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

Charlie Maynard Excerpts

Committee stage
Thursday 9th January 2025 Public Bill Committees

[Tim Farron]

Happy new year to all colleagues. It is good to be in this place and it is a great pleasure to serve under your guidance as Chair, Mr Vickers. I put on the record my thanks to the Minister for her engagement, and to the Committee Clerks and the Minister’s team for being immensely constructive throughout this process.

My hon. Friend the Member for Witney will speak to amendment 22, and I will make remarks on amendment 18, which, with your permission, Mr Vickers, I will press to a vote if the Government are not minded to accept it. I will also voice my concerns about amendment 2 and I give notice that we will vote against it.

Among the challenges that we face is the complete and utterly justified lack of trust in the water sector—water companies in particular, but also the regulatory framework. Amendment 18 was tabled to ensure that some of the people appointed to the boards of water companies, whatever their structure otherwise, have a connection to the benefit and interests of the consumers within the region; will benefit the residents within the areas in which the undertaker—the water company—is operational; and are experts and campaigners on environmental and sewage policy matters.

I am sure that Members on both sides of the House have people in their communities equivalent to the ones I will briefly mention. People from groups such as the Clean River Kent campaign, the Eden Rivers Trust, the South Cumbria Rivers Trust and the Save Windermere campaign, in addition to citizen scientists and others who represent local interests and have great expertise, ought to be on the boards of the outfits that run our waterways in future, and that should be in the Bill.

The amendment would bring the expertise and accountability that we are seriously lacking, and it would build trust, which our water companies are also lacking. We think that the case for it is self-evident, because those bodies and others around the country self-evidently have the expertise, authority and tenacity to add huge value and to ensure that our water companies deliver for the communities they are meant to serve, not just their shareholders.

Government amendment 1 seeks to undo an amendment added by my hon. Friends in the other place. Our concern is that if the Government insist on it and we do not have a much tighter timescale, that will basically undermine the regulation and leave it open-ended so that we cannot be certain that we would be able to enforce the things that the Bill seeks to do in a timely fashion. To ensure that the Bill does what it is supposed to do, we should not cut the water companies any slack.

[Charlie Maynard (Witney) (LD)]

I rise to explain amendment 22. On 11 July, the Environment Secretary issued a press release on the reform of the water industry that stated:

“Water companies will place customers and the environment at the heart of their objectives. Companies have agreed to change their ‘Articles of Association’—the rules governing each company—to make the interests of customers and the environment a primary objective.”

However, that commitment is not currently in the Bill. The amendment simply seeks to bring that commitment into this legislation.

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

It is a great privilege to serve under your chairmanship, Mr Vickers.

On behalf of His Majesty’s Opposition, I rise to challenge the Government on their plans in Government amendments 1 and 2. Before I go into the detail, I will make some general comments about the clause that are pertinent to the amendments.

The Opposition worry that the Bill, rather than taking original and new measures to tackle these issues, is purely an attempt to copy and paste the work done by our previous Conservative Government. In fact, many of the measures have already been copied from previous measures that we introduced in government.

[Dr Hudson]

With the greatest respect, I sat on the Environment, Food and Rural Affairs Committee in the previous Parliament, and we took evidence from the chief executive of Ofwat on some of the key measures that the Conservative Government brought forward. Our Government gave Ofwat teeth and powers, and we need to make sure it uses them.

As detailed in the explanatory notes, Ofwat already has wide powers to set the conditions of water company appointments and licences. The Conservatives worked hard to strengthen its ability and power to do that since this issue came to the fore in order to drive the regulatory change that was vitally needed to tackle the scale of the crisis that came to light.

I again remind Members on both sides of the House that when Labour left office in 2010, only 7% of storm overflows were monitored; when we Conservatives left office, 100% of outflows were monitored. We found the scale of the sewage problem and were the first party to start to address it. The Conservative Government’s Environment Act 2021 gave Ofwat the power to consider, when deliberating about dividends, the environmental performance of a company and its credit rating, whereby Ofwat could stop the paying of dividends if it felt that the firm faced financial risks as a result of its actions.

[Charlie Maynard]

The hon. Gentleman said that 100% of outflows are monitored, but I am afraid that is not correct. In fact, 100% of the 14,000 storm outflows are monitored—he did not mention storm—but 7,000 emergency overflows are not currently monitored. On the other aspect that he just mentioned, Ofwat was entirely devoid of looking at the balance sheets of the companies under the Conservatives’ watch. That is the root of all our trouble, and it would be beneficial to acknowledge that.

[Dr Hudson]

If the hon. Gentleman checks Hansard, he will see that in my speech on Second Reading and just now I said “storm overflows”. I gently remind the third-party spokesman that in the coalition Government the Liberal Democrats had a Water Minister who did absolutely nothing on this issue.

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

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

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

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

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

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

[Charlie Maynard]

It is fairly standard on boards today to have directors and officers insurance; indeed, all board members have it. What is the problem with the new people also having D&O insurance?

[Jerome Mayhew]

I am grateful for that intervention. However, it seems an odd way to proceed if it is recognised that there is a risk to voluntary members who join boards, exposing them to personal obligations, such as a fiduciary duty of care. There is also a legal duty of loyalty to the organisation, which such volunteers might find quite difficult to stomach. There is a duty of obedience to the organisation as well. It seems odd at this drafting stage to say, “We recognise that there is a risk, but don’t worry: you can take out insurance and you’ll probably be okay.” It seems odd to introduce an amendment in an imperfect form, rather than perfecting it.

[Charlie Maynard]

First, it is up to each individual to sign up or not; they do so of their own free will. Secondly, this is standard insurance which almost all boards have in the UK and internationally nowadays, which protects board members. It would not be specifically for those board members; it would be for all board members. To say that that is a concern, and that we should not make this provision on those grounds, seems odd.

