Independent Water Commission: Final Report

Charlie Maynard Excerpts

Tuesday 10th February 2026 Westminster Hall

[Charlie Maynard (Witney) (LD)]

It is a pleasure to serve under your chairship, Sir Jeremy. I thank my hon. Friend the Member for West Dorset (Edward Morello).

I am going to move very quickly. I thank Sir Jon Cunliffe and all the campaigners in my constituency. I note that Blake primary school had to close on Friday because of sewage—the fourth time in the last two and a half months. Bills have gone up: we are paying 9.75% interest with Thames Water. I thank Alex Lipp and Jonny Dawe for putting together sewagemap.co.uk—a fantastic website that tracks what is going on and where.

The “ultimate controller” definition is mentioned 16 times in the Independent Water Commission’s final report. I welcome the proposal in paragraph 700, which would allow an enforceable undertaking against ultimate controllers. However, that will work only if Ofwat is doing its job properly and recognising companies as ultimate controllers. As the Minister knows, the equity of Thames Water is now zero, with most of the investors having written down their equity investment in full, and some having taken away their board representation nearly two years ago. That leaves the debt holders—the class A creditors—holding the majority of the company’s debt. They have now set up the London & Valley Water consortium to co-ordinate their interests.

The water sector is a regulated sector, with the ultimate controller designation being critical. To meet that definition, an entity only has to

“materially influence the policy or affairs”

of Thames Water. There is no limit on how many entities meet that criterion or whether there are equity or debt holders. Clearly, the consortium more than meets that definition as it is, in effect, the only significant party left standing across either Thames Water’s debt or equity structure.

As per the regulation, Thames Water must inform Ofwat even of potential changes in its ultimate controllers. Ofwat then requires water companies to obtain legally enforceable undertakings from each of their ultimate controllers. That has not happened in the case of the class A creditors, and I believe this is a rig-up between the Treasury, the Department for Environment, Food and Rural Affairs, Ofwat, Thames Water and the class A creditors. That is not good enough. It is in contravention of our regulations.

I have repeatedly asked Ministers to explain, in the main Chamber, in the Business and Trade Committee, in this Chamber and in the press, why they believe that the class A creditor consortium does not meet the ultimate controller test. I have received either no answer— most recently from the Minister three weeks ago, when she refused point-blank to give me an answer in the main Chamber—or obfuscation. Please, will the Minister now answer the question? Does she consider the London & Valley Water consortium to meet the ultimate controller test with regard to its material influence over Thames Water, and if not, why not?

[Sir Jeremy Wright (in the Chair)]

I am grateful to the hon. Gentleman and to all Back-Bench colleagues for their co-operation. We now come to the Front-Bench speeches, beginning with that of the Liberal Democrat spokesperson.

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[Emma Hardy]

I turn now to regulation and the case for establishing a new single water regulator. As mentioned, that has to go alongside continuing what we have at the moment. Fundamental reform of water regulation is required, bringing together the economic and environmental planning, and looking at a singular accountable improvement body and enabling a whole-firm view of water company performance. The Liberal Democrat spokesperson, the hon. Member for Westmorland and Lonsdale (Tim Farron), called it phase 2 or round 2 —I am not sure what the right phrase is, but we will be back with further legislation. This is absolutely what we need. We are looking at a chief engineer being embedded in the new regulator, ensuring companies focus on fixing crumbling pipes, treatment works and on engineering expertise—it is shocking that we have not had engineering expertise. We are looking at greater stability, transparency and protection for customers.

Until then, existing regulators must retain their full legal powers and responsibility. However, the Government are determined to ensure that the future regulator does not inherit the problems of the past. Leadership appointments for the new regulator, including a chair designate, will therefore be made at the earliest opportunity, and they will drive the design and direction of the new regulator to support a smooth transition. Before that, early steps are now being taken to look at joining up regulatory activity, particularly between Ofwat and the Environment Agency, until the new regulator is established.

[Charlie Maynard]

We have four minutes to go, including a wind-up speech. I wonder whether the Minister is going to get to my point.

[Emma Hardy]

I will, but I would like to say— I hope this is felt by all Members across the House—that I am extremely accessible as a Minister and always willing to meet people, so I do not like having my integrity questioned. The hon. Gentleman should know that I responded to a letter from him on that very issue on 12 January. If he has not received it, he is welcome to come and see me, but to imply that I have ignored his request is false.

[Charlie Maynard]

I apologise.

Water White Paper

Charlie Maynard Excerpts

Wednesday 21st January 2026 Commons Chamber

[Emma Reynolds]

I agree with my hon. Friend that it is unacceptable. These companies should respect both the spirit and the letter of the law. As I have said, Ofwat is considering what further action it can take to ensure that these companies obey the law that this House passed last year.

[Charlie Maynard (Witney) (LD)]

I welcome the White Paper and thank the Secretary of State and her team for their work. I am keen to understand how it will work in practice. As the Secretary of State will know, Thames Water’s largest equity shareholder wrote down its shareholding to zero in May 2024, so the equity is widely regarded as worthless. That leaves the debt, three quarters of which is held by the London & Valley consortium, the class A creditor. Does she agree that, given that the equity is worthless, leaving only the debt, the consortium obviously has material influence over the company?

[Emma Reynolds]

I am sorry, but I cannot get into the specifics of Thames Water at what is quite a sensitive moment. What I can say is that it is financially stable, but the Government are prepared for all eventualities, including a special administration regime if one were needed, but I cannot go into the detail of what is happening.

Future of Thames Water

Charlie Maynard Excerpts

Tuesday 6th January 2026 Westminster Hall

[Charlie Maynard (Witney) (LD)]

It is a pleasure to serve under your chairship, Mrs Harris. West Oxfordshire is very much ground zero for Thames Water. We have the Thames itself, the Evenlode and the Windrush. West Oxfordshire district council has done great work in going after Thames Water. We have WASP—Windrush Against Sewage Pollution—and we, as a team, have also gone after Thames Water through the High Court and the Court of Appeal, all the way up to the Supreme Court. I thank the legal team that fought pro bono with us last year on behalf of the 16 million Thames Water customers who are being royally stiffed.

As my hon. Friend the Member for Oxford West and Abingdon (Layla Moran) mentioned, the bills people are paying are completely outrageous. I have had constituents whose bills have gone up by 50% and 70%. Somebody got a 93% increase through the post. It is outrageous.

[Helen Maguire (Epsom and Ewell) (LD)]

One of my local residents has had their bills doubled, and a mains water pipe in West Hill has burst, causing major chaos for my constituents. Yet £2.5 million was given out in executive bonuses last April. It is disgraceful that the Labour Government have left our constituents to foot the bill for Thames Water’s shoddy performance. Does my hon. Friend agree that we should put the company into special administration?

[Charlie Maynard]

I completely agree—well said. What is so depressing is that the Labour Government have embraced the Conservative’s mistakes over Thames Water, and our water sector more broadly, and then doubled down on them. The Government have been and continue to be hoodwinked by a bunch of hedge-funds whispering about financial Armageddon into ears of the Department for Environment Food and Rural Affairs and Ofwat. They need to follow through on their regulatory obligations, because we need regulators that have teeth and backbone and will actually deliver. Instead, we have hedge-funds making vast fees with outrageous interest expenses, at the cost of us as consumers. It is not fair. It is a great shame, and it is also unnecessary, because the company’s financial and environmental positions are completely unsustainable. With every day that passes, this becomes more Labour’s problem.

We now need to cut the rope and put the company into special administration, on account of its many breaches of its licence obligations, so that its debt can be written down to around three times cash flow and it can come out of the special administration regime mutually owned by 16 million customers, and run on behalf of them and the environment, and with Government-guaranteed funding mechanisms in place to fund the investment required over the next three, five and 15 years.

Will the Government please answer my letter to the Minister responsible for sewage and flooding, sent at the start of October? I asked whether the Minister believes that Thames Water’s ad hoc group of class A creditors now exerts material influence over it, thereby meeting the “ultimate controller” criteria. I would really like an answer on that. Last February, a High Court judge found that they have material influence over the company, and it would be great to have a straight answer from the Secretary of State or the Minister on that point.

I would not like the Government to give Thames Water, or any other water company, a free pass on paying environmental fines in full. When there are breaches, we need regulators that enforce the fines that are in place. Similarly, given the extreme precarity of the company’s finances, as my hon. Friends have mentioned, the Government should not entrust it with delivering a huge and costly infrastructure project in Oxfordshire in the form of the south-east strategic reservoir option, about which my hon. Friends the Members for Didcot and Wantage (Olly Glover) and for Oxford West and Abingdon spoke in detail. Given all our constituents’ low level of faith in Thames Water, the future of which is precarious, to put it extremely mildly, it is no wonder that this is causing such alarm to residents in my constituency and those of my hon. Friends.

Please do not be bamboozled by the hedge funds; instead, show some backbone—and do not own the Tories’ mistakes. That is the key thing, because this Government still have a chance to leave it with them. Please do so and put the company into a special administration regime.

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[Dr Neil Hudson (Epping Forest) (Con)]

It is a great pleasure to serve under your chairmanship, Mrs Harris. I congratulate the hon. Member for Oxford West and Abingdon (Layla Moran) on securing this important debate. We have heard many contributions from across the House.

Thames Water is a distressing example that brings to light several serious issues that require ongoing attention from the Government and regulators. During the passage of the Water (Special Measures) Act 2025, His Majesty’s official Opposition tabled many sensible amendments that would have ensured that companies did not leverage too much debt. Puzzlingly, and disappointingly, the Government failed to support those amendments.

Companies should be held to the highest standards, and the last Conservative Government took a range of measures to try to do exactly that. Only 7% of storm overflows were monitored when the previous Labour Government departed office in 2010; the Conservatives took that to 100%. Our landmark Environment Act 2021 delivered our plan for cutting plastic pollution and holding water companies to account. We had our ambitious plan for water and took strong action on water companies that were illegally dumping sewage into our waters. We also banned water company bosses from receiving bonuses if the company had committed serious criminal breaches that damaged the environment.

Quite rightly, there is huge frustration that Thames Water has been wrung dry of capital over the years. It has failed to invest to expand its supply and to clean up its sewage spills. His Majesty’s official Opposition have been clear that we do not want to see Thames Water fold, because, although water supply would continue, it would carry the serious risk of higher bills for customers and would not solve any of the issues facing the company. Bizarrely, the third party led legal action that could have sunk the company, and, with it, Reform appears to be happy for the company to go under, exposing the taxpayer to billions and pushing consumer water bills sky high. If the company were taken into a temporary special administration regime or permanent public ownership, the taxpayer would ultimately end up paying the price. That cannot happen, it should not happen, and the parties calling for it seem to be in denial about what it would mean for the British taxpayer.

Ofwat, as the independent regulator for the sector—for now—has responsibility for the sector’s financial resilience and must continue to work closely with Thames Water. In the 2025 to 2030 price review, Ofwat challenged the efficiency of Thames Water’s proposed spending. That led to Thames Water being expected to deliver all schemes that it had proposed, but for £491 million less than it put forward and without any reductions in scale or standard. While Thames Water had initially proposed to appeal Ofwat’s final determinations for 2025 to 2030, it has deferred the appeal while it seeks to secure a rescue proposal.

Talking of spending, the Government have repeatedly made it a talking point that they have secured £104 billion of investment in the water system. They are not telling us, however, that £93 billion of that investment had been submitted by water companies in October 2023, while the Conservatives were in office.

[Charlie Maynard]

Will the hon. Gentleman give way?

[Dr Hudson]

I have to finish—I only have a certain amount of time. Can the Minister outline what action the Government are taking to help find a market-based solution for a Thames Water rescue deal, specifically in the light of reports that current lenders are preventing or shutting out competitors? What are the Government doing to encourage fair competition that puts the long-term interests of the company and customers first, rather than the interests of those seeking to minimise losses?

We are all agreed that Thames Water is in urgent need of a rescue plan. It must be a market-based solution that protects the taxpayer and customers. With the alarming example of Thames Water, which we are discussing today, and with the Cunliffe review’s clear call for improved financial responsibility, His Majesty’s official Opposition continue to urge the Government to rethink their approach and adopt sensible measures to put water companies on a more stable and secure financial footing, in order to protect water, the environment and the British taxpayer.

