the Government now attempt to do is basically closing the stable door after the horse has bolted—and raced to the other side of the world—because the companies are where they are. Although I agree with the noble Lord, Lord Cromwell, that any future restructuring ought to be put under the microscope of the economic regulator, the current situation is leading us to a potentially very grave position, which the Government are trying to address with the other financial clauses in the Bill. I read the clause referenced by the noble Lord, Lord Remnant, as being directed pointedly at a particular water company.

I support the amendment moved by the noble Lord, Lord Cromwell. I suppose it is better to change the situation now than leave it as it is, but what has happened already is unfortunate.

[Lord Roborough (Con)]

My Lords, Amendment 92 is very simple. Had it been in place when the water companies were privatised, it would have prevented the aggressive financial engineering that has led to the financial distress we see regularly reported in the press, which has provoked much anger in this House and elsewhere over the years.

Before I address Amendment 92, I will briefly comment on Amendment 10 moved by the noble Lord, Lord Cromwell. It coexists neatly with my amendment, allowing regulators to be better informed on issues with the financial structures of the companies they regulate, and to be aware of future problems. I am pleased that the noble Lord has moved this amendment, and I broadly agree that the regulator should have better information about the financial structuring of water companies in the interests of protecting their viability and preventing circumstances in which they become overleveraged.

I will speak to the dangers of overleveraging and the problems we have as a result of the weakness of the regulator, but we on this side of the Committee are interested in the amendment moved by the noble Lord, Lord Cromwell, which takes a fairly moderate step towards having a better-informed regulator. That said, it may be possible to go further, either by reforming the way the regulator works in the water sector or, as I propose in Amendment 92, by implementing statutory rules on borrowing for water companies and taking effective steps to prevent capital being taken out of companies that are overleveraged. We need to make the water sector attractive to investors so that they bring more capital into it to fund investment in cleaner and better water infrastructure.

I add my whole-hearted support to the amendment proposed by my noble friend Lord Remnant. It seems grossly unfair that a company that has behaved responsibly should be penalised by the actions of another in the sector. I am aware of precedent in the financial services sector, but that is to protect the integrity of the financial system, which is in all participants’ interests. In this case, each water company is a unique entity whose actions have little or no impact on others. Without this amendment, one bad actor could contaminate the industry.

I add my concerns about the wording that my noble friend Lord Remnant seeks to remove from the Bill. This new subsection as drafted applies the duty to render “relevant financial assistance” to any other company that holds, or held, an appointment under this chapter. This seems to me yet another example of retroactive effects that are littered throughout the Bill and which we will discuss in later groups. Could the Minister explain to the Committee what the Government’s intention is with this retroactive element in the Bill? Will there be a maximum period of time since the relevant company held an appointment for this duty to apply to it? This seems to us to be a concerning power, and we would seek clarifications from the Minister on both the unfairness at the core of this subsection and its retroactive element. I thank my noble friend Lord Remnant for introducing his amendment, and hope that he continues to make progress on this unfairness which exists in the Bill as drafted.

--- Later in debate ---

I press the Minister to make a commitment this evening to implement Schedule 3 to the Flood and Water Management Act without delay and perhaps set out a timetable. This legislation is the right place to do so, because it relates entirely to the environmental standards that the Bill sets out. It is one of the key environmental standards set out in new Section 35B, so I make a plea to the Minister to use her good offices to implement it as part of the Bill. I beg to move.

[Baroness Pinnock (LD)]

My Lords, I do not know whether the noble Baroness, Lady McIntosh, is right to try to urge the adoption of Schedule 3 to the Flood and Water Management Act through this Bill, but she is right that there was an expectation that it would be implemented this year. Given the new Government’s determination to expand the construction of housing as quickly as possible across the country, this schedule is pertinent and relates to the water services Act. We ought to try to address it, through this Act or not. The Minister’s heart is in the right place on this one, so now she has the levers of power I am sure that she will pull the right one.

[Lord Blencathra (Con)]

My Lords, I thank my noble friend Lady McIntosh of Pickering for tabling these amendments, which rightly seek to tackle the issues of flooding and drainage. The Flood and Water Management Act 2010 set out standards for water companies regarding the reduction of flood risks and created more power for local authorities to be able to take action to protect their local areas.