[Jerome Mayhew]

I have expressed my concerns. It would be perfectly possible to achieve the object, which I share, of improving the voice of the customer in water companies, or of improving the implementation of the existing obligation on water companies to take account of the consumer interest. I do not think that the current drafting is the best that we can do. I raise these concerns so that they may be properly considered.

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[Helena Dollimore]

I will make some progress, because I know that we need to make progress in the debate.

In conclusion, I thank the Minister for her work on bringing the Bill before the House so quickly. I know that this is just the start of the change that we need to deliver on our water companies. This Government are acting where the previous Conservative and coalition Governments failed, and are working to clean up our water system.

[Charlie Maynard]

I have a question for you, Mr Vickers. This is my first Bill Committee and I am trying to understand how everything works. There are six amendments to clause 1, and our task is to do line-by-line scrutiny. My ambition is to understand why the Government support or reject each of those amendments. At the moment, in our debate of clause 1, we are swimming quite happily between those amendments. I would love your advice, Mr Vickers, as to how we work to understand what the story is on each amendment in turn, because I am not clear on that.

[The Chair]

There will be an opportunity to force any amendment to a Division, if the hon. Member wishes. We are attempting line-by-line scrutiny—I think it is more like a debate on Second Reading, but that is by the way. Does that answer your question? The Minister will respond.

[Charlie Maynard]

Perhaps, since I am standing, I will make the other two points I want to make.

We have touched on Government amendment 2 already, but I think it is important. I was very pleased to see the wording coming in about bonuses. Proposed new section 35B(3) of the Water Industry Act 1991 says:

“Rules made for the purposes of imposing the prohibition mentioned in subsection (2)(a) (“the pay prohibition”)”.

That is the ban on bonuses. While the explanatory statement says that it is to prevent the need for a statutory instrument—which the Liberal Democrats support and seek to do in further amendments—the impact of the Government’s change is also to remove the requirement for the rules to be published by Ofwat within six months. That we find very odd.

I take it in good faith that the Government are keen to have the measures implemented, so we do not understand why they would take the timeline out. The Government want to ensure that it happens, but as currently stated, they are removing the timeline. Taking it on good faith that Ofwat will publish the rules is less strong than keeping in that commitment to six months.

I will correct the hon. Member for Epping Forest on our amendment 21. Our amendment relates to the same aspect of the Bill as Government amendment 2. However, we want to retain the need for Ofwat to publish the rules on bonuses within six months but remove the option for that to be kicked into the long grass by requiring the Secretary of State to lay a statutory instrument to bring them into effect. By taking out that provision, we remove that risk. That is the purpose.

[Andrew Pakes (Peterborough) (Lab)]

As a new Member, it is a privilege to serve on a Bill Committee under your chairmanship, Mr Vickers—I hope I will get all of it right. I felt particularly moved to speak on these amendments and clause 1, given some of the earlier comments. I was a bit worried that we had been transported by the Opposition back to a previous Conservative age, because we seem to be being told that water customers have never had it so good—as one of their predecessors said—because of all the action that was taken.

There has been a lot of talk about teeth. I ask the Minister to confirm that the Bill is about the dentistry that is needed to put more teeth into the water sector. When she responds, will she identify whether the clauses that the Government have tabled help to address some of the very real anger that my constituents feel about the way they have been ghosted and treated by the big water companies and the behaviour of some of the senior leadership? Representing a seat with Anglian Water, which I think applies to some other Members present, I place it on the record that there is real frustration at the performance and actions of such a large company when at the same time as more than 3,000 hours of sewage were being dumped into rivers around my area, the fens and John Clare county, we saw the Anglian Water chief executive receiving £1.3 million in a package of pay and bonuses, despite that poor performance. The anger and the desire and drive of this Government, but also the public, to see action is palpable, so I very much welcome the Bill and I seek clarity on that. It is absolutely right, as the Government have outlined, that we have a fast Bill to get these teeth and this emergency dental treatment delivered quickly, so that we can come back and put the braces on for the rest of the water sector—[Laughter.] I think I am running out of places where that analogy can go; it is getting very dangerous.

When we get the Cunliffe report and others, we will look at some of the bigger issues for the water sector, but I am very concerned by that £1.3 million. I serve as a member of the Environment, Food and Rural Affairs Committee and I share the concerns expressed by my hon. Friend the Member for Hastings and Rye that when we directly asked Ofwat whether it had the dental tools to challenge and put the surgery on to the water companies, Ofwat was very clear that it did not. I specifically asked the chief executive and leadership of Ofwat about another bête noire of the debate, which is Thames Water. Up until March 2024, in those three months, the chief executive gave themself a £195,000 bonus. Since 2020, we have seen £41 million given to water company chief executives in bonuses and incentives, so can the Minister reassure this Committee that the clauses that the Government have put forward will help to restore trust and put in place initial measures so that we can get on with this, end the delay, take action and start to put right the problems that the Government have inherited, and then look at the wider issues when we get the report later in the year?

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

It is a pleasure to serve under your chairmanship, Mr Vickers, and if I may I will start by wishing everyone a happy new year. I thank members of the Committee for the engagement with the Bill they have shown, and I also thank all the environmental groups, everyone who submitted evidence, and Members in the other place for the work they did on the Bill.

I am pleased to be back debating this vital piece of legislation. As I set out on Second Reading, the Bill will drive meaningful improvements in the performance and culture of the water industry as part of wider efforts to ensure that water companies deliver for both customers and the environment and, as has been mentioned in the debate so far, act on the real anger and mistrust we feel towards our water sector at the moment.

However, the Bill is one part of the Government’s ambitious and long-term approach to fundamentally transforming the water sector. As Members will be aware, in October 2024 the Government announced an independent commission, which will be the largest review of the water sector since privatisation. The commission has a broad scope and will consult experts in areas such as the environment, public health, engineering and economics, as well as customers and investors. It will look closely at financial resilience as one of its key areas—I know we all care about that.