--- Later in debate ---

[Dame Angela Eagle]

I can confirm that, and it was one of the first things that this Labour Government, when we were incoming, put on to the statute book as a priority, in order to prevent that particular abuse. Thames Water is now under a cash lock-up arrangement; only Ofwat can approve any further dividend payments. That restriction will remain in place until credit ratings improve. Nothing that is happening at the moment will allow the kind of behaviour that we have seen in the past, from this company and others, to continue.

[Charlie Maynard]

We have interest costs of 9.75% being paid. We have massive advisory fees coming out of the company. All the class A creditors’ legal fees—£15 million a month, give or take—were being paid for by Thames Water. To say that this is not all hitting the customers is not true. Who else is paying for this, if it is not ultimately the customers?

[Dame Angela Eagle]

I was talking about the specific point that my hon. Friend the Member for Rushcliffe (James Naish) made about ringfencing for investment, not about some of the costs of the current impasse at Thames Water. To go back to that, the Government will always act in the interests of customers and the environment, and ensure that Thames Water acts in those best interests too.

We are working closely with Ofwat, which is currently in conversation with the London & Valley Water consortium, which is the group of creditors that was referred to. Ofwat will only agree to a plan that will ensure the best possible outcomes for customers and the environment. We will continue to support engagement between Ofwat and the consortium, with a view to supporting a market-led solution for Thames Water’s difficulties, while ensuring that customers and the environment are protected.

Many hon. Members in this debate have talked about the potential for a special administration regime. Should Thames Water become insolvent, we would not hesitate to apply to the court to place the company into a special administration regime, but as the hon. Member for Epping Forest pointed out, that is not a cost-free option. This would ensure that there is no increased disruption to customers’ water or waste-water services. In line with our preparations for a range of scenarios across regulated industries, including water, officials from the Department for Environment, Food and Rural Affairs have selected a firm, FTI Consulting, as an adviser to help with special administration regime contingency planning. That planning is going ahead.

[Charlie Maynard]

Will the Minister give way?

[Dame Angela Eagle]

No, I must make this point, which is quite important in the context of the debate. There is a high bar for the use of special administration regimes. The law states that special administration can be initiated only if the company becomes insolvent—while Thames Water is living fairly hand to mouth, it is not currently insolvent—or is in such a serious breach of its principle statutory duties or an enforcement order that it is inappropriate for the company to retain its licence. Those are the only two things than can lead to the application of a special administration regime.

--- Later in debate ---

[Charlie Maynard]

I concur with those views from the hon. Member for Boston and Skegness (Richard Tice), but can the Minister confirm that those discussions with class A creditors will not involve forgiving the company for its fines?

[Dame Angela Eagle]

There is an ongoing process that I cannot and will not comment on from the sidelines. What I have said is that the Government will ensure that any resolution comes in the interests of the environment and customers, and that is the criteria that the Government will apply, but I will not commentate on rumours from outside of the process in this place. It is important that we allow the process to continue to its conclusion, whatever that may be. I hope that Members are reassured that the Government will be ready to act and use special administration if we have to, should we get to that circumstance—but we are not in that circumstance yet.

I conclude by reiterating that this Government will always act in the national interest. We are clear that Thames Water must always act in the best interests of customers and the environment. We expect it to do that, and we stand ready to act if it becomes clear that it cannot.

Thames Water

Charlie Maynard Excerpts

Tuesday 3rd June 2025 Commons Chamber

[Steve Reed]

I thank my hon. Friend, and indeed neighbour, for his question, and I know what a strong water champion he is on behalf of his constituents. His constituents, much like everybody else’s, will now benefit from increased compensation when there are failures. I agree with him that one of the problems we inherited from the previous Government was having a failing system with no accountability at all, so it is quite right that we have introduced new criminal liabilities and potentially prison time for polluting water bosses, and that we have given the regulator the power to ban the unfair and undeserved multimillion-pound bonuses they got away with under the Conservatives.

[Charlie Maynard (Witney) (LD)]

Does the Secretary of State agree with Thames Water’s own expert adviser Teneo—on page 193 of the expert advice report—that the ultimate cost to the Government if the company goes into special administration will be zero?

[Steve Reed]

The point is that there is a market-led solution on the table and I expect Thames Water to follow through on that.

Sewage

Charlie Maynard Excerpts

Wednesday 23rd April 2025 Commons Chamber

[Charlie Maynard (Witney) (LD)]

I am delighted to speak on the issue of how we can fix our broken water and sewerage sector, and get serious about cleaning up our rivers and lakes. I thank my hon. Friend the Member for Westmorland and Lonsdale (Tim Farron) for securing this debate.

My constituency of Witney, in west Oxfordshire, has borne the brunt of the sewage scandal. Many beautiful rivers flow through it, and the Thames bisects it. We have the Windrush and the Evenlode, Shell brook to the north, and the Ock to the south. They are all heavily and frequently polluted.

I welcome the calls from colleagues to introduce a new blue flag status so that we can guarantee that a river is clean enough to swim in. That would help to restore people’s confidence in swimming, and the bathing place in Witney would be a fantastic example. It is just north of Early’s mill, where generations of people have spent their summer swimming but no longer do so.

We know what a car crash our sewerage network is, thanks to the many campaigners who have gone to so much trouble in their own time, and often using their own money, to bring this issue to our attention. At the top of the star is WASP—Windrush Against Sewage Pollution—which is run by Professor Peter Hammond, Ash Smith, Vaughan Lewis and Geoff Tombs, who have worked tirelessly for the last five years to highlight what has gone wrong. I thank them and all the other citizen scientists in my constituency and beyond, who have done so much to bring this issue to national attention. We owe them all a huge debt of gratitude.

I will focus on failures of regulation—specifically, Ofwat’s failures. Ofwat is responsible for holding water companies accountable against the terms of their operating licences. DEFRA has oversight of Ofwat, sets the policy framework and provides strategic guidance to Ofwat on key environmental and social policies. As many Members have said, Ofwat is clearly failing on pollution. The Environment Agency’s own data shows that Thames Water discharged raw sewage for almost 300,000 hours in 2024—up by almost 50% on the 196,000 hours in 2023. That is well known.

Ofwat is also failing to enforce financial viability. Just like every other water company in the country, Thames Water, which serves my constituency, has to have two investment grade credit ratings, but it has not done so for nearly a year. It has been beaten with limp celery, but that is about it. It has £19 billion of debt and is quite possibly heading towards £23 billion of debt, and it has cash flows of just £1.2 billion. That obviously makes no financial sense, yet Thames Water is allowed to breach the rule with impunity. I have no doubt that other water companies, and companies in other sectors, take note of what Thames Water has been allowed to do and say, “We, too, can cross that line in water and other regulated sectors.” How is that good news? It introduces a moral hazard that does enormous damage to our country. Who is ultimately paying the cost of all this debt, and the enormous interest and advisory fees that go with it? Of course, it is the bill payers.

Ofwat fails to provide value for money. As per the Water Industry Act 1991, it has a statutory duty “to protect the interests of consumers” and “to promote economy and efficiency” on the part of water companies. As WASP’s recently published note on water companies’ capital project costs states, the costs that companies are proposing are extraordinary. In some cases, they are almost an order of magnitude higher than those in comparator companies in countries such as the USA and Denmark. Why is this, and why is it being allowed to happen?

Why are our costs so much greater? Is it because our regulatory capital value pricing model is based on asset values, and therefore gives an incentive to water companies to boost their asset bases? They do this through extraordinarily long depreciation periods for network assets such as pipes, which were installed 50 years ago, but somehow have depreciation periods of 100 years and are leaking like sieves. It also gives them an incentive to pour really expensive concrete. Why is it that something built over here costs eight times the price in Denmark? Why has, say, the Oxford sewage treatment works gone from £40 million to more than £400 million in planned spend in the last four years? What sort of inflation is that?

Ofwat fails to provide fair pricing. Water companies have a requirement to demonstrate fairness, transparency and affordability to customers, which, again, Ofwat is supposed to uphold. Water companies have been allowed to hike bills this year—in the case of Thames Water, by 31%, although some of my constituents have come to me and said they have received increases of 50%, 70% or even more than 90%—and what are bill payers getting for that? This is not fair when more than a quarter of the bills in Thames Water’s case are just paying the interest—not paying down the debt, but just paying the interest. Again, Ofwat is continuing to allow the pockets of water company creditors to be lined at the expense of ordinary households.

Ofwat fails to be awake. It has a responsibility—bear with me on this one—for tracking who are the ultimate controllers of the water companies. That should be pretty simple; there are not many of them. In Thames Water’s case, it is taking wilful ignorance to an extreme of utterly determined ignorance. Last May, Thames Water’s largest shareholder, OMERS, wrote its stake in Thames Water down to zero and pulled its directors off the board. This has been widely reported in the press—it is not secret—yet I got a letter from Ofwat last month confirming that it believes OMERS is still the ultimate controller of the company. Why is Ofwat ignoring this, and why does it matter? Being the ultimate controller of the company means it has certain responsibilities. Those responsibilities are just being ignored, and Ofwat, which is exactly what is supposed to be holding the company to account, is hiding under a stone somewhere. It needs to stop doing this.

[Sarah Dyke (Glastonbury and Somerton) (LD)]

My hon. Friend says that Ofwat has failed to regulate the water system effectively, and is failing on environmental, public health and financial interests. In my constituency, Wessex Water leaked sewage for over 400,000 hours last year alone. Does he agree that the water regulator should be replaced with a clean water authority, which would bring together the environmental and financial regulation of water companies?

[Charlie Maynard]

I thank my hon. Friend, and, yes, I absolutely do.

Ofwat is also failing to innovate. It appears to do little, if anything, to push companies to do this. This is so critical because, if we are going to increase capacity in sewage treatment works, there are many better ways of doing so. There is a host of new technologies out there from leak detection, pipeline monitoring and predictive maintenance equipment to trenchless pipe repair and pressure management technologies. Yet I have heard from firms in my constituency that it is easier to sell sewer technology solutions in the US and Europe than in the UK. This is where the issues of the dire state of water companies’ finances and the sewage scandal intersect, because companies cannot make basic repairs, let alone properly innovate and improve, when so much of their revenue is going straight out of the door in interest payments.

The previous Government have a lot to answer for. It was on their watch that dumping sewage in our rivers and lakes reached record levels, as water companies piled up billions in debt. All the while, bosses rewarded themselves with generous bonuses for mismanagement and failure on so many levels. Many people who work so hard in those companies suffered under that mismanagement.

There is only so much point in looking backwards. What I am appalled by is that the new Government, who came into power with promises to get tough with the water companies and sort out the scandal, have so far shown themselves to be about as tough as Ofwat. The Water (Special Measures) Act—by the way, I say to the hon. Member for North West Leicestershire (Amanda Hack) that it was not voted on by us—was, well, just about nothing. Government Members and Conservative Members rejected a whole host of basic common sense steps, proposed as amendments, which could have made the legislation genuinely impactful. I will give some examples.

[Madam Deputy Speaker (Caroline Nokes)]

Order. I would just like to suggest that the hon. Gentleman bring his remarks to a close rather than give us some examples, because we want to hear from the Minister. He has 30 seconds at most.

[Charlie Maynard]

I will make that three. Thank you very much, and over to you.

[Madam Deputy Speaker]

Over to her. [Laughter.] I call the Minister.

Thames Water: Government Support

Charlie Maynard Excerpts

Thursday 3rd April 2025 Westminster Hall

[Charlie Maynard (Witney) (LD)]

It is a pleasure to serve under your chairmanship, Ms Lewell. I thank my hon. Friend the Member for Sutton and Cheam (Luke Taylor) for securing this debate on Government support for Thames Water. What does Government support for Thames Water look like? Our current Government support Thames Water by letting it breach the terms of its operating licence, letting Ofwat ignore its own rules, letting consumers take the pain of higher bills for no gain, letting financiers make out like bandits and letting our rivers continue to be filled with sewage. What is shocking about that is that a Labour Government are doing it. This Government are turning out to be every bit as bad as the Conservatives were at protecting our rivers. They are completely ducking their responsibilities. It is within the Minister’s powers to take action: she is the Parliamentary Under-Secretary of State for Water and Flooding at DEFRA, DEFRA oversees Ofwat, and Ofwat issues operating licences to water companies.

