Pollution in Rivers and Regulation of Private Water Companies

Duke of Wellington Excerpts

Thursday 29th February 2024 Lords Chamber

[The Duke of Wellington (CB)]

My Lords, I declare my agricultural interests, which may be relevant to this debate. I also congratulate the noble Baroness, Lady Bakewell, on securing this debate. I am slightly saddened to hear, from various sides, party-political views on this matter. In my opinion, this is not a party political issue. I think that all parties in this House, and those with no party affiliation, share a determination to try to do something about this serious situation.

There is no doubt that pollution in our rivers affects the whole population, and there is wide public support for legislation to clean up our rivers and beaches. Unfortunately, despite many improvements made by this House to the Environment Act 2021, and despite various plans and intentions published by the Department for Environment, Food and Rural Affairs, the Environment Agency and Ofwat, the situation does not appear to be improving.

The Office for Environmental Protection—a new agency created by the Environment Act—stated in its recent annual report:

“The current state of the water environment is not satisfactory. Despite historic improvements, the pace of change has now stalled.”


It is well known, and a number of noble Lords have mentioned it, that only a small proportion of our rivers are in a good ecological state. In a report by the Rivers Trust, published earlier this week and referred to by several noble Lords, this country’s rivers are described as being in a

“desperate state … plagued by sewage, chemical, nutrient and plastic pollution”.

What can be done to encourage an improvement in our rivers? As the Office for Environmental Protection clearly states in its report, the Government’s ambitions can be achieved only with

“effective management of the farmed landscape and engagement with the nation’s farmers and landowners”.

Unfortunately, the rollout of the environmental land management schemes has been slow, and this will have impeded the reduction in the pollution in our rivers coming from agricultural activities. We have been slow in dealing with the slurry from intensive farming systems located in certain river catchment areas.

However, the inexcusable cause of river pollution is the continuing discharge of raw and untreated sewage. This has been happening for decades, and planning authorities throughout the country have been insufficiently insistent on improvements to sewage treatment plants to cope with new housing developments and so many house improvements. The various parts of central and local government have been insensitive to the scale of sewage pollution entering rivers and lakes. With hindsight, I think it is now clear that the regulatory structure created when the water companies were privatised over 30 years ago has been shown to be inadequate.

In the short term, it will be necessary to enforce to a greater extent compliance with new regulations for slurry management and the control of other farm waste. For the water companies, it will probably be necessary for Ofwat to insist on an even greater level of investment in sewage treatments—including, where possible, nature-based systems. I know that many ambitious investment plans have been announced, but I fear they are not adequate for the dire situation in which we find ourselves. I also fear—and it is uncomfortable to say this—that all this may involve increases in water charges greater than the rate of inflation. This must be coupled with a reduction or elimination of dividends until the discharges have been reduced to a minimum.

In the medium term, we must review the structure of regulation. I realise that this would be complex and that the transition could be disruptive. As the Minister and all the party spokesmen are here participating in this debate, I ask them to discuss with their respective colleagues whether all parties should include in their manifestos at the next election a commitment to an independent review of the structure of the regulation of the water industry. Such a review might well conclude, as I have, that it is necessary to have a single regulator, rather than the continuing splitting of responsibilities between the Water Services Regulation Authority—Ofwat—and the Environment Agency. The water companies are, of course, monopolies in their own geographic areas, and must therefore be regulated. I cannot think of other monopolies where the regulation is divided between two different agencies.

I do not suggest that it would not be complicated, and have other consequences, to change the manner in which water companies are regulated and held to account, and any change would not have an immediate effect. But the present system of regulation has meant that it has taken us decades to realise the full extent of the pollution damage, while the industry has become increasingly indebted and yet has paid out regularly dividends to shareholders, who in many cases are not the public shareholders who originally bought shares from the Government but private equity firms that may not share the same environmental objectives as the Government or the public. Some noble Lords have mentioned bonuses. I agree that it is rather shocking how much has been paid out in bonuses to companies which have been polluting regularly our rivers.

I realise that there is no quick fix for the current state of our rivers, lakes and beaches. But we must continue to keep pressure on the Government, local authorities and the regulators to reduce the discharges of sewage and the agricultural waste entering our river systems. A greater sense of urgency is now required.