I reassure members of the Committee on the timeline; the commission will report to the Government by quarter 2 of 2025. The UK Government and the Welsh Government will then respond and consult on proposals that they intend to take forward, and we expect those to form the basis of future legislation.

[Charlie Maynard]

Does that mean the beginning or the end of Q2?

[Emma Hardy]

We expect the commission to report to the Government in June. I reassure the hon. Member that when I respond at the end of every session, I will go through each and every amendment in turn.

I turn to Government amendments 1 and 2 to clause 1. The Government have carefully considered all non-Government amendments made in the other place and how they fit within the wider plans for reform of the water sector, including the amendments tabled by Lord Roborough and Lord Cromwell. I thank them, and indeed the other place, for their careful consideration of the Bill, particularly for the constructive way in which they worked with the Government during the Bill’s passage through the Lords. That collaborative approach enabled the Bill to be strengthened, for example, through the introduction of new requirements relating to the implementation of measures in pollution incident reduction plans. However, the Government have determined that the amendments from Lord Roborough and Lord Cromwell are not necessary and should be removed from the Bill.

Government amendment 1 concerns financial reporting. During the Bill’s passage through the other place, it was amended in such a way that required rules made by Ofwat under clause 1 to include reporting requirements on company finances. The Government strongly agree with the need to ensure water company finances are closely monitored, especially given the current financial issues experienced by some companies. However, having considered the Lords amendment in detail and having had further discussions with Lord Cromwell about the intent behind his amendment, we feel that it is duplicative of existing processes as well as conditions in water company licences.

Ofwat already has processes in place to monitor where a company may be heading towards financial difficulties. It is already a condition of water company licences that companies are required in their annual report to publish by a set date financial performance metrics, including interest on their borrowing, financial flows and analysis of their debt. Based on those reports, Ofwat sets out its observations on financial resilience across the sector in its “Monitoring financial resilience” report. Ofwat is also alive to the potential for financial engineering to occur outside of regulated companies and is thoroughly monitoring the financial position of all water companies. The Lords amendment would therefore duplicate existing requirements, with the potential to create confusion in what is already a complex regulatory landscape. This is important: we also retain concern about the potential for the Lords amendment to pre-empt forthcoming reforms following the independent commission led by Sir Jon Cunliffe. On that basis, the Government have tabled Government amendment 1 to remove Lord Cromwell’s amendment from the Bill.

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[Emma Hardy]

My hon. Friend is absolutely right. Information will be coming out shortly about how each and every Member across the House can contribute to that review.

Government amendment 2 seeks to remove the amendment that requires rules made by Ofwat under clause 1 to be brought into force by statutory instrument within six months of the Act’s coming into force. Alongside my amendment, I will also address amendment 21—I thank the hon. Member for Westmorland and Lonsdale for tabling it—which is largely in line with the intention behind mine.

Although the Government understand the need to ensure the rules relating to remuneration and governance are subject to efficient scrutiny, this additional process risks compromising Ofwat’s independence, which must be protected. The necessary secondary legislation would be prepared by the Government, and therefore would represent significant Government interference in the independent regulatory process. That kind of interference has the potential to have adverse effects on investor confidence. The consultation requirement in clause 1 already provides the Secretary of State and other interested parties with the opportunity to raise major concerns with the regulator on the content of the rules. We are confident that Ofwat will continue to work constructively with the Government and other stakeholders to determine a robust and appropriate set of rules.

[Charlie Maynard]

Will the Minister give way?

[Emma Hardy]

I will finish what I am saying. I might answer the hon. Gentleman’s question in my upcoming remarks—who knows?

The additional requirement for the rules to be confirmed for affirmative resolution statutory instruments could also risk delaying the introduction of the first set of rules. That is counter to the other aspects of Lord Roborough’s amendment, which requires Ofwat to publish the first set of rules within six months of Royal Assent. I reiterate that the Government expect Ofwat to have the rules in place as soon as possible. Indeed, Ofwat has already concluded its initial policy consultation on the rules, demonstrating its commitment to meeting the Government’s expectations. I highlight the fact that Ofwat today submitted to the Committee written evidence of its statutory consultation on the proposed timelines for introduction of the rules, demonstrating its commitment to getting this done as quickly as possible. I urge all hon. Members to have a look at that evidence.

However, we do not think it is appropriate to hold Ofwat to a six-month deadline. While we are confident that Ofwat can deliver the rules in that timeline, we are mindful that there may be unforeseen complications in finalising the rules. Not allowing adequate time to account for such unexpected complications risks undermining the effectiveness of the rules, opening potential loopholes. For that reason, the Government largely agree with the intent behind amendment 21, tabled by the hon. Member for Westmorland and Lonsdale. It is not appropriate to bring Ofwat’s rules into force via secondary legislation, which is why we have tabled an amendment to remove that from the Bill.

[Charlie Maynard]

I will just express disappointment. The Bill currently sets a deadline of six months, which is not exactly a moment in time; six months is a long time to get something done. I respect what the new Government are doing by trying to go after the bonuses and hold people to account, but to take a step back and say, “Actually, we are going to weaken the Bill”, which is what amendment 2 is doing—the Government are taking out the deadline—is retrograde and a real mistake.

[Emma Hardy]

I strongly disagree that this amendment weakens the Bill or is retrograde. Instead, it is doing things effectively. If we were to put a six-month deadline in the Bill and rush to get the rules done in that period of time and there were complications, we would risk leaving a loophole that could be exploited by companies that have exploited loopholes for an incredibly long time and become rather apt at doing so. With respect, I would rather do it properly.

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

Charlie Maynard Excerpts

Committee stage
Thursday 9th January 2025 Public Bill Committees

[The Chair]

Order. We are debating amendment 13 specifically, so please restrict your comments to that. I call Charlie Maynard.