Here are some of the key requirements that Thames Water needs to comply with, per its Ofwat-issued operating licence. First, there is an operational requirement to comply with environmental and health standards. Thames Water is failing that requirement. As per Environment Agency data, and as my hon. Friend the Member for Twickenham (Munira Wilson) said, in 2024 Thames Water discharged nearly 300,000 hours of sewage, which is 50% up on 2023. It is illegal to dump sewage in dry conditions, but it is happening repeatedly. Professor Peter Hammond, who lives in my constituency, monitored the Stanton Harcourt sewage treatment works in my constituency, and found that there had been 266 illegal spills in just a single sewage treatment works in a four- year period. That is a complete failure of that operating requirement.

Secondly, Thames Water is failing the financial viability requirement, under which it is required to have two licences of investment-grade credit ratings. Currently, it has no credit ratings that are investment grade. Standard & Poor’s has the company’s debt 12 notches below investment grade, and Moody’s has it nine notches below. That is as far deep into junk bond territory as one can get. In the last financial year to March 2024, Thames Water had £19 billion of debt but only £1.2 billion of cash in. Everybody knows that that is not a sensible way to run a company.

By allowing Thames Water to breach that rule, we introduce moral hazard into the water sector and all other regulated sectors. Other water companies take note that there has been no material sanction of Thames Water and realise that they can also likely get away with it. Of the nearly £1.4 billion of funding due to come into the company, £900 million is going straight out in interest expenses, sweet financial goodies for hedge funds, and advisory fees. That is not fair on our bill payers. Customers are being royally stuffed, and Ofwat and the Minister’s DEFRA team are standing by.

Thirdly, there is a requirement to demonstrate fairness, transparency and affordability to customers—the fair pricing requirement—and Thames Water is failing at that too. Bills have gone up by a headline of 31%. Many Witney constituents have written to me with increases of 50% and 70%—in one case, it was even 93%. On top of that, to add insult to injury, Thames Water has an application to the Competition and Markets Authority to increase bills even higher, by 59%.

Fourthly, there is the ownership requirement. This one really gets my goat. Thames Water must inform Ofwat of any change to control. Ultimate controllers are defined in Ofwat’s papers as being

“in a position to control or in a position to materially influence the company”.

Thames Water’s own advisers have publicly stated that the company is de facto controlled by its creditors. Ofwat is ignoring this. Extraordinarily, Ofwat, wrote to me in the last month to say that, despite it being publicly stated in the press that Omers, a shareholder in Thames Water, had written its stake down to zero and pulled its board representation off last May, it is still actually controlling the company. Why is this going on? What could be going on here? It smells—

[Luke Taylor]

It smells like—

[Charlie Maynard]

Yes, it does. I think Ofwat is doing exactly what the company’s creditors want it to do, and I wonder why that is happening, because it should not be.

Finally, there is a failure to innovate. There are a host of technologies out there, and far too often we hear the same old lines about Victorian sewers, cameras and how impossible it all is. There is a huge range of leak detection, pipeline monitoring, protective maintenance, trenchless pipe repair and pressure management technologies. I hear from Oxfordshire firms that it is easier to sell sewer technology solutions into the US and Europe than into the UK, so something is going seriously wrong. We could start by looking at whether the incentives are effectively aligned; I do not believe they are.

What are the consequences of this failure to act? It is easy to lay a lot of the blame at the last Government, but the Water (Special Measures) Act 2025 was more window dressing than action. I am new to Parliament, but I was particularly dismayed that not a single word of a single proposed amendment from any party was accepted by the Minister. I wish that in Parliament we all had enough confidence to accept good ideas where we found them—I live in hope.

[The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Emma Hardy)]

On that point, the hon. Gentleman is incorrect. Actually, compromise amendments were reached on a few occasions, so I want to gently push back on what he says. Cross-party amendments in the other place, where the Bill began, were discussed and accepted, so it is factually incorrect to say that no amendments were accepted.

[Charlie Maynard]

None of the 60 amendments in the Commons, or however many there were, was accepted. The rejected proposals included putting flow meters on the outflows of sewage treatment works, which is sort of logical; establishing targets to reduce pollution over time, using existing benchmarks of hours of spilled sewage; making sewage treatment works’ calculations more transparent; and bringing environmental experts and consumer representatives on to water boards.

The Labour Government are now allowing a public utility company to line the pockets of bankers and hedge funds at the expense of bill payers. As someone said in the Financial Times this week,

“with water, it’s a total monopoly and a total shambles. A shambopoly if you will”.

The Government’s support for Thames Water essentially amounts to unconditional support for the company’s creditors, at a direct and massive cost to its customers.

What do we need to do instead? First, we need to put the company out of its financial misery and put it into special administration. We should allow its debt to be massively written down to something like three times the cash flow or thereabouts. If the debt is reduced, the company will have a sufficiently strong balance sheet to allow it to invest in the infrastructure we desperately need and to spend our bill payments on fixing treatment works and pipe networks, rather than paying interest. We should allow water companies coming out of special administration to be mutually owned by their customers and professionally managed. We should set pollution baselines and pollution reduction targets and get serious about putting transparency targets and technology to work to clean up our rivers.

Special administration is clearly the most logical option at the moment, but I believe that the Government are shying away from it because of threats of legal action against them, phantasmagorical scenarios of financial Armageddon, or both. Please do not let Thames Water’s lobbyists, including Ruth Kelly, the ex-Labour Minister who is now chair of Water UK, to scaremonger you out of taking the action that 16 million consumers—your electorate—need. Those scenarios are patently not true, and it is best to ask Thames Water about that. As per page 92 of the independent expert report from Thames Water’s adviser, Teneo, the net cost to the Treasury of taking the company into special administration, even in the worst-case scenario, is zero—please look it up.

Instead, we now have this bizarre situation whereby a Labour Government are cheerleading the American hedge funds and private equity funds taking over our largest water company and making a massive profit out of its customers. What goes for Thames Water will very likely go for the rest of the sector, so the signal that you and your Government are sending the sector—

[Emma Lewell (in the Chair)]

Order. I do not wish to spoil the hon. Gentleman’s flow, but we use the same conventions in Westminster Hall as in the main Chamber. You should not use the words “you” or “your” unless you are referring to me.

[Charlie Maynard]

Many apologies to you, Ms Lewell, and to the Minister.

The signal that the Minister and the Government are sending to this and other regulated sectors is simply terrible. All that customers in my Witney constituency and across the whole catchment really want at this point is reliable, affordable, clean water to our homes. We want local rivers and lakes not to have sewage poured into them on a near-daily basis. We want a Government who are serious about putting the interests of customers and our rivers before the interests of hedge funds and private equity funds. Please stop letting us down.

--- Later in debate ---

[Robbie Moore]

I thank the hon. Lady for her intervention, but I simply refer to the fact that since privatisation about £250 billion of private investment has been put into our water companies, not only to improve infrastructure but to help with service delivery—£250 billion that would otherwise have had to come from the taxpayer.

My second point is that the system should work if the regulator is being robust enough. The point that I come back to is that there is a clear argument that the regulator, Ofwat, has not been sufficiently utilising the powers awarded to it by the Government, and therefore it is right that the Government hold it to account to make it as robust as possible. North of the border in Scotland, with Scottish Water, only 4% of storm overflows are even being monitored, and the service and delivery that Scottish residents are facing is in some cases far worse than what we are experiencing from Thames Water. Simply having a nationalisation strategy does not demonstrate better roll-out and service delivery for customers.

There have been myriad mistakes at Thames Water, but it is the responsibility of the independent regulator, Ofwat, to right those wrongs.

[Charlie Maynard]

Could the hon. Member elaborate a little bit on that £250 billion number and where it comes from?

[Robbie Moore]

It is a figure that has been referenced since nationalisation initially took place, and has been well recognised as the amount of money that has been invested into our water companies by the private sector, for the benefit not only of Thames Water but of all the water companies across England.

What is the Minister doing to ensure that Ofwat is utilising the powers awarded to it, and does she have confidence in Ofwat being able to exercise its function? If not, what is the Minister doing about it? Furthermore, the Government need to take action to further protect consumers from the Thames Water fallout. The court settlement that Thames Water secured in February is designed to give everyone involved time to come to a sustainable plan, but I hope that the Minister will be able to reassure us today that her efforts are firmly going towards ensuring that the plan protects consumers.

Finally, I would like to talk about the broader reforms and support that we can offer our water industry. As I and others have rightly said throughout this debate, our water industry is crying out for further investment. We need to think further about how to utilise the opportunities for the water sector across the country. To that end, what consideration is the Minister giving to providing more opportunities for individuals and organisations outside of major water companies to influence improving the water sector, and has she considered the untapped potential to increase water supply and capacity to the thousands of people who are utilising water, and the hundreds of landowners out there who, with the right financial and planning incentives, may choose to further invest in the water industry? That may be an avenue that the Minister may wish to explore.

I again thank the hon. Member for Sutton and Cheam for securing this important debate.

[The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Emma Hardy)]

It is a real pleasure to see you in the Chair, Ms Lewell. I wish you, and anybody celebrating, a very happy Easter—I hope that it is a peaceful and enjoyable day. I thank the hon. Member for Sutton and Cheam (Luke Taylor) for securing this debate and giving us space and time to discuss this important issue.

I hope that I can use this debate as an opportunity to address some of the concerns being voiced around Thames Water and the water industry. Since I am feeling rather positive and getting ready for Easter, instead of “10 things I hate about”, I would rather come up with 10 things that might give us reason for hope and renewal in the water industry. To give 10 reasons for hope, since we have been elected we have: one, introduced the Water (Special Measures) Act 2025 to ban bonuses; two, with the Water (Special Measures) Act, introduced criminal liability; three, introduced automatic penalties; four, set up the independent commission; five, changed the articles of association; six, ringfenced money for investment; seven, doubled the compensation for burst pipes, which has come up through the guaranteed standards scheme; eight, created customer panels for water companies; nine, passed bathing water reforms; 10, published storm overflow guidance just last week. And this new Labour Government have not even been in office for a year.

Thinking of fairness and justice, I generally have an aversion to criticising people who cannot be here to defend themselves, so I want to reflect on the comment made about Ruth Kelly. She works for Water UK; she does not work for Thames Water, so characterising her as a defender of Thames Water is not entirely correct.

[Charlie Maynard]

Will the Minister give way?

[Emma Hardy]

I am happy to, if the hon. Member wishes to retract his comment.

[Charlie Maynard]

To be clear, I said that Ruth Kelly is the chair of Water UK—I said exactly that.

[Emma Hardy]

Perhaps I misunderstood the hon. Member as also saying that she is a defender of, or a spokesperson for, Thames Water. I am happy for him to retract his comment.

[Charlie Maynard]

I said that she is the chair of Water UK, which is the trade body for water companies, so I think that follows.

[Emma Hardy]

I am pleased by what I believe I have heard: that no reference was made to Ruth Kelly with regard to Thames Water; instead, the comment was solely about her representing Water UK.

Further to my point about people who are not here and unable to defend themselves, as a trade unionist I want to talk about the people who work for water companies, including those who work for Thames Water and go out to fix the broken pipes, clean up sewage and deal with the sewage overspills. I have had reports from some unions that those people often face abuse for doing so. They are often on the frontline facing people angry with the company. I would like to say—and I hope we have unity on this point—that the people going out, cleaning up the mess and dealing with the difficulties are not responsible. They are not Thames Water; they are people who work for it. I thank them for the work that they do in incredibly difficult circumstances.

--- Later in debate ---

[Emma Hardy]

I want to stress that although that is the legal process for entering special administration, that does not mean for one second that we are satisfied with the performance of the company as a whole. But there is a wealth of difference between the court-sanctioned process of going into special administration and the Government taking action. There are many things on which we want to take action. In fact, the whole purpose of the commission is to look at the way in which companies are set up and how we got into this position in the first place. It might interest the Opposition that some of the rules and regulations around Ofwat were relaxed in 2014—under the coalition Government.

It is not as though we are completely satisfied with everything, and that is why we are not doing SA. What I am saying is that SA is an ultimate enforcement tool; it is a serious step to take and it is sanctioned by the courts, but that does not mean that we are not doing anything else in between. We are taking a lot of other actions, but I wanted to address the specific point around why we are not pushing the company into special administration.

