Water (Special Measures) Bill [ Lords ] (First sitting)

Catherine Fookes Excerpts

Committee stage
Thursday 9th January 2025 Public Bill Committees

[Dr Hudson]

I was referring to the hon. Gentleman’s colleague.

It is therefore worrying that although the previous Administration went to great lengths to ensure that water companies were financially resilient, this Government are doing quite the opposite with Government amendment 1. That amendment, which will leave out lines 4 to 8 of clause 1, would amend the requirement for rules made by Ofwat under the clause to specifically include rules on financial reporting. That could not more clearly delineate the Conservative approach that the Labour party so derided—it promised the British people that it would do things differently—from the actual approach that Labour has taken in power.

Government amendment 1 undermines not only the hard efforts of the previous Conservative Government in taking the issue seriously, but the efforts of the cross-party consensus that secured the commitment to having financial reporting rules made by Ofwat in the Bill. That cross-party coalition, which included my Conservative colleagues in the other place, forced the Government to ensure that the original commitment would be in place in the Bill. Labour voted against the commitment and is simply seeking to overturn a clear cross-party consensus for Ofwat to be given powers to set rules on financial reporting.

Ensuring that Ofwat can view a water company’s financial structuring will help it to scrutinise and have an understanding of how the company is operating. It will also ensure that the consumers who have been let down by the water industry for far too long are protected. With close financial monitoring, water companies will face the necessary scrutiny to reduce the risk that ordinary consumers are left without a supplier. Financial mismanagement poses great risks, so every sinew must be strained to prevent it; financial reporting is key to ensuring that that takes place. The financial resilience of the water companies is not a hypothetical issue, but a paramount concern right now.

As recently as November, Ofwat’s monitoring financial responsibility report identified 10 companies that needed an increased level of monitoring and/or engagement concerning financial resilience. Seven of those companies were placed in the elevated concern category, meaning that some concerns or potential concerns with their financial resilience have been identified. Three companies were placed in the highest category of action required, meaning that action must be taken or is being taken to strengthen the company’s challenges with financial resilience, and therefore they need to publish additional information and report on improvements at a more senior level with Ofwat.

[Catherine Fookes (Monmouthshire) (Lab)]

Does the hon. Gentleman agree that his Government had 14 years to reform Ofwat, during which time they did absolutely nothing?

[Dr Hudson]

I respectfully disagree with the hon. Member. We passed the Environment Act 2021, we gave Ofwat and the Environment Agency more teeth and, as I have said, we were the first party to start measuring and collecting the data that meant we could act on this issue. Moving forward, we are trying to ensure that Ofwat and the Environment Agency use the teeth given to them by the previous Conservative Government to make our waters better. To suggest with Government amendment 1 that Ofwat should not be concerned with financial resilience rules quite simply sends the wrong message to the public, so I urge the Government to reconsider. The Opposition will seek to push Government amendment 1 to a vote.

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Given that the Liberal Democrats go to great lengths to display how tough they are on the water industry and how they want accountability, it is disappointing and shocking that they would table amendment 21, which would likewise remove that requirement for a statutory instrument. Why would they also want to support this Government in trying to avoid accountability when it comes to Governments taking action on the water industry and practices? Again, are they haunted by their own record of being in government and doing nothing on this issue? I strongly urge the Government to consider their position on Government amendment 2, which we will also seek to push to a vote. In addition, if it is not withdrawn, we will seek a vote on the third party’s similarly retrograde amendment 21.

[Catherine Fookes]

It is a pleasure to serve under your chairship, Mr Vickers. I take the opportunity to welcome the measures in the Bill, particularly those in clause 1, and to thank the Minister for her really swift work. We know all too well the damage that has been done by water companies and agricultural pollution across the UK. That damage has only been exacerbated by years of Conservative failure, allowing for record levels of illegal sewage dumping in our rivers, lakes and seas.

In my constituency of Monmouthshire, we have the majestic rivers the Wye, the Usk and the Monnow. Armies of citizen scientists, co-ordinated by the wonderful Save the River Usk group in Usk with Angela Jones, have been monitoring the river over the past few years. Sadly, it is getting worse and worse. The levels of phosphate pollution in the River Usk are the worst in all the nine Welsh rivers that are special areas of conservation—SACs.