[Charlie Maynard (Witney) (LD)]

Amendment 13 is about volume. It would add volume to the list in clause 3, which includes

“the location of the emergency overflow…when the discharge began…when the discharge ended.”

The Liberal Democrats seek to add the volume of discharge to that list, and that is common sense. As many Members have said, we want to know how much sewage is coming out, and we are looking for help from all Members to get the amendment into the Bill. If we are serious about solving the problems in our rivers, we need to know how much sewage is coming down.

[Jerome Mayhew]

I am grateful to the hon. Member for giving way and for the conversation that we had over the lunch recess. One challenge with the measuring of volume is what we are measuring the volume of. The industry estimates that 97%-plus of volume from a storm event is water—it is just rainwater. How do these amendments address the measurement of what is being passed, and is this something on which we could co-operate?

[Charlie Maynard]

Let us talk about the spectrum of information here. We have got the number of spills, where we have no idea how long those spills went on. We then have EDMs—event duration monitors—which count the number of hours of pollution. There is then the volume of flow, and then various iterations around measuring dissolved oxygen, or whatever it might be. I do not want the perfect to be the enemy of the good. We need to make progress. Thames Water is installing flow monitors all over its network, upstream of its sewage treatment works, but not downstream. That is because it is scared of actually having to count and have in the public domain the volume of sewage that it is dumping.

As my hon. Friend the Member for Eastbourne (Josh Babarinde) said, “If you have a coke bottle of sewage, and you don’t know how diluted it is, you still don’t want it in your bath.” Of course we want to know how diluted it is—that would be nice—but if we are serious about addressing these problems, we need to know how much is coming out of those overflows.

To quantify what has been going on over the last few years—I give the previous Government some credit—some 14,000 monitors have been installed in the last seven years, which is good news. The figure was less than 1,000, and 15,000 have now been installed on the storm overflows, but another 7,000 do not have monitors. Amendment 16 talks about where those locations are. We can have overflows at a sewage treatment works, at a pumping station or on the sewer network. I believe that everyone on this Committee wants to capture wherever that overflow is, which is what the amendment would do.

I will try to quantify some of the numbers, and I will talk about my favourite, Thames Water. Right now, Thames Water has 30 event duration monitors at inlet storm overflows at waste water treatment works. It has 183 EDMs on storm tanks at waste water treatment works and 137 EDMs at storm discharge overflows at pumping stations, and it has 320 storm overflows on the sewer network—not in a pumping station or at a treatment works. We are trying to capture all those areas, because we need to know what is going on. If we do not know what is going on, we cannot fix it.

Amendment 13 is on the volume of discharge. Amendment 14 concerns the same count, so I will not go into it in more detail. Amendment 15 relates to reporting on discharge from overflows and would add to existing stipulations about the form in which the information must be published. I will read it out: the information must

“be uploaded and updated automatically”.

Let us get rid of human involvement. We are in 2025—all this stuff can, and should, be automated.

Professor Peter Hammond has done some great research, and I am incredibly grateful to Windrush Against Sewage Pollution, which has been one of the drivers of information and campaigning in this space. Well done to Peter, Ash, Vaughan and Geoff; I give them many thanks. Peter spotted that when Thames Water monitors its sewage, it does so at the wrong times of day, when the level of sewage is at its lowest. We want to automate that so that it is monitored all the time. That means less human interaction and lower costs, and it is much more achievable.

There is a map that shows whether sewage has been dumped in the last 48 hours, is being dumped currently or has not been dumped in the last 48 hours—Thames Water was actually one of the first to put that in the public domain—but it does not give the historical information. We need the historical information in there and it needs to be downloadable, so that any citizen scientist can come along, pull the data off and act on it. Without amendment 15, we do not have that. These are very nuts-and-bolts, practical things that we want to head along.

[Helena Dollimore (Hastings and Rye) (Lab/Co-op)]

On the questions that the hon. Gentleman is asking around the type of monitors we have on sewage outlets, is he aware that the Environmental Audit Committee looked at this very issue in the last Parliament? It recommended the approach currently being taken by the Bill, which is to look at monitors upstream and downstream that look at the water quality. The Committee regarded that as the best way to assess this issue.

[Charlie Maynard]

I am very happy with looking at monitors upstream and downstream. That is fine, but I want them all to be in, and I want them done quicker. In the last seven years, 14,000 monitors were put in. As per the House of Commons Library briefing on clause 3, we are currently being signed up to a much slower installation of monitors—it does not matter if they are EDMs or flow meters. The briefing states:

“The reporting duty on discharges from emergency overflows would be phased in, with water companies expected to achieve 50% monitoring coverage by the end of the next price review in 2030 and 100% by 2035, the end of the following price review.”

Why would we go slower? That is a lot slower than what has been done over the last seven years. We should be moving much faster.

I find it rather depressing that I suspect this information came out of the Department for Environment, Food and Rural Affairs. Why is there this desire to slow the whole thing down if possible? We have a huge problem, so why are we not moving faster to deal with it? Frankly—I am not looking at the crew opposite—the DEFRA mindset is profoundly depressing. That’s that.

Amendment 16 covers the installation rate. What we are trying to do there is get the rate much faster. We have asked for 12 months, and I will try to quantify this; I have a business background. How much do flow monitors cost? How much they cost matters. Flow monitors are £500 to £2,000 per unit. We have 15,000 across the country, so we are talking £85 million or whatever it might be. That is if we have £2,000 as the unit cost. If we take the higher level of the unit cost and say that each of them will cost £2,000 to install, it is quite a lot of money. We did it much cheaper in west Oxfordshire and Witney. Well done to the Witney flood mitigation group. It got 10 installed for a fraction of that, so that is doable. Let us just talk £84 million. Does that sound like a lot of money? Frankly, it does not to me, and I will try to quantify that. The £84 million is between 10 or so water companies. Thames Water alone has £17 billion of debt. We are talking about £84 million. It is a fractional number, and if we are serious about fixing our problems, we have to go there.