[Charlie Maynard]

I want to play back what the Minster just said. It is up to either Ofwat or the Secretary of State to apply to the court to put the company into special administration. As the Minister wrote to me last July or September, one of those conditions is whether the company is unable, or likely to be unable, to pay its debts. Given that the company has come out and said that it has only £39 million, with £19.5 billion of debt, and it is going to run out of money by 24 March, I think that we have passed that benchmark pretty clearly. The idea that we have not is simply not true. It is therefore up to Ofwat or the Secretary of State, who continues to decline—maybe that is a better word than resist—to ask the court to consider.

[Emma Hardy]

With respect, I think that we have different interpretations of the truth. We are saying that the company can enter SA if it is insolvent. Thames Water is not at the point of insolvency. My message to the public and to people working in the company is that the company remains stable at the moment; however, as a responsible Government, we are preparing for every eventuality.

I want to talk about broader commitments to financial stability and the independent commission. For me, this debate highlights how important it is to address the financial resilience of the water sector. We are talking specifically about Thames Water, but that does not mean that everything else is a bed of roses. Some historical decisions made by companies on debt levels have left them badly financially exposed. Those decisions often coincided with moves towards more complex ownership structures and the involvement of firms with shorter-term horizons.

We recognise that the Government have an important role to play in setting a regulatory framework that encourages a stable water sector. In hindsight, many might question the 2014 changes to make Ofwat a lighter-touch regulator. The Independent Water Commission is exploring how the Government could provide the regulatory structure that most people in the Chamber recognise that we need. The call for evidence is currently live, seeking views from stakeholders on improvements that could be made to economic regulation across a number of areas. As always, we welcome contributions from everybody across the House. The call for evidence closes on 23 April, and I encourage all interested parties to respond to the commission’s questions on these topics via DEFRA’s online consultation tool, Citizen Space.

I conclude by reiterating that both the Government and Ofwat are carefully monitoring the situation with Thames Water.

Farming

Charlie Maynard Excerpts

Thursday 13th March 2025 Commons Chamber

[Ellie Chowns (North Herefordshire) (Green)]

I welcome this timely debate on the future of farming, in the week in which the SFI rug was pulled out from underneath farmers.

Surely the future of farming has to be young farmers. I have been in touch with some young farmers in my constituency to ask what they think I should talk about in this debate. I was sent a screenshot by Beth, who was partway through her SFI application. It said, “Thank you for doing your application. When you are ready, submit it. If we need to close applications, we will give you six weeks’ notice. We will publicise this on gov.uk and we will email you.” If that is not a broken promise, I do not know what is.

Louise, another farmer in my constituency, said that she was

“angry, disappointed, upset and exasperated…we have followed the Government’s advice to the letter, and been kicked in the teeth”.

Another farmer said:

“Pulling SFI is absolutely criminal—just more short-term thinking that forces us into decisions we don’t want to make.”

Ben said:

“yet another nail in the coffin for…family farms…with no warning environmental projects that had been in planning for months on our farm will have to be stopped….We cannot plan for the future when the rules keep changing.”

The future of farming needs to be S, F and I: S for sustainable, F for fair and I for in partnership.

[Charlie Maynard (Witney) (LD)]

I think the hon. Member will agree that the shutting down of the SFI with no notice on Tuesday night is an awful situation. DEFRA has been either disorganised or sneaky, but either way it diminishes the trust of our farming communities in the Government.

[Ellie Chowns]

I could not agree more. This has diminished trust. It is vital to rebuild that trust because we need that sustainable, fair and in-partnership future for farming. It needs to be sustainable in environmental terms— we need to recognise the reality of the climate crisis and the nature crisis. We need to support our farmers to make the vital transition to nature-friendly farming. Farmers in North Herefordshire are at the forefront of that, but they need the Government to back them, not knock them off their feet with policy changes with zero notice.

We need farming to be sustainable environmentally, and sustainable economically. It is not acceptable that the rates of return on farming are so low for so many. The Government have a crucial role to play in tackling that. The Green party has long called for a doubling of the nature-friendly farming budget, because of all the extra benefits that farming provides socially, economically and environmentally. We need the Government to step up on that.

Farming needs to be fair, both internationally and locally. Internationally, our farmers must not be undercut by trade deals that let in products that undermine our animal welfare and environmental standards. We need to ensure that the Government stand firm on that. Farming needs to be fair locally, because access to farming support schemes has not been equal. It is hard for many farmers to access those schemes. Whatever replaces the SFI, I hope that the Minister will ensure that farmers have equal access, and the support that they need to access those schemes. [Interruption.] I see that the Minister is nodding.

Finally, the future of farming has to happen in partnership with farmers themselves—their voices have to be heard—and with the rest of Government. We need a fully joined-up approach to land use, food, farming and sustainability. It also needs to happen in partnership with nature, because without a thriving natural world, there is no sustainable future for farming.

Oral Answers to Questions

Charlie Maynard Excerpts

Thursday 6th February 2025 Commons Chamber

[Emma Hardy]

I thank my hon. Friend for raising this important issue and for the work he is doing in championing what is obviously a crucial issue for his residents. I would of course be happy to meet him.

[Charlie Maynard (Witney) (LD)]

Constituents in Witney were extremely distressed to receive letters this week from Thames Water saying that their bills are going up by £19 a month from April, putting more pressure on household bills. Does the Minister think that is acceptable, given that the restructuring plan in the High Court is putting £800 million to £900 million of interest expenses on to this company—

[Mr Speaker]

Order. This is sub judice, and the hon. Member should not go into the actual detail of the application before the Court at the moment. Can the Minister say anything? If not, we will have to move on.

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

Charlie Maynard Excerpts

Committee stage
Thursday 16th January 2025 Public Bill Committees

Brought up, and read the First time.

[Charlie Maynard (Witney) (LD)]

I beg to move, That the clause be read a Second time.

Good morning, everyone. I will highlight two key points about new clause 28, which concerns what happens when companies that have gone into special administration come out of it. Subsection (1) refers to considering

“the merits of changing the law to provide that a water company exiting a special administration regime becomes a company mutually owned by its customers.”

Subsection (2) states that that would involving considering

“the general merits of mutual ownership of water companies in such circumstances, and…what model of mutual ownership would be most suitable.”

We are not saying that companies have to be this or that; we are just advocating considering this possibility. Private companies have made an absolute mess of our water sector, have added no value over the past 36 years and have ramped up nearly £70 billion of debt. When the companies come out of special administration, we have an opportunity to do something different and not to repeat the mistakes of the past. I want the Committee to take that on board. We are not asking for a commitment; we are just asking for consideration. Hon. Members all know how badly the private companies have treated us, our rivers and our communities.

These companies are monopolies, so they have absolute power. Unfortunately, our regulators have completely failed in their task. If they have failed in the task, and if we do not have absolute confidence in the regulators—I do not think that anybody who will be voting today does—we must not give water back to the private sector.

Globally, this is standard. It is what the rest of the world does with its water sector. Even in the US, the vast majority of the water sector is mutually or municipally held. Chile may be the one shining example of private capitalism that we can point to in this regard, but there are almost no other countries in the world that do as we do. We are asking the Committee to do what is standard, rather than what is unusual.

The Under-Secretary of State for Business and Trade, the hon. Member for Harrow West (Gareth Thomas), has written about the benefits of the mutual ownership model, which he states forces water companies

“to operate in the interests of consumers; where environmental considerations such as disposal of sewage would take precedence over profit.”

That is our request. I rest my case.

[Adrian Ramsay (Waveney Valley) (Green)]

For several decades, the water companies have been able to profit from failure. There is a strong groundswell of opinion among the public, across political persuasions, that real action must be taken and that if there has been real failure, water companies must not just be allowed to carry on operating in the private sector. I welcome the hon. Member’s amendment; mutual ownership is clearly one alternative model. Does he agree that full public ownership is another option that should be investigated in these circumstances?

[Charlie Maynard]

What I really like about our proposal is that the companies are coming out of special administration, so it does not cost anybody anything: the equity of the shareholders has been written off. We often hear that it would not be a good idea, because it would cost too much to buy the companies out. Under our proposal, we would not need to buy them out, because we are advocating this only where companies are going into special administration. We are advocating a mutual model and—I say respectfully to the hon. Member—only that. That is what is on the table today, and that is what we are after.

[Jayne Kirkham (Truro and Falmouth) (Lab/Co-op)]

Does the hon. Member agree that it is lucky that within six months we will have the Cunliffe review, which will look in great depth at ownership, regulation and everything to do with the water industry? Maybe this is something that we could take further at that stage.

[Charlie Maynard]

That may be a chink of light, because all I have heard from the Government so far is “Only private companies welcome here.” My understanding is that the Cunliffe review’s remit purposely excludes ownership. If that is now on the table, it is great news, because it is one of the fundamental problems in the water sector. If the commission’s remit now includes ownership structures, I am delighted. I would love the Minister to clarify the point.

[The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Emma Hardy)]

It is a pleasure to serve under your chairwomanship once again, Dr Huq. As promised, I have provided a fact sheet on the use of special administration. All Committee members should have received it by email, but hard copies are available on the table for their convenience.

Welcome to the last day of Committee.

[Charlie Maynard]

On that point, may I intervene?

[Emma Hardy]

On the welcoming point? Of course.

[Charlie Maynard]

We all welcome one another, but I meant the fact sheet. I really appreciate your going to the trouble of putting it together; I thank your team as well. I have read it diligently and done my best, but I have a quiz question for you. The first bullet point refers to giving

“the power to recover HMG funding should there not be sufficient funds to pay HMG back at the end of a SAR.”

Then, under the heading “Context”, the penultimate bullet point states:

“If this shortfall occurred, and Ministers decided to use this new power, the Secretary of State and Welsh Ministers must launch a consultation prior to this power being used. This will ensure that those affected (e.g. water billpayers) are able to provide their views. It will also ensure that the shortfall recovery mechanism is implemented in a way that means costs are recovered fairly.”

To me, that completely confirms paragraph 69 of the explanatory notes published by the Department for Environment, Food and Rural Affairs, which says that the Government will make the bill payers, as opposed to the creditors, pay for the costs. Please confirm, if you could.

[The Chair]

Order. The Minister is not “you”: we do not use the word “you”.

--- Later in debate ---

[Charlie Maynard]

I am happy to hear that mutual ownership is being considered. I am very grateful for that.

I will take my chances and try to clear up one point. I completely agree with what the Minister read out from the last page of the fact sheet:

“Would the shortfall recovery mechanism be used to compensate financial creditors or shareholders following a SAR?

No.”

Absolutely, but my point is not remotely about that. I am not asking about compensating creditors.

Let me take the Committee back to the first paragraph on page 1. Where there is a recovery to be made, who pays for it? We are not talking about compensating creditors; we are talking about taking money off them. Rather than the money being taken from the customers, which is exactly what the bullet point that I read out three minutes ago states, we believe that it should be taken from the creditors.

It is not about compensation. I am surprised that there is confusion on the point, because that is not where I am coming from. It is about the shortfall and who pays for it. It is clearly stated twice—both in DEFRA’s explanatory notes and in the bullet point, which I can read out again as desired—that the bill payers will pay for it.

Question put, That the clause be read a Second time.

--- Later in debate ---

Brought up, and read the First time.

[Charlie Maynard]

I beg to move, That the clause be read a Second time.

New clause 32 is about procurement. I will read out the key point:

“The Authority must issue rules requiring relevant undertakers to use competitive procurement processes in respect of procurement relating to water infrastructure.”

What are we getting at here? There is an unholy trinity that is causing trouble inside our water sector: too much debt, regulatory capital value—a concept that is misfiring big time—and the ownership model. I hope that the Government will take on that unholy trinity and find a stake.

The new clause addresses RCV, because it is not working in the water sector. I touched on that in our last sittings, so I will not drag the Committee through it again. Regulatory capital value encourages as big an asset base as possible, which gives water companies an incentive to source product as expensively as possible—to pour really expensive concrete. It has been going on over the last few decades, so I am not pinning the blame on this Government, but I am asking for their help to stop it.

It is not in the customers’ interests for us to continue to have faulty procurement processes that encourage water companies to buy things expensively. With new clause 32 the Liberal Democrats are trying to highlight that problem and address it. I suspect that the provision will not be passed, but I am going to be talking about it. RCV is the issue, and I am interested to see if the Government will recognise it as such and look to address it.

[Emma Hardy]

I thank the hon. Member for Westmorland and Lonsdale for the intention behind new clause 32. On a personal level, I welcome the scrutiny and the level of detail that we have gone into. As the Bill started in the other place, there was a lot of cross-party work and the Government have taken onboard some of the recommendations. I gently push back on the idea that this is not a necessary or valid way to examine legislation.