When in government, we tightened restrictions on water companies to protect our countryside, and we are pleased that this work is being continued. Since 2010, under the Conservatives, government investment has better protected more than 600,000 properties from flooding and coastal erosion. Since 2015, Conservative investment has protected over 900,000 acres of farmland, rightly putting the needs of rural communities first.

In 2020, we built on this further and announced a doubling of capital funding into flood defences in England, to a record £5.6 billion from 2021 to 2027. As the Committee will understand from these steps, we had a strong record of investment in flood defences and water management. It would be helpful to hear from the Minister what plans the Government have to improve on those Conservative measures to protect communities across the UK from the harms of flooding.

Much of our debate on the Bill has so far focused on the corporate structures and financial management of companies in our water industry. It is right that we consider these issues in depth and seek to put the right incentives in place to deliver better outcomes for the key groups and interests that we should be aiming to protect under the Bill; namely, consumers, employees of water companies and the protection of our environment.

While the majority of the public debate around our water sector focuses on the damage that sewage overflows do to our waterways, my noble friend Lady McIntosh is absolutely right to take this opportunity to consider the dangers of flooding and to seek to ensure that water companies put this issue front and centre. We on these Benches certainly understand the issues of sewage contamination in our rivers across the country and would like to solve this issue to preserve the nature and wildlife that this has serious impacts on. We also recognise the horrendous impact that floods have on many communities because those water companies have not done enough in terms of flood management.

The first impact most people experience when water management is poor is flooding on roads and on other key transport links. However, in serious cases—such as the 2007 summer floods and the floods of 2015-16—this can result in threats to lives and livelihoods, enormous costs to the economy and massive devastation for the people affected. I am not sure if the Minister is politically old enough to remember the terrible Carlisle floods a few years ago, but it was horrendous to drive through Carlisle and see thousands of homes with abandoned furniture outside, which was soaked through. In my own constituency, just south of Penrith, at Eamont Bridge, houses had been flooded to a depth of about three inches, but with osmosis, the water had been sucked right up the walls and everything had been destroyed. So, flooding seriously impacts people’s lives.

Reporting on those two exceptional examples together, the Office for Budget Responsibility estimated that the 2007 summer floods cost the UK economy £3.2 billion, while the 2015-16 winter floods cost the economy roughly half of that, at £1.6 billion. These examples alone demonstrate the importance of improving water management to protect our communities from flooding.

That said, it is not only the extreme examples that demonstrate the importance of managing flood risks. As anyone who is involved in farming or other rural affairs will tell you, 2024 has been a very wet year, with many communities facing difficult challenges with flooding. In April 2024, England as a whole received 150% of the long-term average rainfall for the time of year and the north-west was particularly wet—as the noble Baroness and I will testify—with, as my notes say, the wettest April since records began in 1871. I can also tell noble Lords that it was also the wettest August, with one dry day this year.

This is a good opportunity to remind ourselves that it is not just people’s homes that rely on a good water system but our food supply—people’s livelihoods rely on it too. That is why my noble friend Lady McIntosh of Pickering is right to bring this point forward for debate as the Bill makes progress.

When flooding and poor water management affect our rural communities, invariably this has a knock-on effect on agriculture and, in turn, consumer costs. Earlier this month, the Guardian reported that fresh food inflation increased to 1.5% from 1% just in August as the wet weather affected British production of salads and soft fruits, while storms in the Atlantic delayed imports of more exotic fruits, driving up prices.

No Government can control the weather—thank goodness; farmers would like to control it of course, but each would want to control it differently—and no water company can entirely mitigate the impacts of wet periods on our agricultural output. However, good water management is very important when we are faced with unusually poor conditions.

I am grateful to my noble friend Lady McIntosh of Pickering for tabling these amendments to the Bill. I know many farmers will be pleased to hear their concerns about the impacts of poor water management are being discussed in your Lordships’ House tonight. While the Government may not be inclined to accept these amendments, we on this side of the House see this as an important opportunity to ask the Government to please keep the issue of flooding and water management high on the agenda, in light of the very serious impacts it has on people across the country, in both direct damage to their homes and communities and the secondary impact it can have on food prices for all of us.

I would therefore be interested to hear whether the Minister might consider bringing tougher flood mitigation duties for water companies into the Bill. As we have heard constantly, the Government intend to bring forward much wider reforms in the coming year, but, as we approach winter, many families up and down the country will have concerns in the backs of their minds about the risks of flood, in light of the continued failures in our water sector.