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[Jerome Mayhew]

I will start with the Liberal Democrat amendment to add volume measurers to storm outflows. I hope I made it clear in my earlier intervention that I am sympathetic to the amendment’s objective, but I have questions about whether the route that the Liberal Democrats have gone down is the right one. Legislating for another piece of kit—volume-measuring equipment, alongside the EDM—yes, would go some way to solving the problem, but it would not solve the real problem, which is that we need to know when a discharge is happening, the volume of the discharge, the level of sewage as opposed to water in that discharge, and the consequential impact on the watercourse into which it is being discharged.

I was grateful for the intervention of the hon. Member for Hastings and Rye, who referred to the water report of the Environmental Audit Committee, of which I was one of the authors. We took a lot of evidence on the issue and we had a trip to Oxfordshire, to the River Windrush. We met the leading citizen scientists in the area and took evidence from them there and in our more formal evidence sessions in this place. The hon. Lady was right that the outcome of the combination of evidence we received was that the most appropriate form of technical solution was a measurer of water quality upstream and downstream, and for that water quality measurement to be published timeously. For that reason, section 81 of the Environment Act 2021 requires automatic publishing within 60 minutes of an event happening.

That leads me to a question. The hon. Member for Witney referred to Thames Water choosing when to measure, but with respect to him, the clause is about emergency overflows, not about standard monitoring, and under the existing legislation, Thames Water or any other water undertaker has no option as to when it measures—the EDM is triggered by the emergency event. It also has no option as to when it can publish, because it has to be within 60 minutes of the event being notified.

[Charlie Maynard]

Yes, of course, the EDMs are automatic; I was talking about the spot monitoring by individuals.

[Jerome Mayhew]

With respect, that is a separate point, because we are talking about amendments to clause 3, which is about emergency overflows. I accept the point. As with so many of our discussions this morning and this afternoon, we are all trying to get the right outcome, but this is line-by-line consideration of the Bill, which is rather boring and technical, but it is where we try to tease out some of the drafting issues and what can be improved. I am not sure that the problem that the hon. Gentleman is seeking to resolve sits naturally in this clause.

Moving on to amendment 15, again I highlight my fear that, given that the clause relates to emergency overflows, the amendment leads to a legal duplication of section 81 of the Environment Act. I do not want to do the Minister’s job for her, but from my perspective, that is a reason why we should look carefully at amendment 15 before we accept it. Of course, when I say that I do not want to do the Minister’s job for her, that is only pro tem—in the future, I definitely want to do this job for her.

The Liberal Democrats have not yet spoken in favour of amendment 16, so I will leave that until such time as they decide to. The hon. Member for Witney can come back to it.

Finally, on amendment 17, which the hon. Member for Westmorland and Lonsdale—

[The Chair]

Order. Amendment 17 is not in this grouping.

[Charlie Maynard]

Mr Vickers, may I revert to amendment 16? I am sorry; I thought I had mentioned it. I will read it out:

“The undertaker must ensure that, within 12 months of the passing of this Act, appropriate monitors are installed to collect the information required”.

That point is 12 months, so that is holding people’s feet to the fire, but we have a massive problem. This is totally doable in terms of timeline. If the Government came back and said, “No, we want 36 months, not 12 months,” then fine, I have no problem with that, but I have talked about being depressed by the desire to slow things down, and about the House of Commons Library data on giving another 10 years to install these monitors. Why are we going slow? We all say to the public that we are really serious about it; let us be serious. I thought that I had covered amendment 16, but there it is again.

[Jerome Mayhew]

I now rise to talk about amendment 16. My primary objection here is the overarching one: I am not convinced that this is the right technical approach, for the reasons set out in the report of the Environmental Audit Committee, and also in the Environment Act 2021. However, if I am wrong on that, I am happy to support this amendment as a probing amendment and look forward to the answer that the Minister gives; but if it were to be taken to a vote, without further information about the practicality of being able to obtain the required tens of thousands of these machines, install them and have them operational and reporting in a 12-month period, I am not sure that I, as a responsible legislator, could support amendment 16. I would need further information on whether that was a practical option.

[Emma Hardy]

I thank all hon. Members for their thoughts on this set of amendments. I would also like to pay tribute to all of the citizen scientists—in fact, many Members have paid tribute to them—and the incredible work that they do as volunteers, going out there to discover the true state of many of our rivers, lakes and seas. I think we can all agree that it is vital to understand the scale and the impact of sewage discharges by ensuring that water companies install monitors on emergency overflows as soon as possible and by encouraging public access to emergency-overflow discharge statements. As the hon. Member for Broadland and Fakenham said, I think this is about us all trying to move in the same direction.

Just before I turn to the amendments, I think there may be some confusion in the debate today about the different types of monitors and the different types of discharges being discussed. There is a big difference between fully treated waste water being released from treatment outlets and the discharge of untreated sewage from an emergency or storm overflow. I am therefore very happy to share a factsheet detailing the differences in the different types of emergency and storm overflows to help inform future debates.

On amendments 13 and 14, tabled by the hon. Member for Westmorland and Lonsdale, clause 3 requires water companies to provide information on the frequency and duration of discharges from emergency overflows in near-real time. Combined with the equivalent duty for storm overflows, which has just come into force, that will ensure that all sewage overflows on the network are monitored. That will enable regulators and the public to see, in near-real time, when a discharge from any overflow has occurred, and how long it has lasted for. Water companies will use that information to prioritise investment to mitigate the impact of the most polluting overflows, as guided by the regulator.