The Government agree that competitive procurement can be a successful way to provide better value for money for consumers, and greater innovation within major infrastructure projects. In the 2019 price review, Ofwat developed the direct procurement for customers approach, or DPC, building on the success of the Thames tideway tunnel. The DPC allows the water company to competitively tender for services in relation to the delivery of major infrastructure projects. At price review 2024, Ofwat noted that, by default, all projects with a total life cost of over £200 million should be delivered through a DPC. Following final determinations in December 2024, Ofwat announced that 26 major water company projects would be delivered by competitive tendering processes, including a DPC, with a total whole-life cost of almost £50 billion.

[Charlie Maynard]

Two-hundred million is a really big number. In my patch in Witney, we have sewage treatment works as far as the eye can see that are undercapacity and are leaking sewage all over the place—at Bampton, Cassington, Carterton, Witney, Milton; you name it. It is awful, and I am sure that is the case in other constituencies, too. Two-hundred million pounds is miles higher than any of their spend, so—correct me if I am wrong—all those sewage treatment works are going to carry on without the new procurement processes because they are below the £200 million threshold.

[Emma Hardy]

The point is that competitive tendering processes were introduced back in 2019, including looking at where money is being used and how that money can be used most effectively. As I have just mentioned, we have £50 billion-worth of competitive processes in the next price review determination. Water companies are already actively using competitive procurement processes. This is something that Ofwat already encourages through the price review process. I therefore hope that the hon. Member is content that this amendment is unnecessary.

--- Later in debate ---

[Charlie Maynard]

We will not put this to a vote, but I will continue to highlight the point that £200 million is too high a benchmark and we should drop it, because that would serve us all, and our customers, better. I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 33

Responsibility in relation to planning issues

“(1) The Water Industry Act 1991 is amended as follows.

(2) In section 37 (General duty to maintain water supply system etc), after subsection (1) insert—

“(1A) When participating in a planning consultation, or when otherwise providing advice in relation to a planning matter, a water undertaker must provide—

(a) full and accurate information, and

(b) an honest assessment,

in relation to its current and future ability to fulfil its duties under subsection (1).

(1B) An undertaker which fails to provide information required under subsection (1A) will be subject to such penalties as the Authority may impose.

(1C) Where, in providing information required under subsection (1A), an undertaker expects not to be able to fulfil its duties under subsection (1), the undertaker must establish a plan to meet its requirements by a relevant time.

(3) In section 94, after subsection (2) insert—

“(2A) When participating in a planning consultation, or when otherwise providing advice in relation to a planning matter, a water undertaker must provide—

(a) full and accurate information, and

(b) an honest assessment,

in relation to its current and future ability to fulfil its duties under subsections (1) and (2).

(2B) An undertaker which fails to provide information required under subsection (2A) will be subject to such penalties as the Authority may impose.

(2C) Where, in providing information required under subsection (2A), an undertaker expects not to be able to fulfil its duties under subsections (1) and (2), the undertaker must establish a plan to meet its requirements by a relevant time.

(2D) An undertaker which fails to carry out a plan established under subsection (2A) will be subject to such penalties as the Authority may impose.””—(Charlie Maynard.)

Brought up, and read the First time.

[Charlie Maynard]

I beg to move, That the clause be read a Second time.

There are only three new clauses to go; I will highlight the key parts of new clause 33. Subsection (2)(1A) states:

“When participating in a planning consultation, or when otherwise providing advice in relation to a planning matter, a water undertaker must provide full and accurate information, and an honest assessment, in relation to its current and future ability to fulfil its duties under subsection (1)”

Subsection (3)(2C) states:

“Where, in providing information required under subsection (2A), an undertaker expects not to be able to fulfil its duties under subsections (1) and (2), the undertaker must establish a plan to meet its requirements by a relevant time.”

What does that mean? It means that if an undertaker does not have sewage treatment work capacity, they must commit to draw up a plan to install it by a relevant time. The “relevant time” means that if 200 or 2,000 houses are being added and the sewage treatment works do not have sufficient capacity, then the undertaker will be saying, “By the time those houses are occupied, we will have increased capacity by the amount required.”

This is all very common-sense, but many hon. Members will have been district councillors in their time—I currently am one—and I am sure they will have seen it happen time and time again in planning committees where, guess what, the response from the water utility is: “Fine, no problem. Hook ’em up.”

[Jayne Kirkham]

Is it not the case that the water companies used to have more power to object? Did they have a veto which the previous Government removed? Do they now have to cope with whatever the planning authority decides?

[Charlie Maynard]

I thank the hon. Member for that intervention. I do not know when that changed. [Interruption] In 2015, was it? There we are: maybe it was changed in 2015. Perhaps all of us, or most of us, recognise that is not a good situation. Time and again—I have seen this in Witney, Ducklington, Bampton, Aston and Carterton—this is just waved through. When I quiz people from Thames Water about why they have waved it through, they say, “We have a duty to connect.” They do have a legal duty to connect, which they take seriously, but they take their duty to add capacity to match that increase much less seriously.

[Jerome Mayhew]

This is a request for information on my part. In my conversations with Anglian Water, one of its key asks relates to the imbalance in which the company has a legal duty to connect any planning application that is passed, yet it is not a statutory consultee. It is therefore not required—not able, in fact—to take part in the planning process. Until the companies are made statutory consultees, all this is irrelevant, so should not the new clause focus on their becoming statutory consultees?

While I am on my feet, I have a query about the drafting. The hon. Gentleman defined a “relevant time”, but I do not see that definition in the new clause. Is it contained somewhere in the draft legislation? If it is not, what might the effective definition be?

[Charlie Maynard]

The point about “relevant time” is fair and deserves to be clarified. I completely agree on the issue of statutory consultees and have no issue with that either—that would make much more sense, because there is a real failure in that regard.

I will go a step further—I have lived experience in this regard—and give a special shout-out to Thames Water employee Richard Aylard, who for two years dutifully showed up every six weeks with West Oxfordshire district council to hash through these issues. I learned a lot from him and am grateful to him, as well as to Jake Morley, Lidia Arciszewska, Phil Martin, Laurence King, Alaric Smith and Alistair Wray. They sat through all that, and we all learned together. It is important that everybody knows what came out of those meetings. When sewage treatment works’ capacity is calculated—they are very much under-capacity in my patch and, I am sure, in those of other hon. Members—there are four criteria. The first is the population or population equivalent, which is normally optimistically understated. The second is per capita consumption. Thames Water has a high per capita consumption when it suits the company and a low per capita consumption when it suits the company, so again that is understated.

The third is the Environment Agency multiplier, which is typically 3.0, and is discounted far too often. When there is a known record of spills, Thames Water is still allowed to discount the EA multiplier, often from 3.0 down to 2.4; that is a 20% cut, which means that the capacity can be 20% less. That is a real problem, and it is being done repeatedly on sewage treatment works that have dumped sewage left, right and centre for years.

The fourth criterion is infiltration. Some 47% of the capacity of west Oxfordshire’s big nine sewage treatment works comes from infiltration. That means that our pipes are leaking. There is not enough science on this matter. If we were to put in flow meters, we would have the information, but it seems that we Lib Dems are the only team in the room, alongside the hon. Member for Waveney Valley, that advocates flow meters. If we want to solve these problems, we have to get serious about the information.

[Adrian Ramsay]

I thank the hon. Member for the new clause. We all recognise the situation he describes. In East Anglia, planned housing growth over the coming decades outpaces available water resources. In my constituency, we already have a water resource zone in Hartismere where business operations and planned business growth are being restricted by the water available. He is addressing some of the important points about water companies’ being able to take responsibility, but do we not also need a joined-up approach? The planning system must be used to address the issues by means of stricter water efficiency requirements, sustainable drainage systems and housing plans that are realistic given the available natural resources. Is there not a problem with just putting the ball in the water companies’ court, rather than taking a more joined-up approach?

[Charlie Maynard]

I completely agree with the hon. Member. Using West Oxfordshire as an example again, we have installed Grampian conditions, which I encourage other Members to look into, where we have said, “You may not occupy this house.” We could not stop the houses being built by arguing that there was insufficient capacity, but we could put a Grampian condition in force that says, “Those houses may not be occupied. Any buyer knows this, so they will not buy them.” It is flagged to any buyer so that they do not buy a house they cannot occupy, which will continue until the capacity has been added. That puts some heat underneath the water companies to get on and increase their sewage treatment works capacity. I really encourage the Government to look into those. We have vast amounts of housing that will be built, and under the current law, they will be steamrolled through and the capacities will not keep up. That is a real problem for everybody, and it puts more pressure on our rivers.

[Dr Neil Hudson (Epping Forest) (Con)]

I am grateful to the hon. Member for giving way, and I have a lot of respect for the new clauses that he has tabled to put pressure on water companies to provide more information at critical stages. The Opposition have tabled amendments requiring water companies to publish data on their websites to enable citizen science, so I respect what he is saying. I guess some of the issue is in the detail of the wording of the new clause. I am sure we are all in agreement about water companies providing information, but proposed new section 37(1A) says that we want them to be “full and accurate” and “honest”. I guess the devil is in the detail. How will that be judged? If this new clause were to come into play, how will people judge that? Is an “honest assessment” whether something is not false, or whether something is complete or incomplete? There is an element of challenge that could be put in. I understand the sentiment, but the devil is in the detail of the wording as to how this could actually work.

[Charlie Maynard]

I thank the hon. Member for his kind words, and I look forward to his support in some of the votes at some point. In the meantime, if he has recommendations on the wording that he would like to put forward, I ask that he please do so. These new clauses are already in place, so maybe that is impossible, but let us by all means try to improve them.

[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.

[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.

[Charlie Maynard]

I thank the hon. Member for Monmouthshire for her excellent point. It is very interesting that a mutually owned water company is taking that very sensible decision and approach. It highlights that that is a benefit. They are not trying to make money hand over fist. They are trying to do the right thing.

[Emma Hardy]

With your indulgence, Dr Huq, I will clarify something that I should have mentioned in the previous debate. Ofwat reserves the right to explore the use of DPC for major projects below the £200 million threshold where it offers value for money for customers. I just wanted to put that on record.

I thank the hon. Member for Westmorland and Lonsdale for tabling new clause 33, which would increase the responsibilities of water companies where they participate in the planning process. As we all do, I genuinely recognise the intent behind the clause and where the hon. Member is trying to get to. We absolutely recognise concerns surrounding water and sewage companies’ ability to keep pace with the needs arising from new property developments.

[Emma Hardy]

Conversations are ongoing, but I would not want to pre-empt their results. I recognise from previous conversations that this is a concern for the hon. Gentleman.

The Government consider that the Bill is not an appropriate vehicle to resolve this issue. It should be addressed through measures such as the water resources management plans or draining and waste water management planning. As was mentioned earlier, it is our job as legislators to ensure that we draft the right amendments to the right Bills in order to achieve the aims we are seeking.

Water companies already account for local plan growth forecasts in their water resource management plans. These plans for water provision over a five-year period with a forward look over 25 years provide for a development outline. We recognise the need for stronger and earlier join-up between local planning authorities, regulators and water companies. As I mentioned, work is under way to consider such questions and to ensure timely and mutual understanding of water resource requirements at a local scale to support sustainable development. That work includes the independent commission on the water sector regulatory system, which will provide recommendations for the roles and responsibilities of the water industry regulators that govern the water industry model and strategic planning.

As such, it would be premature to legislate in this area or to impose any additional responsibilities for regulators until the commission has concluded its review, but I reassure hon. Members that the Government recognise the need for water companies and local planning authorities to co-operate effectively in considering the water infrastructure requirements that will underpin development plans, housing growth and sustainable development. The proposed new clause is unnecessary, and I ask the hon. Member for Witney to withdraw it.

[Charlie Maynard]

We wish to press the new clause to a Division.

Question put, That the clause be read a Second time.

--- Later in debate ---

[Tim Farron]

I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 35

Companies to be placed in special measures for missing pollution targets

“In section 2 of the Water Industry Act 1991, after subsection (2D) insert—

‘(2DZA) For the purposes of ensuring that the functions of water and sewerage undertakers are properly carried out, the Authority must establish—

(a) annual, and

(b) rolling five-year average

pollution targets which must be met by water and sewerage undertakers, and the penalties to be imposed for failure to meet such targets.