This Labour Government have only been in office for six months, yet we are already taking more action to tackle the scourge of sewage than the Conservative party did—indeed, more than the Conservative party and the Liberal Democrat party did—when they were in government. Instead of obfuscation and delay, we are getting serious action to end the disgraceful behaviour that we have been discussing. That is especially evident in clause 1, which seeks to ban bonuses for water bosses unless high standards of protecting the environment are met. Water bosses must also involve consumers in decision making. In addition, the clause ensures that failing water bosses will no longer be able to be water bosses. This action is essential if we are to hold water company bosses to account and ensure that they act in the best interests of the public and the environment, rather than in the interests of their own pockets.

I am pleased that in Wales we have the not-for-profit water company Dŵr Cymru. Sadly, however, that status has not stopped the company from leaking sewage. In 2023, we had 2,383 sewage dumping incidents in Monmouthshire, which is 2,383 too many. In 2022, chief executive Peter Perry took home £332,000 and a further £232,000 in bonuses, while in the latest financial year Ofwat had to step in and stop the company from paying out £163,000 of bonuses from customers’ money.

I am sure that I am not alone in recognising the injustice of such bosses’ being paid hundreds of thousands of pounds in bonuses while polluting our environment. It is clear to me that significant Government action and regulation is needed, and the clause delivers it. It finally ensures that the polluter pays. I support it wholeheartedly.

[Jerome Mayhew (Broadland and Fakenham) (Con)]

I am pleased to see you in your place, Mr Vickers.

I am not going to speak to the Government amendments; I merely repeat the very good arguments put forward by my hon. Friend the Member for Epping Forest. At this stage, however, I will just express a couple of concerns that I have about amendment 18, tabled by the Liberal Democrats.

I understand the rationale or the intention behind amendment 18; we all want the water companies to pay closer attention to the interests of their consumers. I note in passing that they already have a statutory duty—a consumer-focused statutory duty—but the actions taken by the Conservative Government over the past 14 years to ask questions about the state of sewage discharges and to get information about them, so as to take effective action to bring them to an end, bring with them an additional need.

The hon. Member for Westmorland and Lonsdale highlighted a loss of trust in the water undertakers, and I agree with him on that. There has been a significant loss of trust as their poor behaviour, which was uncovered by the Conservative Administration, has been met with considerable outrage—justifiable outrage—by the Government and by members of the public.

However, I fear that there will be some significant unintended consequences associated with the drafting of amendment 18, relating to the legal obligations of a board member. The hon. Member for Westmorland and Lonsdale referred to those new positions being on the boards of companies. There are legal obligations that apply to all board members and I question whether the representatives of consumers and of the voluntary organisations that have been so active in this area over the past few years would really want to be exposed to the legal obligations of being a member of the board of a plc, because those obligations are significant and onerous.

Water (Special Measures) Bill [ Lords ] (Fourth sitting)

Catherine Fookes Excerpts

Committee stage
Tuesday 14th January 2025 Public Bill Committees

In my constituency, I see the distraction in the Environment Agency. We had Storm Desmond more than nine years ago now. The flood defences are being built in Kendal, overseen by the Environment Agency. Meanwhile, eight miles up the road, we have Windermere, which is a centre of great concern because of pollution there. There are only so many things that a small group of people can keep in their head at any given time.

[Catherine Fookes (Monmouthshire) (Lab)]

I think we can safely say that Ofwat is already under review. In my mind, it has until 2030 to deliver everything that we want. We have an independent commission coming up, so I would say that the hon. Member’s new clause is not necessary. We should let the commission report and say what extra steps are necessary.

[Tim Farron]

I thank the hon. Member for her very reasonable intervention. In the extremely unlikely event that the Committee rejects my new clause today, we will of course submit our ideas to Sir Jon Cunliffe and take part in the review, which we welcome. Nevertheless, my point is that the division of responsibility and division of attention, particularly in the Environment Agency as a regulator dealing with flooding and so on, means that it does not have the resource; I know that we will talk about that later. Also, the fact that the regulatory set-up is so fragmented means that the water companies simply run rings around the various regulators.

One final point arising from new clause 20 is that we must outline a potential way forward. We are not convinced at this stage that renationalisation would be affordable or wise. I am not saying that I am opposed to it in principle; it just does not seem wise at this stage to do something that will cost the taxpayer a vast amount and put money in the hands of people who have fleeced us once already. Unless people can come up with a different model, that does not feel like the right way of doing it.

At the same time, the current model of ownership has clearly failed. We suggest a not-for-profit, a community benefit company model or looking at mutuals, but there may be a way of migrating the system towards that model of ownership via what happens at the end of the administration.

