Water Companies: Executive Bonuses

Claire Hanna Excerpts

Tuesday 5th December 2023 Commons Chamber

[Rebecca Pow]

I am going to carry on for a bit.

Ensuring that our regulators are fit for purpose, to enforce our new regime, is absolutely crucial. With that in mind, we have increased the Environment Agency’s overall grant-in-aid funding by over 40% and capital funding by 80% since 2010. We have also provided an extra £2.2 million per year specifically for water company enforcement activity. In May we did even more: we provided £11.3 million of funding increase to Ofwat to treble its enforcement activity, because both EA and Ofwat have enforcement powers. In June, in recognition of the urgency of action, Ofwat approved a further £2.2 billion of accelerated infrastructure, which included £1.7 billion of investment, in reducing sewage discharges, including a major project to reduce sewage discharges in Lake Windermere.

The shadow Minister mentioned automatic fines. That idea would backfire, because if the regulators found evidence of criminal misdemeanours, it would prevent them from going through the courts and we would effectively end up with even higher fines. So the system of automatic fines would not work, but we have just brought in our unlimited penalties for the environment, so the regulators could use that option, but we still need the option for them to go to the courts if necessary.

[Claire Hanna (Belfast South) (SDLP)]

On that point, will the Minister give way?

[Rebecca Pow]

I will talk about stronger regulation now. We are bringing in even tougher regulations than ever before to hold water companies to account. In the summer, Ofwat confirmed new plans to ensure that customers no longer fund executive bonus payments where companies have not met Ofwat’s expectation on environmental performance. Using new powers granted to Ofwat by this Government in the landmark Environment Act 2021, Ofwat announced in March that it will take enforcement action against water companies that do not link dividend payments to environmental performance. As I said, we have also legislated to bring in unlimited penalties on water companies that breach their environmental permits. The changes will provide the Environment Agency with the tools it needs to hold water companies to account.

[Claire Hanna]

The Minister may be aware of the evolving environmental catastrophe in Lough Neagh, which is the largest lake in these islands and a key biodiversity asset for Northern Ireland. It is dying in front of our eyes because of blue-green algal bloom related to agricultural run-off and sewage discharge from Northern Ireland Water, which is entirely Government owned. In that context, does she agree with me that Northern Ireland desperately needs an independent environment agency, to try to reconcile the competing priorities of the Department of Agriculture, Environment and Rural Affairs—DEFRA’s sister Department in Northern Ireland—which is responsible for both swelling agricultural assets and protecting the environment? Clearly, in this context the environment is being failed.

[Rebecca Pow]

I have heard about this incident. I refer DAERA to our plans on water to see how we are tackling such issues. Farming is a big cause of some of the pollution. We have launched our slurry infrastructure grant and a range of measures to work with farmers to cut down that pollution, so lessons could be shared.