(2DZB) The performance of a water or sewerage undertaker against such targets must be measured through independent analysis of monitoring data.

(2DZC) A timetable produced under subsection (2DZA)(b) must require the following reductions in the duration of sewage spill events, using the annual total hours’ duration of all sewage spill events recorded by Event Duration Monitors, based on an average from the last five years, as a baseline—

(a) a 25% reduction within five years;

(b) a 60% reduction within ten years;

(c) an 85% reduction within fifteen years; and

(d) a 99% reduction within twenty years.

(2DZD) A water or sewerage undertaker which fails to meet pollution targets set out by the Authority will be subject to such special measures as the Authority deems appropriate, which may include—

(a) being required to work on improvement projects with or take instruction from the Authority, the relevant Government department, or such other bodies or authorities as the Authority deems appropriate; and

(b) financial penalties.’”—(Charlie Maynard.)

Brought up, and read the First time.

[Charlie Maynard]

This is a big one: companies to be placed in special measures for missing pollution targets. I will read out the key bits:

“(2DZA) For the purposes of ensuring that the functions of water and sewerage undertakers are properly carried out, the Authority must establish…annual, and…rolling five-year average pollution targets which must be met by water and sewerage undertakers, and the penalties to be imposed for failure to meet such targets.”

On the five-year average, obviously we have wet years and dry years. We cannot just have flat numbers. We have to take an average. The new clause also states:

“A timetable produced under subsection (2DZA)(b) must require the following reductions in the duration of sewage spill events, using the annual total hours’ duration of all sewage spill events recorded by Event Duration Monitors, based on an average from the last five years, as a baseline…a 25% reduction within five years;…a 60% reduction within ten years;…an 85% reduction within fifteen years…and…a 99% reduction within twenty years.”

What are we trying to get at? Clause 2 is about pollution incident reduction plans. That is about specific events, so it is at a micro level. We have a national problem and need to think about things at a national level. We have a lot of data already. I think it was Peter Drucker who said, “If you can’t measure it, you can’t improve it.” We have been advocating for measuring it; we have had that debate. The good news is that we already have one metric of measurement—event duration monitors—that tells us how many hours of sewage are spilled per year. EDMs are a long way from perfect in two respects. First, we do not know the volumes going out or how much of that is actually sewage, as we have discussed at length. Secondly, a lot of EDMs are sub-par. I will give a shout-out to Professor Peter Hammond, who has highlighted some essential messages about that. However, that is still the best dataset we have, and we should all take the view that we should not let the perfect be the enemy of the good.

As soon as we put in flow monitors and quality monitors—I know the Government do not support that—we will advocate using those as a metric, but we do not have those now. However, we do have EDM data, so I am advocating that we use that metric. We already know how many hours are spilled by operator. We can take the five-year average and start setting out targets.

Businesses like knowing where they stand. I am a naive politician who is only six months into the job, so there is an awful lot I do not know. I probably committed a key error here by putting in numbers, so some smart politician could come along and say, “That is an incredibly generous number. We’ll go lower than that.” Fine—I do not really care if someone wants to play that game. I want our rivers fixed, and we get our rivers fixed by setting targets, telling the water companies that we want them to meet those targets and giving them sticks, and possibly carrots, to meet them.

We are missing an opportunity—respectfully, I feel that we have missed a lot of opportunities. We did not have to have this Bill now, but we do have it. We ought to be going for the wins now, but every single amendment has been rejected regardless of which party tabled it. That is a loss for our rivers as much as for hon. Members present. However, this new clause provides an opportunity to set some targets. Whether it is today—although this new clause will almost certainly fail because we will not push it to a vote—or in the future, I encourage the Government to take the metric they have, which is hours of sewage spilled, set benchmarks against which to measure water companies and set out bad news or good news depending on whether they miss or hit them. If we hit those targets, we are seriously getting closer to fixing our rivers. Without them, we are not.

I echo my hon. Friend the Member for Westmorland and Lonsdale in saying that I have really enjoyed most of the three days of this Committee. I appreciate the courtesy and generosity in the answers. I thank the Chair, the team of Clerks, who have been so helpful, and the DEFRA team.

[Emma Hardy]

I would like to thank, as I have before, all the environmental groups and activists up and down the country who do so much to champion cleaner air, rivers, lakes and seas for us all. I look forward to seeing hon. Members on Third Reading and Report.

As I did before, I will gently push back and say that the Government did work collectively and cross-party in the other House and brought in compromise amendments before the Bill came here. It would be slightly disingenuous to imply that the Government have not accepted amendments or worked with other parties on the Bill.

I thank the hon. Member for Westmorland and Lonsdale for tabling new clause 35. We must ensure that companies accelerate action to reduce pollution to the environment, halting the unacceptable harm they have caused in recent decades. That is why we have introduced a new requirement for water companies to produce annual pollution incident reduction plans and the accompanying implementation reports through the Bill. Again, I gently note that the implementation reports and the strengthening of that provision was done cross-party in the other place.

The plans will need to set out the actions that water companies intend to take to reduce pollution incidents, and an assessment of the impact that those actions will have. Companies must then report on the progress they have made with measures they committed to in the previous year, and must clearly explain the reasons for any failures to implement their plans and set out the steps they are taking to avoid similar failures in the future.

In addition to the new requirements that increase accountability for pollution incidents, the Government are committed to acting as fast as possible to reduce sewage pollution in our waterways and upholding stringent performance criteria for water companies, as evidenced by the significant forthcoming programme of investment in price review ’24. A delivery programme of this scale, improving thousands of storm overflows with billions of pounds of investment, requires clear and robust regulation. The new clause as drafted would unfortunately undermine that.

The Government’s storm overflows discharge reduction plan sets stretching timebound targets to eliminate ecological harm from all storm overflows by 2050, and for water companies to significantly reduce harmful pathogens from storm overflows discharging into bathing waters by 2035. This is supported by an ambitious backstop target. By 2050, no storm overflow will be permitted to spill more than 10 times a year on average. Those stretching targets are informed by detailed analysis and extensive engagement. They will drive £60 billion of investment between 2025 and 2050—the largest infrastructure programme in water company history. Almost £12 billion of that investment will begin this year, improving over 2,800 storm overflows by 2029-30.

Those targets bolster underpinning legislative requirements to limit pollution from storm overflows. The Environment Agency monitors and enforces against breaches of environmental requirements, utilising monitoring data to support its investigations. Where breaches are identified, it has significant powers to ensure enforcement orders and financial penalties, and where appropriate, to pursue criminal prosecution. The measures in the Bill will further strengthen its powers, including by introducing automatic penalties.

[Charlie Maynard]

These timelines are too slow. Setting the date at 2035 for monitor installation will mean that this is done at a much slower rate than the rate over the last seven years. That is disappointing. Targets set for 2045 and 2050 are too far away. We do not need to, and should not, move that slowly. We must do better.

[Emma Hardy]

I think when we had this debate, it led to the first of the fact sheets that we produced for the Committee. The hon. Member is talking about the speed of installation, and we highlighted that we will double the rate of the previous Government. We also highlighted that some of the improvements involve engineering and work. That is why we think that with £12 billion of investment, we are improving things, and I mention again the 2,800 storm overflows by 2029-30. So in the next few years, there will be billions of pounds-worth of improvements.

We all want opportunities to go quicker—everybody would want everything to be done quickly. As a Government, there is always a balance between making promises we cannot keep—which is never the best way to go—and being stretching and ambitious. I feel that we are being stretching and ambitious while also ensuring that we do not make promises we cannot keep. Obviously, however, if there was a way to go faster, everybody would accept that.

The Environment Agency is currently consulting on proposals to add new spill frequency thresholds to storm overflow permits. That will maintain the performance of storm overflows that have undergone improvements, and make it easier for the Environment Agency to act quickly if storm overflow performance deteriorates. Ofwat sets specific performance targets for water companies in the five-yearly price review. Ofwat is expanding those performance commitments for price review ’24, to include an ambitious storm overflow spill reduction target, which, if achieved, would see average spill per storm overflow reducing by 45% by 2029, compared with the 2021 levels across the industry. Where the commitments are not met, companies must reimburse customers, holding water companies to account to deliver outcomes.

[Charlie Maynard]

I am sorry, but with spill per overflow, I again think we are drinking the water industry’s Kool-Aid. We are doing its metrics, and that is not doing anybody any favours. We are talking about spill per overflow; what we should be talking about is how many hours. We have that information. Why are we not saying how many hours? Let us think about it. We could have a spill for one hour or a spill for a month. That is just one, in that metric. It is missing a huge amount of what is going on. Please can we move away from these metrics towards spill hours, at a minimum?

[Emma Hardy]

Again, I recognise the intent behind the hon. Gentleman’s comments. Whichever way we want to address this, talk about it or set targets, ultimately what we want from a Government is less sewage going into our rivers, lakes and seas. If we can find a way to all agree on the best way to move that forward, that is something we can unite behind.

As I mentioned, the Government cannot accept the new clause, but I recognise the intent behind it. It would cut across the existing targets that I have set out, creating confusion and uncertainty about which water targets the companies should meet. That would risk undermining the extensive forward investment programme that is already under way and is essential to delivering the changes that we all want. For those reasons, and for the last time, I ask the hon. Member to withdraw his new clause.

[Charlie Maynard]

We will not press this new clause to a vote. I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

Question proposed, That the Chair do report the Bill, as amended, to the House.

[Dr Hudson]

It is a great pleasure to again serve under your chairship today, Dr Huq. May I first, on behalf of the Opposition and, I hope, colleagues from across the Committee, give a vote of thanks to everyone involved in this process? I have a list here, and please shout out if I miss anyone out.

First, I thank the Chairs—Dr Huq and Mr Vickers—for guiding us through the process. I thank all the Bill Committee staff—the Clerks and officials—for their assiduous, thorough work, which keeps us on message as Members of Parliament scrutinising this legislation. We thank them for that. Dr Huq, thank you—I will use the word “you” for you. I thank the DEFRA officials for all their hard work on this and for engaging with the Opposition as well. I very much appreciate the Minister allowing the officials to do that.

I thank the Doorkeepers and Hansard. I do not think I have missed anyone in the room except the public. This gives me the chance to thank the members of the public who have come in and watched our proceedings, as well as people who have watched online from afar. There are also, as the Minister said, the stakeholders: the environmental groups, the volunteers and the experts who have fed into this Bill and the water debate that we are having and who are helping legislators across the House to improve and refine legislation. We thank the public very much as well.

We have had a very interesting few days. It has shown us that there is a lot of cross-party consensus on what we are trying to do to improve our water quality. There is some disagreement about how best we do that, but this Committee has shown the House that, actually, there is a lot of agreement about the scale of the problem and the fact that we need to address it.

I respectfully say that I am disappointed with the comments from the third-party spokesperson, the hon. Member for Westmorland and Lonsdale, about the Bill Committee stage being a charade. I do not think that line-by-line scrutiny of Bills is a charade. Yes, there is a process as to how Committees are populated, but that is democracy. I would have thought that that particular party, given its title, would respect election results. That is how democracy works. We have seen that they have had some disagreement among themselves about some of their votes as well, but I will leave that point there.

We have had some interesting discussions, and it would be remiss of me not to talk about teeth. We have had dental analogies aplenty: we are wanting to give more teeth to the various regulators. Finally, I think I did detect—we will have to check Hansard—the Minister using the word “Ofwet”. When this matter goes to the commission, “Ofwet” might be an interesting term for a new body that might be set up, but I will leave that with the Minister.

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

Charlie Maynard Excerpts

Committee stage
Tuesday 14th January 2025 Public Bill Committees

[Charlie Maynard (Witney) (LD)]

With respect, I feel that we are living in parallel universes. I will take Thames Water as an example, whose debt is 14 times the level of its cash flows. The Minister is saying that financial resilience could be threatened, but I spent 25 years in finance, and that ratio is very threatening. Is Ofwat closely monitoring that? Moody’s and Standard & Poor’s have put Thames Water into junk bond ratings—seven ratings under the investment grade—and we are pedalling on regardless. Could the Minister give a view on Thames Water’s levels of debt, and whether they are threatening to the company?