Water (Special Measures) Bill [ Lords ] (Fifth sitting)

Catherine Fookes Excerpts

Committee stage
Thursday 16th January 2025 Public Bill Committees

[Tim Farron]

I will say a brief word on the new clause. This is important, and I would like to add to the detail that my hon. Friend the Member for Witney has set out. Essentially, we have two problems here, one of which is that water companies are not statutory consultees, and they should be. I take the point that it could be more clearly stated, but the new clause does say “When participating” more than once, not “If participating”.

Without pointing fingers—well, maybe a bit at water companies in certain parts of the country, including mine—the key thing is that there is an incentive for a water company, when giving its advice to a planning committee, whether it be in the national parks, the dales, the lakes or a local council, basically to say that everything is fine, and why would it not? If a water company says, “We have no capacity issues. You can build those 200 houses on the edge of Kendal and it won’t cause any problems for our sewer capacity,” two things happen, do they not? First, the water company is not conceding the need to spend any money on upgrading the sewerage network. Secondly, it is guaranteeing itself 200 households that pay water bills, in addition to the ones it already has, so it has a built-in incentive—maybe not to be dishonest, but to not really give the fullest and broadest assessment of the situation.

[Catherine Fookes (Monmouthshire) (Lab)]

I would like to give the hon. Member a practical example of where the absolute opposite has happened in Wales. In my constituency of Monmouthshire, Welsh Water was very clear that, because of the phosphate levels in the River Wye, there could be no development whatsoever in my area of the constituency—Monmouth—for several years. It absolutely stopped all development and seemed to be very honest in doing so. Now the problems have cleared up somewhat, and Monmouthshire county council has put forward a proposal in the local development plan to build houses. We also have a sustainable drainage systems regime, which means that absolutely nothing will be built without those systems. By the way, 50% of the homes will be affordable and they will be 100% net zero, so I commend Monmouthshire county council for putting that forward. I just wanted to say that there are examples where the opposite has happened to what the hon. Member for Westmorland and Lonsdale is saying.

[Tim Farron]

I thank the hon. Member for the intervention; I am sure that is the case, and the two are not mutually exclusive. I want to see houses built. The great frustration in our communities in the lakes and dales and just outside is that we desperately need homes that are affordable, and we want homes to be zero carbon. We want to be in a situation where the local community is able to hold developers to account. The danger is that developers who are going to build stuff on the cheap that is not affordable to potential buyers or renters are able to get themselves off the hook because the water companies will not really test the resilience of the existing infrastructure.

It is true that both things can happen. We feel that this is about giving planning authorities the power to say, “The developer is seeking to do this, but the community as a whole does not have the resilience or the capacity to cope with 200 extra bathrooms; so what resources will the developer or the water company put in to ensure that the facilities are upgraded to make that possible?” This is about ensuring that planning does its job.

Water (Special Measures) Bill [Lords]

Catherine Fookes Excerpts

Report stage
Tuesday 28th January 2025 Commons Chamber

[Emma Hardy]

The right hon. Gentleman is indeed an eager beaver. As much as I do not wish to pour water on his enthusiasm, I will of course respond to all the amendments at the end of this stage of the Bill, as protocol expects. I hope he is able to contain his excitement, and is looking forward to my final comments on that area. And I shall be practising my pirouettes in anticipation.

I wish to pay special thanks to the Welsh Government, the Deputy First Minister and the officials who have worked so openly and collaboratively with the UK Government throughout the development and passage of this Bill. I also thank the Senedd for their consent, which we received on 21 January. I look forward to continuing to work closely with our Welsh counterparts to protect our rivers, lakes and seas, particularly those that cross our borders.

[Catherine Fookes (Monmouthshire) (Lab)]

I thank my hon. Friend for all her work on this Bill. Does she agree that we have made much more progress on banning bosses’ bonuses in the six months that we have been in office than the Conservatives did in 14 years?

[Emma Hardy]

That excellent point was well made by my hon. Friend. I hope all hon. Members agree that the amendments tabled by the Government will only strengthen this Bill and will support new clause 18.

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The Bill is okay—it is even good in parts—but it would be significantly better with the Liberal Democrats’ suggested amendments. We humbly ask right hon. and hon. Members to support those amendments, and especially amendment 9, to give the British people the radical water industry clean-up that they voted for.