However, the monitors required to measure volume are much more difficult and costly to install compared with those used to monitor discharge duration. By comparing that with the cost of installing flow monitors at waste water treatment works, we estimate the cost of installing flow monitors on all 18,000 storm and emergency overflow sites in England to be up to £6 billion. Network overflows are not set up for flow monitors to be installed, which means that the majority of overflows would require complex works, such as pipework modifications, in order for monitors to record volume accurately. We do not think this added cost is proportionate to the additional value that volume information would provide, especially given that volume information alone does not provide a comprehensive account of the impact of a discharge. For example, a very small volume of very concentrated foul water could enter our rivers, which would be very damaging, or a large volume of diluted rainwater overflow. Volume cannot give an accurate assessment of impact. The measurement of water quality, as the hon. Member for Broadland and Fakenham has said, is required.

[Charlie Maynard]

Would the Minister be willing to give information on the breakdown of that £6 billion? That would be very helpful. Also, I think we are all in agreement and of course we want to know the quality. As has been said, if that is the case, surely the plan is to go there. By all means, have flow meters with the quality meters installed, rather than not going there. I think the Minister was proposing not putting in flow meters and not putting in any quality meters either, or is she planning on putting in flow and quality meters? If so, when and how?

[Emma Hardy]

I am very happy to give a breakdown of the numbers that we have worked out. To reiterate the point I made before the intervention, that is why the Government believe that it is the measurement of water quality that is required. Water companies have been instructed to begin installing continuous water quality monitors for storm overflows and waste water treatment works from April 2025 onwards, so they have been told to put in those water quality monitors from April 2025. That will provide further information on the impact of sewage discharges on water quality. On that basis, I hope that the hon. Member for Westmorland and Lonsdale will see that amendment 13 is not needed and feels able to withdraw it.

[Charlie Maynard]

The Minister said from 2025, which is great, but over what timeline? Is that the Library’s 10 years, or is that another timeline?

[Emma Hardy]

I want to make sure that I am not giving the hon. Gentleman inaccurate information, so I will find out the answer to his question and return to it, if that is okay. I do not want to give him the wrong information. The main point we are making is that it is not the volume that is having the impact; it is the toxicity. We think that, by focusing on measuring water quality, we can accurately see the damage being done to our environment by what is being discharged, and I think that is the point. If we are choosing where to put the monitors, we think that focusing on water quality and how damaging it can be is more important than focusing on how much there is.

--- Later in debate ---

[Emma Hardy]

I think the hon. Gentleman is probably moving on to amendment 16 with his point about the speed at which these were being rolled out. We were discussing amendments 13 and 14. That is where the confusion lies in this conversation. I will address the points about speed when we move on to amendment 16 —it is all to come.

I turn now to amendments 3 and 15, which were tabled by the hon. Member for Beaconsfield and the hon. Member for Westmorland and Lonsdale respectively. Clause 3 already requires companies to publish information on discharges in a readily accessible and understandable format. That includes information on the occurrence, location and start time of the discharges, which must be published within an hour of the discharge starting. To meet this requirement, water companies will install monitors that have telemetry technology to communicate discharges as they occur. To the point the hon. Member for Broadland and Fakenham made, that information cannot be falsified. It is not based on someone coming; it is automatic communication.

Those requirements are the same as those for publishing storm overflow discharges, which is now a statutory duty enforced by Ofwat. Water companies have already published individual maps for their regions to show storm overflow discharges in near real time. In addition, Water UK launched a national storm overflow hub in November last year to centralise all discharge information from water companies on a single national map. We expect that a similar approach will be taken for emergency overflows. If further direction for companies on how to approach the duty is needed, that can be more appropriately addressed through guidance. Furthermore, validated historical information on discharges from emergency overflows will be available through annual returns published by the Environment Agency. Those will allow for long-term trends in annual data to be analysed. If there are any specific requests from groups or organisations about how they would like to see information, they are of course welcome to communicate that to me.

[Charlie Maynard]

We are here for another week or so. I take the point about apples and pears, but if the information is already in DEFRA’s hands, would it be helpful, if DEFRA can move fast enough—I do not know whether that is possible—to have a little grid circulated to Committee members about storm and emergency installation periods, whether that is quality, flow or EDM? With that data we could talk about it decently and honestly.

[Emma Hardy]

I think that might be really helpful. It has been an interesting but slightly muddled conversation. We were going to produce a factsheet to explain the difference between emergency and storm. Maybe we can include as much information as we can for Committee members by the end of Committee or before Report, if that does not put too much on my hard-working officials.

On the annual data being analysed, the proposed amendments are unnecessary and I ask hon. Members not to press their amendments. On amendment 16, which was also tabled by the hon. Member for Westmorland and Lonsdale, and which is about the speed of delivery, the need to deliver the installation of monitors on emergency overflows must be balanced with practical constraints and with due consideration for the cost of rolling out so many monitors, especially as those costs are ultimately passed to consumers through water bills.

Water companies have been instructed to install monitors at 50% of emergency overflows by 2030. This represents a doubling of the previous Conservative Government’s target of 25% of emergency overflows monitored by 2030. The Environment Agency will agree with water companies which emergency overflows will have monitors installed over the next five years based on priority areas, such as those that impact designated bathing and shellfish waters. As set out in the impact assessment, we expect the roll-out of monitors at emergency overflows to cost £533 million over a 10-year period. We believe that pace of roll-out strikes the right balance of recognising the urgency—this Government are doing double what the previous Government promised—while ensuring that companies have the capacity to progress other improvements and balancing customer bill impacts.

To speak frankly, it is very important to monitor, but it is also very important to fix the causes of some of the problems that we see. There is always a balance between monitoring and fixing the problem, and we believe that we have got that balance right.

Requiring a faster roll-out of monitors could undermine the delivery of other improvements that water companies must make in price review 24—I would not want to be in a situation at the end of the price review where we monitor everything and fix nothing. That includes upgrades to wastewater treatment works and sewerage networks to reduce sewage discharges from storm overflows. Where companies can move further and faster to achieve the roll-out of monitors at emergency overflows, they will of course be encouraged to do so, but we cannot accept this amendment to require water companies to install all monitors within 12 months. I therefore ask the hon. Member to withdraw it.