[Emma Hardy]

I hope that the hon. Gentleman has not misunderstood. There is certainly no desire from me to keep pedalling. Instead, what we want to do is look at the entire financial situation of companies—he knows that we have had that conversation outside this room. We need to look at some of the longer-term reform options for how companies are structured financially, which is why we have the deputy governor of the Bank of England leading our review, and using his knowledge and expertise to look at how companies are structured.

I do not think that the new clause is the appropriate place to pre-empt the outcome of the commission before it has had an opportunity to report, or even to listen to the hon. Member for Epping Forest through the call for evidence that is yet to be announced. I want to stress that I support sentiment of the hon. Member for Witney, but I express caution around the risks of putting through changes of this magnitude without giving full and proper consideration. We believe that the commission is the appropriate way to do that.

--- Later in debate ---

[Tim Farron]

I am not entirely reassured but I am partially at least and we have no desire to push this new clause a vote. I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 11

Duty to publish maps of sewage catchment networks

After section 205 of the Water Industry Act 1991 insert—

“205ZA Duty to publish maps of sewage catchment networks

(1) Each relevant undertaker must publish a map of its sewage catchment network.

(2) A map published under this section must illustrate any relevant pumping stations, pipes, and other works constituting part of the undertaker’s sewerage network.

(3) Maps published under this section must be published within 12 months of the passing of this Act, and must be updated whenever changes are made to the sewage catchment network or the components listed in subsection (2).

(4) Maps published under this section must be made publicly accessible on the undertaker’s website.”—(Charlie Maynard.)

Brought up, and read the First time.

[Charlie Maynard]

I beg to move, That the clause be read a Second time.

This is a very nuts and bolts thing. I believe we are here to try to make a better water sector. I will rattle through the clause, which would mean that each relevant undertaker

“must publish a map of its sewage catchment networks”,

and that maps published under the provision

“must illustrate…pumping stations, pipes and other works constituting part of the undertaker’s sewerage network…must be published within 12 months of the passing of this Act…must be made publicly accessible on the undertaker’s website.”

I am a district councillor as well as an MP and in my ward of Standlake Aston and Stanton Harcourt, parish councillors, members of the public and campaigners have grappled for information and failed to find it. Many people do not know how to do a freedom of information request. This means that people do not know where the sewage is going from and to, and that leads to confusion and means that the problems are further away from us.

Putting these maps in the public domain, making them easily accessible and making sure that not only the pumping stations and the treatment works but the pipes connecting them all—which are not automatically clear —are always in the public domain and always easily accessible means that we are getting to a solution quicker. That is all this new clause is about. I am probably going to get a response saying, “We have to wait for the water commission”, in which case I would express some disappointment, because these things do not cost any money and they mean we move quicker to solve problems. I would really like a culture of, “If that’s a good idea, let’s do it”.

[Emma Hardy]

I understand the intent of new clause 11. The location and health of a water company’s assets is key to ensuring their maintenance and improvement. Under section 199 of the Water Industry Act, companies are required to keep records of the locations of many of their sewers, natural drains or disposal mains. Members of the public are able to request this information from water and sewerage companies in map form. Furthermore, the Environment Agency hosts a public register of information relating to all sites and assets permitted under the environmental permitting regulations. As of 1 January—this month—all water companies are required to publish discharge data from their storm overflows. Water UK’s centralised map shows that near real-time data for water companies across England in a publicly accessible format.

--- Later in debate ---

While we agree that transparency in the sector is key to real change, the new clause would not build greatly on the existing requirements in section 199 of the Water Industry Act. As such, the Government cannot accept it.

[Charlie Maynard]

Frankly, it is pretty worrying that we do not have maps of sewer networks around the country. That is a pretty fundamental thing that we would want a water utility company to have. I acknowledge that they do not, though, and nowhere in the new clause am I proposing that the network is mapped. I am simply saying that we should take the existing maps and get them into the public domain by default. Currently, it is necessary to make a freedom of information request to access them.

I suggest that the Minister might be being a little disingenuous in saying, “We’re just being asked to monitor, but we want to act.” The Government can do both. It is not the case that if we are monitoring, we are not acting; there is plenty to be acting on and plenty to be monitoring. Also, when I hear, “If we put in flow monitors then we would need to cover the quality,” I think, “Yes—all of it. Let’s do it now.” It is not an either/or, and I do not like the occasional suggestion that there may be an either/or.

Having said all that, I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 12

Environmental duties with respect to chalk streams

“(1) The Water Industry Act 1991 is amended as follows.

(2) After section 4, insert—

‘4A Environmental duties with respect to chalk streams

(1) Where a relevant undertaker operates, or has any effect on chalk streams, that undertaker must—

(a) secure and maintain high ecological status of such chalk streams, and

(b) clearly mark chalk streams which are of high ecological status.

(2) In this section “high ecological status” relates to the classification of water bodies in The Environment (Water Framework Directive) (England and Wales) Regulations 2017.””—(Tim Farron.)

Brought up, and read the First time.

[Tim Farron]

I beg to move, That the clause be read a Second time.

--- Later in debate ---

Brought up, and read the First time.

[Charlie Maynard]

I beg to move, That the clause be read a Second time.

[The Chair]

With this it will be convenient to discuss new clause 23—Ofwat to publish guidance on debt levels after administration—

“In section 2 of the Water Industry Act 1991, after subsection (2D) insert—

‘(2DZA) For the purposes of ensuring that relevant undertakers are able to finance the proper carrying out of their functions under subsection (2A)(c), the Authority must establish guidelines to be followed by relevant undertakers who have been in special administration.

(2DZB) Guidelines produced under subsection (2DZA) must—

(a) set out a maximum level of debt which can be accrued by the undertaker;

(b) set out a process for agreeing capital expenditure necessary for service improvements, bill increases, and changes to operating costs while the undertaker is subject to the Special Administration Regime;

(c) state the penalties which will be imposed for breaches of such guidelines, which may include –

(i) financial penalties;

(ii) prohibitions on the payment of dividends or other bonuses; or

(iii) such other special measures as the Authority deems appropriate.’”

[Charlie Maynard]

I will speak first to new clause 19, which has three parts. Proposed new section (2DZA), which I will cover very quickly, essentially ensures the financial stability of water or sewerage undertakers. I think we discussed that at length in the debate on new clause 4, which I will not rehash, as I think we all know each other’s views.

Proposed new section (2DZB) has two subsections, (a) and (b). Subsection (a) is

“a prohibition on water or sewerage undertakers having offshore holding companies”.

Why would a UK-regulated water company need an offshore holding company? Maybe to dodge some tax? Maybe to make it as untransparent as possible? I would like a straight answer as to why we are not going to kill this possibility off today. Do we really need to push this out another six, maybe 12 or maybe 24 months—until maybe never—with the water commission? I do not know. I think each of us could just find our way to saying that offshore holding companies are not good for our rivers, our citizens or our country. I really hope we get there.

It is getting a bit late, but there is something I would really like Members to engage their brains on. It is a difficult and complicated subject, but it is the key to understanding what is going wrong with our water companies. It is called regulated capital value. What is in proposed new section (2DZB)(b)? It would introduce

“a requirement that the Regulated Capital Value for each undertaker is annually reconciled against the market values of the undertaker’s equity and debt.”

What on earth is regulated capital value? The key thing to remember is that it decides how much money the water companies make, so a higher regulated capital value is good for water companies.

The bizarre thing is that regulated capital value has not really been a proxy for enterprise value, which basically means the equity value of the company—what the shareholders’ value of the company is worth—plus the net debt. That was set up—this is really one of the original sins—back in the mists of time, around 1989 and beyond, when the companies were originally privatised. It has been carried forward every year: “Take last year’s, and add a bit for inflation and a bit for capex. Never, never, never reconcile it with reality.” That is what has gone on for decades.

Now we have this thing called regulated capital value, which is the critical thing the water utility companies are focused on: “This is how we make money, so we want this number as big as possible.” What we are advocating here is taking that apart, because of the reality on the ground. I will take Thames Water as my usual guinea pig. Many, many of Thames Water’s equity shareholders have declared that their holding in Thames Water has no value. That includes OMERS—the Ontario Municipal Employees Retirement System—and the UK’s Universities Superannuation Scheme, and I think the Abu Dhabi Investment Authority may have done it as well. They have said, “Our equity is toast. It’s written off.”

The debt is not that hard to calculate either, because people can just look at what Thames Water is trading at; these are bonds, and people can see what discounts they are trading at. People can add that up, and they have a number that is much, much smaller than the regulated capital value of Thames Water today. But if it is a water company or Ofwat, they say, “Let’s just put a big pair of mufflers on and ignore that fact,” because it is safer to be in fantasyland.

--- Later in debate ---

[Jerome Mayhew]

This is a genuinely interesting point. I know it is late, but I would be grateful if the hon. Member could expand in further detail. While he is referencing regulated capital value and the difference between what is on the sheet and what is reality, could he explain in a bit more detail, for the benefit of the Committee, what that means in reality? If there were to be a rebase of regulated capital value, what would be the practical impact of that?

[Charlie Maynard]

I question what value regulated capital value, given how completely out of whack it is with reality, is bringing to the table. I do not have all the answers, but I question whether this has any utility to the conversation. What is happening here is that a business is generating £1.2 billion of cash flows, and it has this enormous balance sheet and this enormous regulated capital value. Because of those essentially false premises—I believe that we do not actually have assets of that value—regulated capital value is essentially a figment. We are grappling with things that have no basis, and we would do well to reconcile and to look at the facts—at what these assets are actually worth—and then to build out from there.

[Jerome Mayhew]

One possible reason why regulated capital value is important is that the assessment of whether bills are reasonable or not relates—in part, at least—to what is considered to be a reasonable return on capital. Does the hon. Member agree that if one’s regulated capital value has depreciated to zero, there might be an adverse knock-on impact on what is considered a reasonable bill, to take account of the debt and the capital investment? Does he think that that might be something to do with it?

[Charlie Maynard]

The whole thing is reverse engineered—I am completely in agreement on that—and that is not necessary or useful in terms of where we are getting to, and that is causing a lot of the trouble. I would like to find a way out of that, and I would really recommend that the water commission digs into this to find a way out. I am on the Business and Trade Committee and I will be asking the Financial Reporting Council, which oversees the accounting body, to ask these accounting firms whether they actually think those numbers—those incredibly slow depreciation periods of 150 years—are valid and, if so, why.

[Jerome Mayhew]

I am grateful to the hon. Member for allowing me another intervention, this time on proposed new subsection (2DZB)(a), which refers to

“a prohibition on water or sewerage undertakers having offshore holding companies”.

He referenced some of the international investors who have holdings in Thames Water, and perhaps in the majority of the other water companies. Access to international markets is very important for raising investment into our water utilities. Does he accept that using offshore holding companies might be a mechanism that allows for easier transfer of funds, easier investment and easier access to international finance, and may therefore have a benign rationale? We always assume that offshore holding companies are somehow suspicious, or that their motivation is tax avoidance, and I believe that the hon. Member referenced that earlier. That might be the case—in which case, they should not be encouraged—but with his 25 years’ experience in finance, which he referenced, does he think that there is an argument for saying that offshore holding companies make it easier to access international investment?

[Charlie Maynard]

I have the name of one here: Thames Water Utilities Cayman Finance Holdings Ltd. Why Cayman? If I say “Cayman”, people say “tax haven”. That is why it is there. We should be doing our best to stop that. Last I looked, London was still a financial capital, and equity and debt could still be raised in this country, and I sincerely hope that remains the case. So I do not see a good reason to have holding companies offshore. Hon. Members might be happy to hear that that was all I wanted to say on new clause 19.

New clause 23 is also being considered in this tranche, and I will highlight proposed new subsection (2DZB)(b), which refers to

“a process for agreeing capital expenditure necessary for service improvements, bill increases, and changes to operating costs while the undertaker is subject to the Special Administration Regime”.

We have to spend a huge amount of money on our water utility companies, because they have not been spending enough over the last decade or two. When a special administrator is appointed in such instances, the goal is to ensure that the special administrator takes that future spend into account in considering how much debt needs to be cut. We do not want to come out of special administration with debt that is still high, which will prevent the investments from being made that will be required over the next. That is the goal of the new clause.

[Emma Hardy]

I thank the hon. Member for Westmorland and Lonsdale for the intent behind new clause 19. As highlighted, it seems in parts to contradict new clause 18, which was also tabled in his name.

