Water (Special Measures) Bill [HL]

Baroness Young of Old Scone Excerpts

2nd reading
Wednesday 9th October 2024 Lords Chamber

[Baroness Young of Old Scone (Lab)]

My Lords, I declare my interests as a former chief executive of the Environment Agency and, briefly, a non-executive director of Anglian Water—I did not gallop over the horizon with bags full of money.

Before I turn to the particulars of the Bill, I will comment on the importance of the wider review of water issues that the Government have promised, because the poor state of our water bodies and rivers is not just about how water companies and others have dealt with sewage. There are other major sources of pollution in agriculture—including, indeed, chicken shit, which the noble Lord, Lord Lipsey, promoted with vigour. There are also other pressures that have caused diminution in the quality of our rivers and water bodies. Surface water run-off is a major aspect, particularly from roads but also from other surfaces, including all urban surfaces, and there are pressures from novel and persistent chemicals.

The state of our water bodies is therefore not just about the sewerage issue, so we need to put the Bill in a much wider context. The state of our water bodies is also about the record and effectiveness of the regulators, Ofwat and the Environment Agency, as many noble Lords have pointed out. It is also about the ineffectiveness of the current arrangements for water pricing. I therefore urge the Minister to publish for consultation the framework for the review and ask that it includes the following four issues.

The first is what action would be needed to reduce overall pollution of the water environment from the whole range of sources, particularly agriculture, and not just sewage pollution. The second is what is needed to get both regulators back to the point where they can regulate effectively. In the case of the Environment Agency, this means resources to enable effective, real-time monitoring; reduce reliance on self-monitoring by operators, particularly the dodgier operators; and fund effective enforcement.

In the case of Ofwat. I believe that it seriously lost the plot from around 2010. It was focusing very much at that stage on the promotion of rather spurious competition in a business which is naturally monopolistic. It was not helped by strong direction from the Government that keeping bills flat was more important than environmental programmes. For those reasons and many others, I would be very cautious about giving more powers to Ofwat until we can be assured that it will operate more effectively in the public interest. After all, Ofwat has been responsible for overseeing the financial shambles that the current water companies have become.

The review should therefore cover the appropriate powers and approaches of the regulators. I do not support the creation of a single regulator for the water industry. I think it would be disastrous to combine economic and environmental interests in one regulator. It would hide the environmental and economic trade-offs. As long as there are two regulators, both robustly defending their part of the equation, either economic or environmental, it is a very transparent system.

In addition, if you think about it, regulating the water companies because of their impact on rivers is a rather crazy thing to do when what we should be doing is regulating rivers and water bodies in an integrated way to take account of all the pressures on them. After all, farmers, planners, builders, water companies, fisheries, forestry and a whole range of other economic activities impact on rivers. If we have one regulator which is talking simply about water company impacts and another regulator which is talking about all other impacts—or if, even worse, the regulators are fragmented even further—I think that we would lose sight completely of integrated management of our water environment. I am surprised that the noble Lord, Lord Whitty, was keen on the single regulator solution. I thought that we had trained him rather better at the Environment Agency—he is off my Christmas card list.

The third thing I would like is a review of the culture in water companies. There is a totally different culture in the parts of water companies that deal with drinking water. There is an absolute prohibition on falling from grace in that part of the water industry because drinking water standards are regarded as inviolable, and it is not good for business to poison people. There is not that culture on the other side of the water industry, which deals with sewage. That is very visible considering the prosecutions against and fines on water companies in the recent past. Many of them are not just negligent, but also carried on for far too long and caused even more damage than was necessary, had they been dealt with promptly. We need a radical look to make sure that the high-quality culture in the drinking water supply is merged in the case of pollution reduction measures. That culture really has to change.

The fourth thing I would like in the review is the need, at long last, for an open public debate about the options, trade-offs and costs of cleaning up the water environment. It is not as simple as punishing the water companies and controlling them, and the water environment then recovering. It will not, and it is unfair to wind the public up to expect that, which is what much of the public debate is about at the moment. People think: “It’s all these rotten water companies and if we sort them out we will have a clean environment”. That is simply not the case. There needs to be a properly informed, understandable public debate about how much the public can pay, what they think it is most important for them to pay for and over what period of time. At the moment we have more heat and steam than illumination.

Can my noble friend the Minister tell the House more about the timescale of this review and whether the scope will be consulted on? I have gone on rather long about the review and have very little to say about the Bill itself. It is a bit performative—kicking the water companies, which have lost the confidence of the public and the Government. It is not a substitute for more fundamental action on water policy and the water environment. However, as the Bill is here, I would like to support several of the amendments to it that have already been mentioned, and raise a few of my own. It is important to give an environmental duty to Ofwat to ensure that it cannot be guided, or by default, soft-pedal the environment, as has happened since 2010. I would like the earmarking of all water company fines to an environmental fund such as the Water Restoration Fund. I would like measures to ensure the commencement of Schedule 3 to the Flood and Water Management Act, as the noble Baroness, Lady McIntosh, mentioned. It is outrageous that 14 years have passed since Parliament endorsed SUDS and soft drainage measures to try to reduce the amount of run-off into the sewerage system and therefore the cause of more overflows. Why on earth are we here creating legislation if it is never commenced? I would also like measures to strengthen the examination and sign-off of the pollution incident reduction plans by regulators and by Ministers to make sure that they are fit for purpose and can be properly implemented and monitored.

There are other amendments to come forward, but I make one last plea to the Minister. It is a more general point about legislation, but this is a good place to make it. She very kindly summarised the number of delegated powers in the Bill. I remember the days when I first came into this House when it was regarded as outrageous if we did not have, in draft, guidance and secondary legislation that flowed from a piece of primary legislation before we finally pressed the button on it at Report and Third Reading. I would like to think that a new Labour Government would bring back a commitment to making sure that this House sees in draft form what the contents of guidance and secondary legislation will look like, so that when we debate the Bill we are not debating a pig in a poke.