[Catherine Fookes]

I thank the Minister for bringing forward the Bill so fast in the first six months of the Government. It was an honour to sit on the Bill Committee and to engage in constructive discussion with hon. Members from across the House. However, I must take issue with the hon. Member for Westmorland and Lonsdale (Tim Farron) and his veritable smorgasbord of amendments and new clauses. I will not support them, because, let us remember, this is just the first step in cleaning up the appalling mess we have been left with our water companies. I am sure that the commission will bring forward ideas for more legislation.

I grew up in the countryside on a farm, and one of my favourite memories was running down the garden and out into the river at the bottom, going for a walk and sploshing through the streams. I and my family took it for granted that we could just mess about in the streams. Apart from really annoying my mum when I got back by leaving a messy puddle of water on the floor, there was never any fear that I would get sick or that I had been wading through sewage. What a change there has been, with parents now worried about their children going into the water. They cannot run helter-skelter into the local chalk stream for fear that they will get an ear infection or an eye infection, or perhaps encounter a wet wipe or something much worse.

Sadly, the health of the Wye and the Usk, our two majestic rivers in Monmouthshire, has really suffered over the past 14 years. I have spent many happy hours walking alongside them, seeing herons and kingfishers, and we have had some of our happiest family days out there. The dreadful state that those two rivers are in makes them two really good examples of the 14 years of Conservative failure and flimflam. We have record levels of illegal sewage dumping in our rivers, lakes and seas, and chronic ongoing diffuse pollution from agriculture.

In every constituency across the UK there are amazing groups of citizen scientists who have really brought our rivers to the fore. I pay tribute to Save the River Usk and Friends of the River Wye in Monmouthshire, who are among the best in the UK. [Interruption.] I am afraid that I will not give way as we are under extreme time pressure. One of my key promises in the election campaign was to work to clean up our rivers. Feargal Sharkey endorsed my campaign—when someone like him endorses a campaign, we know that we will be held to account. That is why I am so pleased that in the last six months we have done more than the Conservatives and the Lib Dems when they were in coalition.

I am proud that we are already standing here debating the Bill, only six months in. It will bring criminal charges against persistent lawbreakers, with penalties including imprisonment. In addition, the cost recovery powers of regulators will be expanded to ensure that water companies bear the cost of enforcement action taken in response to their failings.

We have been left a very difficult legacy due to the disastrous inaction of the Tories and the Lib Dems when they were in coalition. It will take much more work and many years across borders, with both farmers and water companies, to restore our rivers, but the Bill makes an excellent start to cleaning up the horrific mess. It will mean that in future, I hope, parents will be able to allow their children to run helter-skelter into their local rivers and streams.

[Joy Morrissey (Beaconsfield) (Con)]

I would like to speak to amendments 2 and 3, tabled in my name. Amendment 2 would further strengthen the Bill by making it a criminal offence for water companies to fail to report discharge from emergency overflows. Amendment 3 would prohibit such discharge in river areas such as the Thames that are used for aquatic sports.

I have the privilege of representing the towns and villages of Beaconsfield, Marlow, Bourne End and the south Bucks villages. Unfortunately, we are served by Thames Water, and we have some of the highest levels of fines in the country. We are blessed with a beautiful waterway setting throughout my constituency, including the River Thames. Our area is rich in watersport clubs—the Marlow rowing club, the Marlow canoe club and the Upper Thames sailing club to name but three. Young people from high schools and grammar schools use the Thames for their water sports as well.

Amendment 3 would give water used for aquatic sports the same protection as that used for bathing. It would establish clear consequences for water companies and their chief executives where they fail to comply with a clear duty to protect the water in which people practise aquatic sports, particularly rowing. That is particularly true of Thames Water and of the Thames. I appreciate the cross-party support in Committee on these amendments.

Aquatic sports are an important part of our sporting heritage in this country, but storm overflow discharge into our rivers has adversely affected the health of participants, creating an ongoing health risk to rowing, sailing, canoeing and other aquatic sports clubs along the Thames and across the country. Many clubs, particularly in places such as Marlow, take their duty of care very seriously, and are having to put in place their own monitoring systems to protect their members.

Amendment 3 would ensure that water used for aquatic sports was put on the same statutory footing as bathing water. It is time for water companies to take responsibility for ensuring that those waters are safe to use, and to protect our young people for the future. The amendments set out a reasonable expectation that a water company must not discharge an emergency overflow within a 1-mile radius of an area used for aquatic sports. The definition of such an area is clearly outlined, and further discretion is provided for the Secretary of State to determine such areas where needed. The amendment would bring much-needed support to our vital aquatic sports.