It is important to highlight that Ofwat already has a core duty under section 2 of the Water Industry Act 1991 to ensure that water companies are able to finance the proper carrying out of their statutory obligations. Ofwat already monitors information it receives about companies and their financial positions on an ongoing basis. That includes carrying out a detailed review of the financial information published by companies in annual performance reports, statutory accounts, interim accounts, investor reports and other sources. Ofwat also directly engages with companies where it sees an increased level of risk. Additionally, Ofwat has recently updated water company licences to require companies to take account of service delivery for customers and the environment, as well as financial resilience when deciding whether to pay a dividend.

More broadly, the independent commission into the water industry will look at long-term, wider reform of the water sector, as I have mentioned. Company financial structures are one of a number of areas that could be explored under the commission, and we do not want to pre-empt the outcome of the commission through this new clause. The former deputy governor of the Bank of England, Sir Jon Cunliffe, chairs the commission. As mentioned, he has decades of financial, investor and regulatory experience. His appointment demonstrates the Government’s ambition to fix the foundations of the industry. As I have mentioned previously, there will be a call for evidence, and the hon. Member will be able to make his points to Sir Jon Cunliffe and the commission. Given the existing monitoring of the financial resilience of the sector and the forthcoming recommendations of the independent commission, we do not believe that the new clause is appropriate, and I ask the hon. Member to withdraw it.

Turning to new clause 23, which was also tabled by the hon. Member for Westmorland and Lonsdale, a special administration regime enables a company that provides vital public services—water, energy or rail—to be put into administration in certain circumstances to ensure that the public service will continue to be provided pending rescue, via a means such as debt restructuring or transfer, via a sale, to new owners. There is no need for a company exiting a SAR to be placed under an enhanced regime regarding its debt levels. Water companies are allowed to raise debt to fund the delivery of their services, and it is for companies to decide their financial structures. I will resist the urge to repeat my previous comments about the water commission looking at the financial structures of all the water companies, and I hope the hon. Member will take what I outlined previously as read.

In relation to capital expenditure during a SAR, it is not necessary to establish a statutory process for agreeing that expenditure, as that would be agreed under a court-appointed special administrator in the lead-up to a SAR. The Government can provide funding support to a special administrator. Any company under a SAR will still be subjected to the same regulatory regime and expected to meet its statutory obligations.

I hope the hon. Member understands why we cannot accept his new clauses, but I repeat the offer made: he will be able to talk to Sir Jon Cunliffe and present to him the evidence he has just presented to the Committee, so that he can consider it as part of the wider evidence gathering. I therefore ask the hon. Member not to press his new clauses.

[Charlie Maynard]

It is very kind of the Minister to have so much faith in, and be so charitable towards, Ofwat, given its record over the last decade or two, particularly with regard to its management of water companies’ financials. We will not press new clause 23, but would like to call a vote on new clause 19.

Question put, That the clause be read a Second time.

--- Later in debate ---

[Charlie Maynard]

I beg to move, That the clause be read a Second time.

[The Chair]

With this it will be convenient to discuss new clause 29—Ofwat consideration of pollution targets for price reviews—

“(1) The Water Industry Act 2011 is amended as follows.

(2) After section 17I insert—

‘17IA Duty to have regard to pollution targets in carrying out price reviews

When carrying out a periodic review for the purpose of setting a Price Control in respect of one or more relevant undertakers, the Authority must have regard to the performance of the relevant undertaker or undertakers against pollution targets across the previous five years.’”

[Charlie Maynard]

I will be brief. We just want to highlight the five-year price review and the shoehorning in of that time period. It might have worked for Lenin—maybe not—but we do not think it works well in the water sector, so we want to see whether we can release ourselves from it. We will come to new clause 35 later, but in certain situations we will all be better off if we look over a longer time period. We have some really big problems and we need to think about reducing them not just over the next five years, but over a 10 or 15-year period. We need to work towards some really big fixes over a longer period. If we are always locked into these five-year cycles, we are not serving ourselves well. That is the point of new clause 21.

New clause 29 states that

“the Authority must have regard to the performance of the relevant undertaker or undertakers against pollution targets across the previous five years.”

At the moment, how companies do is not very well linked to their reward. Most of the time, with water companies, everybody is thinking about sticks—I certainly am—but we ought to think a little about carrots as well. Let us say that ultimately we do good things such as setting pollution reduction targets. If companies beat those targets, we should work towards a solution whereby they do well out of that. They could have a carrot as a reward for doing well, as opposed to endlessly being given the stick. That is the point of new clause 29. We will not push either new clause to a vote.

[Emma Hardy]

I thank the hon. Members for Witney and for Westmorland and Lonsdale for the intention behind their new clauses. The water sector is facing multiple challenges and growing pressures. Resolving them will require transformational change.

The Government agree that it is crucial to conduct a fundamental review of the water industry regulatory system. We want to ensure that we have a system that supports strategic planning and investment, with fairness to customers and environmental improvement at its core. I reassure the hon. Member for Witney that such a review is already under way—I might have mentioned this once or twice before—through the independent commission, led by Sir Jon Cunliffe. That comprehensive review is addressing the three elements that the new clause raises: planning, financing and investment. It is taking a holistic approach to assessing the system, and it will make recommendations to ensure that the water sector is better equipped to ensure clean rivers, lakes and seas and a sustainable water supply for the future.

The commission will report to the Government by the second quarter of 2025, ahead of the timeframe recommended in the new clause. I trust that the hon. Member for Witney is reassured that the requirements of the new clause are already being addressed through the work of the independent commission.

On new clause 29, which was also tabled by the hon. Members for Westmorland and Lonsdale and for Witney, I reassure them that the Government are fully aware of the scale of damage that pollution is causing to our waterways. We are committed to working with the water industry regulators to address that.

As a regulator, Ofwat has a range of primary duties, including ensuring that companies properly carry out their functions and can finance the delivery of their statutory obligations, including environmental obligations. Ofwat sets the total spending envelope for companies through its price review process and it reviews company business plans to ensure compliance with statutory obligations. I am pleased to inform the Committee that Ofwat published its final determinations for the 2024 price review on 19 December, which included confirmation of £104 billion-worth of expenditure over the next five years. That is the highest level of investment in the water sector since privatisation and will fund reducing the number of spills from storm overflows by 45% through upgrading 2,800 storm overflows.

In addition, companies will improve river water quality by improving more than 1,700 waste water treatment works. Furthermore, Ofwat has increased the number of outcome delivery incentives against which companies must deliver, including targets on reducing serious pollution incidents, such as a reduction in storm overflows and operational greenhouse gas emissions. That means that serious pollution incidents will lead to clear and robust financial penalties for companies. I trust that the hon. Member for Witney is reassured that his new clause is not required, as pollution targets are already closely factored into the current price review model, and I ask him not to press it.

[Charlie Maynard]

I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 22

Prohibition on bail-out of water company shareholders and creditors

“(1) The Secretary of State and His Majesty’s Treasury must not directly or indirectly discharge, assume, or guarantee any debts of legal entities in any water company group subject to proceedings under section 24 of the Water Industry Act 1991 (special administration orders made on special petitions), except in accordance with subsection (2).

(2) The special administrator of a water company may reduce the debts owed by the regulated entity to its creditors by up to 100 per cent, taking into account the future forecast expenditure over the short, medium and long term and subject to the administrator’s confidence in the company’s ability to accommodate this spending.

(3) The prohibition set out in subsection (1) and the reduction of debts set out in subsection (2) must not include pension, wage and other obligations owed to employees, excluding any past or current member of a board of directors, within the water company group.”—(Charlie Maynard.)

This new clause aims to allow up to 100% of debts to be cancelled in the event of special administration proceedings, taking into account the scale of investment required to hit the future targets established by the Authority.

Brought up, and read the First time.

[Charlie Maynard]

I beg to move, That the clause be read a Second time.

We have covered this already, so I will be brief. I highlight subsection (2):

“The special administrator of a water company may reduce the debts owed by the regulated entity to its creditors by up to 100 per cent, taking into account the future forecast expenditure over the short, medium and long term and subject to the administrator’s confidence in the company’s ability to accommodate this spending.”

We have already discussed this. I am not going to go through it further, and I am not going to push it to a vote, so I will leave it at that.

[Emma Hardy]

I thank the hon. Members for Westmorland and Lonsdale and for Witney for tabling new clause 22. As the hon. Member for Witney says, we have already had a debate on this issue. I hoped that we had made the situation quite clear about what the special administration regime is and what it is not, but here we go again.

I must reject the new clause, because it would jeopardise the main purpose of the water special administration regime: the continued provision of vital public services. The role of a special administrator does not include a power to cancel debt, and the purpose of the administration is not to bail out water company creditors or shareholders. The new clause is therefore unnecessary. It would divert from long-established insolvency principles of treating creditors equally according to their rights as commercial entities. When a water company enters special administration, creditors are unable to enforce their debt repayments unless they seek leave of the court or receive permission from the special administrator. When a water company exits from special administration either by rescue, such as debt restructuring, or by transfer, such as a sale, the special administrator determines the level of repayment to credits. That will be calculated according to the statutory order of priority.

It is very unlikely that all debt would be repaid at the end of a special administration, because of the order in which payments are required to be made. Debts can be cancelled only according to a restructuring plan or under court supervision. The Government do not directly or indirectly make any decisions relating to the exact quantity of debt recouped by creditors or equity recouped by shareholders.

I must reject the new clause, because the changes that we are making align the water industry special administration regime with regimes in other sectors. We do not intend to alter the regime’s relationship with the existing framework of insolvency legislation.

[Charlie Maynard]

I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 26

Rules about performance-related pay

“(1) The Water Industry Act 1991 is amended as follows.

(2) After section 35D (inserted by section 1 of this Act) insert—

‘35E Rules about performance-related pay

(1) The Authority must issue rules prohibiting a relevant undertaker from giving to persons holding senior roles performance-related pay in respect of any financial year in which the undertaker has failed to prevent all sewage discharges, spills, or leaks.

(2) The rules issued under subsection (1) must include—

(a) provision designed to secure that performance-related pay which, if given by a relevant undertaker, would contravene the pay prohibition on the part of the undertaker, is not given by another person;

(b) that any provision of an agreement (whether made before or after the issuing of the rules) is void to the extent that it contravenes the pay prohibition;

(c) provision for a relevant undertaker to recover any payment made, or other property transferred, in breach of the pay prohibition.

(3) For the purposes of subsection (1)—

(a) “performance-related pay” means any payment, consideration or other benefit (including pension benefit) the giving of which results from the meeting of any targets or performance standards on the part of the relevant undertaker or the person to whom such payment, consideration or benefit is given;

(b) a person holds a “senior role” with a relevant undertaker if the person—

(i) is a chief executive of the undertaker,

(ii) is a director of the undertaker, or

(iii) holds such other description of role with the undertaker as may be specified.’”—(Tim Farron.)

This new clause creates a new section in the Water Industry Act 1991 to require Ofwat to ban bonuses for water company bosses if they fail to prevent sewage discharges, spills, or leaks.

Brought up, and read the First time.

[Tim Farron]

I beg to move, That the clause be read a Second time.

I do not really want to press this new clause to a vote, but we tabled it because my noble Friend Lady Bakewell withdrew it in the Lords after being given assurances by the noble Baroness, Lady Hayman, for whom I have enormous respect and of whom I think very highly. It seeks to ban bonuses for senior company executives who have been found guilty of a category 1 or 2 discharge. It would prevent any loopholes such as pay rises and share options that might enable bonuses to be paid under those circumstances.

From the Dispatch Box in the other place, Baroness Hayman said:

“However, we are very aware that water companies need to attract investment so, as outlined in Ofwat’s consultation, the circumstances under which performance-related pay bans are being proposed represent very serious failures by a company. I reassure the noble Baroness, Lady Bakewell of Hardington Mandeville, that this includes instances of criminal convictions, credit ratings falling below investment grade and Ofwat’s proposed metric for bonuses to be prohibited if a company has had a serious category 1 or 2 pollution incident in the preceding calendar year…I would like to be clear with all noble Lords that we are not asking companies to meet any higher or new standard than that which is already expected of them.”—[Official Report, House of Lords, 20 November 2024; Vol. 841, c. 247.]

We were grateful for that assurance, but nothing of that sort has appeared in the Bill since. Will the Minister give me some reassurance as to why we should not press the new clause to a vote? I do not see anything in writing that gives us confidence, other than the words of the noble Baroness.