Will the Minister take this forward and look at possible improvements that can be made to the Bill now? I hope the Government will listen to the important points raised by my noble friend tonight and consider these carefully before Report.

Water (Special Measures) Bill [HL]

Baroness Pinnock Excerpts

Committee stage
Wednesday 30th October 2024 Lords Chamber

[Baroness Young of Old Scone (Lab)]

My Lords, I support Amendment 53 in the name of the noble Baroness, Lady McIntosh of Pickering. It gives the Secretary of State six months to report on the implementation of Schedule 3 to the Flood and Water Management Act 2010, which covers sustainable drainage. The Act is what it says on the tin: enacted in 2010—but, if I understand it correctly, Schedule 3, which we slaved over in your Lordships’ House, has never been formally commenced. There is no point in legislating if it is not brought into effect. What is the point of us being here if the legislation we meticulously pore over and pass is never implemented?

This is an important issue of sustainable drainage. The noble Baroness has already outlined how it impacts on housing development and other developments. It has a big impact on river and water body quality, so I look forward to hearing how the Government intend to deal with this issue.

[Baroness Pinnock (LD)]

My Lords, the amendments from the noble Baronesses, Lady McIntosh of Pickering and Lady Browning, and the noble Duke, the Duke of Wellington, are, in their varied ways, interesting.

The amendment of the noble Baroness, Lady McIntosh, urges the Government to give greater consideration to encouraging water companies to use nature to slow down excessive water flows, particularly in rivers, because that would reduce the impact on combined sewers, which take both sewage and rainfall through the sewerage system. The noble Baroness gave the example of Pickering, which was discussed when I was on the board of Yorkshire Water some years ago. I was very pleased to hear that that approach has worked so well.

There is another interesting example, in Somerset. A group of environmentalists—not a water company—encouraged a river to return from a driven channel to its natural meandering state. That has benefited nature in many ways, but it has also reduced the speed of the water flow, thereby bringing about the benefits the noble Baroness described. The Government could encourage such approaches—not much more is needed. The Pickering scheme was supported by the board of Yorkshire Water because it was a lot less expensive and had many environmental pluses, among which was the reduced carbon cost of not having to use huge amounts of concrete, adopting a nature-driven approach instead.

I hope the Minister will take on board what has been said. The water companies, with a bit of oomph behind them, could be encouraged to experiment and use these ways to reduce water flows and therefore flooding, to reduce excessive water in the system, and to reduce storm water overflow pollution incidents. This would have a huge benefit.

The next issue, which we discussed on Monday, is the failure to implement SUDS. That was supposed to happen this year and has not, but it ought to. On the plus side, although the Government have not implemented it, in my experience planning authorities are already insisting on new planning applications having a SUDS scheme, because of the capacity issues raised by the noble Baroness, Lady Browning. In any major housing development scheme, the sewerage undertaker is required to commentate on the scheme and may say, “Guess what? There’s not enough capacity in the system”. A SUDS scheme is then applied, which reduces the highways rainfall flow so that it goes not into the sewerage system but, via attenuation tanks, into a neighbouring water course.

In some ways these things are already happening, but I agree with the noble Baroness, Lady Browning, about the importance of considering the capacity of the sewerage system and water resource availability. We know that in some parts of the country, particularly the south-east, housing developments do not happen because there is insufficient water supply. I heard what the Minister said earlier—that in the price review to be signed off by the end of this year, sufficient capital was agreed for nine new reservoirs. That is important, but we also need to think about using water more efficiently, as was said earlier. The volume of water that each of us uses compared to even 10 years ago is quite concerning. We need to think carefully about water efficiency, so that we use what is a precious resource more carefully.

I urge the Government to think again about a national water grid. Water is connected across the country, but the water resources are owned by individual water companies. There is quite a lot of water in the north and not anywhere near enough in the south of the country. Water is currently pushed from one part of a company’s resources to the neighbouring water company. For instance, Yorkshire Water regularly pushes water to whatever the neighbouring authority is in the Midlands. The Government should think about using the water in the north—I am sure that we who live in Yorkshire would be willing to sell it at a good price to those of you in the south who do not have enough.

On that basis, we support what has been proposed by the noble Baronesses, Lady McIntosh and Lady Browning, and we look forward to the Minister’s response to those concerns.