King’s Speech

Duke of Wellington Excerpts

Monday 13th November 2023 Lords Chamber

[The Duke of Wellington (CB)]

My Lords, in this very wide-ranging debate this afternoon, I wish to speak about the environment, and in particular the aquatic environment. I had hoped that there might have been a reference in the gracious Speech to the regulation of water companies. Almost every day we read in the newspapers of yet more revolting discharges of sewage into our rivers and on to our beaches. The Environment Act 2021 placed new obligations on water companies to limit such discharges. The Water Services Regulation Authority, Ofwat, and the Environment Agency are taking this matter a great deal more seriously than they did before the passing of that Act, and public awareness and concern have continued to rise. In the local elections last May, it became an important political issue—but the continuing level of discharges is an embarrassment to this country.

Many people rightly question how we could have got ourselves into this shameful situation. There have been suggestions that the water companies should be renationalised. I am personally not in favour of that, but I think we must now accept that, when these regional public service monopolies were privatised, the regulatory structure then created has been found to be inadequate. Any monopoly, particularly of a public service, must necessarily be methodically regulated. Unfortunately, for the water industry this responsibility is split between Ofwat, the financial regulator, and the Environment Agency, the environmental regulator.

The Environment Agency has many responsibilities and monitoring sewage discharges has not in the past been a high priority. I therefore propose to Ministers—and I realise that the noble Baroness, Lady Penn, is a Treasury Minister, and I hope that she will pass this on to her colleagues in Defra—and to the Opposition—I am pleased to see the noble Baroness, Lady Hayman, in her place—that whoever is drafting the next King’s Speech should include an undertaking by His Majesty’s Ministers to introduce legislation to Parliament to place all regulation of water companies in one regulator. I am not aware of any other regulated industry where the responsibility is divided.

In trying to analyse the causes of this dire situation, we see a number of possible reasons. Ofwat may not have been aware of the level of investment required to cope with the enormous increase in wastewater being generated by housebuilding and home improvements. It may not have been aware of the increasing volumes of rainwater being channelled into the sewerage system. Equally, the Environment Agency had not been aware for years of the level of illegal discharges and the degree of investment required to rectify it. I sympathise with officials at both regulators, who are trying to do their jobs. At Ofwat, one hand was tied behind their back, and at the Environment Agency they have been more concerned with other matters, such as floods and flood management.

My request, perhaps to the new Secretary of State, is to allow officials at the Department for Environment, Food and Rural Affairs to study the possible restructuring of water company regulation so as to place it unambiguously with a single regulator. This will probably lead to higher investment, which is absolutely necessary; to lower dividends to water company shareholders, which with hindsight have been too high; and to lower bonuses for management, which have clearly been too high. This is not a glamorous subject. In this green and pleasant land—a phrase used earlier in the excellent maiden speech by the noble Lord, Lord Gascoigne, but worth repeating—we simply cannot go on polluting our rivers and beaches.