Water (Special Measures) Bill [Lords]

Catherine Fookes Excerpts

Consideration of Lords message
Tuesday 11th February 2025 Commons Chamber

[Tim Farron (Westmorland and Lonsdale) (LD)]

It is a pleasure to be back talking about the Bill again. In Committee and on Report, the Liberal Democrats put down a grand total of 56 amendments. What is two more? We believe, as the hon. Member for Epping Forest (Dr Hudson) said, that this Bill is a good thing, and we wish to see it on the statute book, but we do not feel it goes far enough, and the two amendments before us today give us the opportunity to consider it a little more.

Through amendment (a) the Government want to introduce financial reporting requirements for water companies. The report, to be required once a year, should be a concise, intelligible and up-to-date overview of the financial position of each undertaker—a water company—including information on share capital and debt, and any significant changes that may have happened in the past 12 months or expected changes in the 12 months to come. We very much welcome the amendment. We tabled many similar amendments that contained aspects of those proposals, both in Committee and on Report. We are bound to say that they were better amendments—more ambitious and far reaching—but as with much of this Bill, these proposals are a decent start and we do not want to stand in their way.

To clarify, we have proposed a variety of amendments to the Bill up to this point, including calling for Ofwat to be made responsible for the financial stability duty on water companies. We called for the banning of bonuses for water company bosses whose companies were performing poorly, and not just on environmental duties but on financial stability and water quality. On the Floor of the House we pushed to a vote, with the permission of the Chair, a ban on water companies making customers pay for their debt at the point of bankruptcy, and instead for investors, who have taken risks, to pay for them. That was right, and we were disappointed that the Government voted against it and the Conservatives sat on their hands and did not support bill payers. This is an important and live issue. In Westmorland in the north-west of England, 11% of bills paid only service the debt of United Utilities, yet in other parts of the country such as the areas served by Thames Water, that figure is around 35% or potentially even more.

We have called for scrutiny not just of the finances of water companies but of other areas. The Bill has moved things in the right direction, but not radically enough. In Committee, we sought to encourage and persuade Labour and Conservative Front Benchers—without success—that it would be wise to have environmental experts on the boards of water companies.

On the Government’s laudable and positive move towards a live database that citizen scientists can scrutinise, we asked that it also be a historical database that is searchable in retrospect. Wonderful organisations in my constituency, which are replicated around the country, such as the Eden Rivers Trust, the South Cumbria Rivers Trust, the Clean River Kent campaign and Save Windermere, would monitor that database, but unless they look at it 24/7 and do nothing else in their lives, some things may get past them. For example, between 2021 and 2023, 120 million litres of sewage were pumped into Windermere lake without United Utilities reporting it. We are reliant on citizen scientists knowing about this stuff, and a great database will do the job only if it is searchable in retrospect. Scrutiny and transparency on finances and environmental matters are vital. We are satisfied that amendment (a) provides increased transparency on water company finances, and therefore we will not make a nuisance of ourselves today.

I turn to the second of the amendments in front of us. The hon. Member for Epping Forest (Dr Hudson) rightly highlights and reminds Members of my distaste for not having stuff in the Bill, and how statutory instruments are not the best way of doing things. Despite that, I am even more of a fan of ensuring that we in this place can properly scrutinise those who are meant to be scrutinising our water companies, namely Ofwat.

Throughout the passage of the Bill, Liberal Democrats have made good, radical, environmentally minded proposals that are in the interests of our constituents and our waterways. Although the Government have understandably stuck to their guns and voted against us, the official Opposition have, oddly enough, abstained on pretty much everything—including, it would appear, on their own amendment today, for which we want to vote, notwithstanding all our reticence about not having important matters in the Bill.

This amendment was proposed in the other place by my former neighbour but one—not the hon. Member for Epping Forest, who is also my former neighbour—the right hon. Lord Blencathra, a former Member for Penrith and the Border, and a very accomplished parliamentarian. In this amendment, he is seeking to require increased parliamentary scrutiny of Ofwat when signing off on water company bonuses. That issue is of huge concern to me, and, I think, to most people around this country—certainly in my constituency—because record bonuses are being paid to senior executives around the country.

[Catherine Fookes (Monmouthshire) (Lab)]

The hon. Gentleman put forward a veritable smorgasbord of amendments in the Bill Committee, and all those issues were discussed. It is so important that Ofwat retains its independence. It is extremely relevant to point out, however, that during the coalition years and the 14 years the Conservatives were in government, no Bills were passed to ban water company bonuses, and this Bill will do just that.