--- Later in debate ---

[Charlie Maynard]

I will keep this short. I am looking forward to the factsheet, but the Minister will note that new clause 25 focuses on overflows, not emergencies or storms. Frankly, it does not make much difference to a bug, a bunny or a bather whether they get whacked by an emergency overflow or a storm overflow—they are still getting whacked by the sewage. Trying to unify things and get all the issues into one table would be really helpful.

We have already been denied one amendment about flow; I recognise that and will not go on. But quality and flow are important. I am afraid that I find the Government’s position—“We really need to focus on quality, so let’s not talk about flow or install flow meters”—to be spurious. I mean no offence, but it feels like a real let-down that we are not going there now. I do not see any reason why we cannot; respectfully, I think the Government are being flim-flammed by the £6 billion figure.

We talk about sewage treatment works, pumping stations and so on. I have mentioned them already but really want to push the point home because we want to be capturing every overflow, wherever it is. Too often, people talk about works but forget pumping stations and the overflows on the network itself. We look forward to seeing that being covered in the legislation: overflows, works, pumping stations and the network. We will not press the new clause to a Division.

[Darren Paffey]

rose—

Flooding

Charlie Maynard Excerpts

Monday 6th January 2025 Commons Chamber

[Emma Hardy]

I thank my hon. Friend. I am sure her constituent has done an incredible job—the flood groups have done an amazing job—and I understand why she must be feeling so exhausted. We have mentioned the impact that flood events have on people’s mental health. We want to look at areas at risk of repeated flooding in the flooding formula review to make sure that those areas are getting the support they need. The immediate post-flood situation is of course for MHCLG, but if I can help in any way she needs only to contact me.

[Charlie Maynard (Witney) (LD)]

Many of us recognise that our drainage network is in disrepair in many places. Much of that stems from the Environment Agency’s main river designation; an enormous amount of bureaucracy is required in order to get permission to unblock what is nominally called a main river but to almost all of us is a ditch. These ditch networks are very broad; in Northmoor and Bablock Hythe in my constituency, virtually every ditch is a main river, which means that in one case we required about three years to get a permit from the EA. That makes things extremely difficult and nothing ever gets done. We have had five permits in five years from the EA throughout the West Oxfordshire district. Will the Minister please consider doing two things: making it easier to de-designate main rivers to ordinary watercourses; and simplifying the EA’s permit procedure, which is incredibly byzantine, so that people can apply for permits and be able to unblock their ditches?

[Emma Hardy]

I am incredibly interested in what the hon. Gentleman has had to say, because the last thing we want is it taking five years to deal with a problem when there is a simple solution for it. If unwanted bureaucracy is causing a problem, I would like to try and help. I ask the hon. Member please to send me all the information. I am happy to have that conversation with the EA, and let us see what can be done.

Water (Special Measures) Bill [Lords]

Charlie Maynard Excerpts

2nd reading
Monday 16th December 2024 Commons Chamber

[Steve Reed]

I have to say to the hon. Gentleman that there is very little point in monitoring sewage in the water if all you do is watch the sewage increase and keep on flowing into our rivers, lakes and seas. The Conservatives seem to be satisfied with the failure they presided over. The Labour party will fix the problem that they left behind.

If you find cracks in the wall of your house and ignore it for years, the problem gets worse and the cost of putting it right escalates. That is exactly what the Conservatives did to our water system. They refused to bring in the investment early enough, so ageing infrastructure crumbled even further and the cost to bill payers has rocketed.

[Charlie Maynard (Witney) (LD)]

We are about a month away from Thames Water signing up for another £3 billion of debt. If that happens, 46% of the bills of every customer in that catchment will be spent on interest expenses, and that is without even paying down the £20 billion of debt. How is that helping anyone?

[Steve Reed]

I thank the hon. Gentleman for his intervention. One of the reasons the Government commissioned a review into governance and regulation is because of the failure of the current system that the previous Government allowed to continue.

I share customers’ anger about the scale of water bill rises they seem likely to face. They are rightly furious at being left to pay the price of Conservative failure. I am grateful that the party opposite has indicated support for the Bill. It is just a shame its support has come so late. In December last year, while they were still in government, I called a vote on introducing a ban on unjustified bonuses for water bosses, but they refused to do it. They could have acted at any point over the past 14 years, but they would not do it. There have been many times in history when Labour has had to clean up the Tories’ mess, but rarely quite so literally as cleaning up the raw sewage polluting our country’s waterways.

--- Later in debate ---

[Charlie Maynard (Witney) (LD)]

I believe that this Bill is disappointing. It almost totally ignores the financials of the companies, and that is the root of the problem. Unless we fix the financials, we will not fix the problem. Thames Water, for example, has £17 billion of debt, and it is currently expected to have a further £3 billion of debt by the end of January. If that happens, it will cost Thames Water an extra £334 million a year, which means that 46% of the bill of every single one of the 15 million bill payers will be funding interest payments—before the £20 billion of debt that the company will have is paid down. How does that make sense? How do we get this working again? That is not the route to a solution.

The reason Thames Water is not in special administration is that, officially, it is unable, or unlikely to be able, to pay its debts. You do not need a GCSE in business to know that if a company currently has £16 billion of debt and £1.2 billion of cash flows, it is unlikely to be able to pay its debts. I believe that our Government are running scared. They are worried about being sued by big bad American vulture investors, and that is why they are not putting Thames Water into the special administration regime—a regime that was explicitly set up for exactly this purpose. I say to the Government, “Please, do not let Ofwat approve a price rise for Thames Water. Put the company into special administration and start to deal with the problems, because we will not be able to deal with them until we deal with the financials.”

I have one minute and 17 seconds in which to ask the Government to steal some of these ideas. Yes, they should reform the three regulators, by putting them all together. In respect of clauses 10 and 11, why should consumers pay for financial losses following Government financial assistance? Why should not creditors and shareholders pay for those losses? It seems pretty weird to me. Pollution baselines should be established for each catchment; we should get that straight. Environment Agency permits for individual sewage treatment works should be reset. The capacity for each STW should be established, and the agency’s Environment Agency 3.0 multiplier should be applied to every one of them. There should also be volumetric flow meters, for which clause 3 does not provide—we are not getting them. I invite Members to read clause 3 themselves. We are getting event duration monitors but not flow meters, and that means we are back in the same place where we have been for the last 14 years. We need flow meters, so please can we insist on that? Finally, we need to haircut the debt: we need to get that £20 billion down to £5 billion. That should be the key focus, because then we will be back on a stable footing and able to invest as we need to.

Storm Bert

Charlie Maynard Excerpts

Monday 25th November 2024 Commons Chamber

[Steve Reed]

It is always wise to follow the advice that is given for people’s safety. We are in regular contact with colleagues in the Department for Transport and other parts of Government to make sure that we are doing everything we can to keep people safe.

[Charlie Maynard (Witney) (LD)]

My constituency of Witney has the Windrush, the Evenlode and the Thames, all of which have really impacted constituents today. We have just lost out on some FiPL—farming in protected landscapes—funding to produce modelling of the Windrush, which is upstream of Witney, our key market town in the constituency. That means that we are unable to forecast how we can lower and slow the flood crest through Witney, which would make it safer. Will the Secretary of State please look into providing better funding or enlarging the funding for such modelling, so that we can keep towns such as Witney safe on rivers like the Windrush?

[Steve Reed]

I recognise the hon. Gentleman’s point. We will make announcements on FiPL early in the new year.

Water Companies: Regulation and Financial Stability

Charlie Maynard Excerpts

Wednesday 23rd October 2024 Westminster Hall

[Charlie Maynard (Witney) (LD)]

I am honoured to serve under your chairmanship, Mr Pritchard. I thank my hon. Friend the Member for Westmorland and Lonsdale (Tim Farron) for letting me wrap up this debate, and I thank all the speakers who spoke so well and eloquently about the places they represent and love.

I am the Liberal Democrat MP for Witney and a West Oxfordshire district councillor. Our area is a ground zero for pollution. The Windrush flows through Witney, the Evenlode flows through to the north, and Shill brook flows to the south. All flow into the Thames. All are repeatedly and heavily polluted. I work closely with Windrush Against Sewage Pollution, one of the best advocacy groups in the country, to get to grips with this problem. I have learned a lot from that group and from many of the other parish councils and community groups that work so hard locally, and I am grateful for everything they have taught me.

I will focus on financial stability, or the lack thereof, and on Thames Water, as it is the largest and the most unstable of the water companies. First, I will give some context. Thames Water has six holding companies stacked one on top of the other. Some of them are offshore; some are onshore. The top holding company, Kemble, has £1.2 billion of operating cash flows—that is, money coming in—and £18 billion of debt. Roughly £13 billion of the £18 billion is held by class-A bondholders, and Members will hear a bit more about them. This debt is expensive, and more than a third of all our customers’ bills are being spent on servicing the debt.

In July, S&P and Moody’s cut the credit ratings of the class-A bonds to junk and two notches below that. That action put the company in breach of its operating licence. Ofwat waved some limp celery at Thames Water and did very little. That opens up moral hazard because it means that other water companies and other companies in regulated sectors can do the same. On 5 August, the Under-Secretary of State for Environment, Food and Rural Affairs, the hon. Member for Kingston upon Hull West and Haltemprice (Emma Hardy), stated in reply to my written question that Thames Water’s financial position “remains stable”.

In early September, it became public that various funds, including the notorious Elliott Management, which pillaged Argentina and Peru, had bought large amounts of class-A debt at very discounted prices. On 13 September, the Under-Secretary of State replied to me again, saying that Thames Water “remains stable”. She noted that special administration was an option if any of three conditions were met, with one of the conditions being if

“the company is or is likely to be unable to pay its debts”

—pretty simple. On 26 September, both S&P and Moody’s slashed Thames Water’s class-A debt again. It was already two notches below junk; this time it went down a further five and six notches respectively. The words “death spiral” spring to mind.

A week ago, it was reported that Ofwat is meeting a creditor group representing the class-A shareholders to discuss restructuring the company’s debt. The condition that

“the company is or is likely to be unable to pay its debts”

has most definitely been met. The company’s cash burn is faster than previously forecast, and the company as is will likely run out of cash by December. Its class-A bondholders are desperate to avoid special administration as that would crystallise their loss and result in much of their debt being written off. However, the creditors are now negotiating with Ofwat to inject a relatively small amount of new capital in, cram down the other debt classes, resulting in perhaps a 20% to 30% debt write-down, flip some of their debt into equity, and then sell the company on to another buyer within 12 months, making a huge profit.

If the Government allow such a restructuring, they are effectively rescuing a group of lenders, including vulture funds, not the company. Instead of the bondholders having to write off billions of pounds of worthless debts, the Government will be giving ownership of the company to the vulture funds, which will then flip it at a profit. Such a route is neither sensible nor equitable for the company, the Government or our country. It is a lazy, short-term fix from which the Government can repent at leisure over the course of the parliamentary term. No one will be fooled by the Government claiming that in the short-term the market has fixed it, and no one should be panicked by bankers claiming Armageddon but, in reality, just driving their own agenda.

The special administration regime was set up for exactly this scenario. The Government should make use of it and place Thames Water into special administration, allowing for an orderly restructuring and reorganisation resulting in the sale of a clean company on the open market; whether that is nationally, mutually or privately is, of course, up to the Government, but that will allow a clean company to be in place. To be investable again as a sector, we need a clear regulatory framework that is transparent and enforceable against, where companies that make bad decisions know they will have to take the consequences. That will allow investors to fund water companies’ balance sheets so they can handle the very substantial investment spend that will be required over the next 10 years.