Planning and Infrastructure Bill

Earl Russell Excerpts

Report stage
Wednesday 22nd October 2025 Lords Chamber

[Baroness Coffey (Con)]

My Lords, this amendment was debated in Committee, led by my noble friend Lord Gascoigne, who did a marvellous job of it, because I was away representing Parliament in the US. However, I have decided to retable it as I am conscious of the timing of the contributions last time. Only a couple of days beforehand, the Government, or rather Sir John Cunliffe, had published the review. In the response, the Minister referred to the March 2025 report by the Government regarding regulators and felt that it was too soon to be considering this issue. I am also conscious that, if I were to press this amendment, I would have gone further and amended the Water Industry Act 1991, the parent act of these regulations.

Why does this matter? We have just seen a Division on smaller reservoirs, but I am conscious that, particularly with the current financial environment regarding the water industry—which, by the way, will be putting a record amount of capital into fixing things such as sewers over the next five to 10 years, as well as the other work being done—there are still significant needs for reservoirs. We should recognise, as will be said, that a reservoir has not been built in the last 30 years. I remind your Lordships that, in 2015, the expansion of the Abberton Reservoir in Essex was completed, which increased its capacity by about 58%. The water industry has got far more efficient in its use of water and, while there are still leaks, they have also significantly reduced. Nevertheless, the pressure on water resources in this country is acute.

The reason that I seek to encourage the Government to look at this is, frankly, in recognition of how successful the Thames Tideway Tunnel project was—indeed, is. Bearing in mind the amendment passed by the Government on Monday, this amendment would open up opportunities to reduce the cost of consumers’ bills in relation to these significant reservoir projects, and indeed other projects.

That is why I continue to encourage the Government to look back at the 1991 Act and these regulations. A lot of what is happening in this Bill is reportedly being done to try and say to the OBR this is a way of increasing investment. Meanwhile, Part 3 is being used as a sledgehammer to crack a nut. That is why looking at some more straightforward aspects of deregulation could go a long way to resolving some of the infrastructure issues that this country faces.

I should be interested to hear from the Minister where the Government’s thinking has moved on this, if at all, but it is not my intention to test the opinion of the House. I beg to move.

[Earl Russell (LD)]

My Lords, I rise briefly to respond to the amendment in the name of the noble Baroness, Lady Coffey. It was moved in Committee by the noble Lord, Lord Gascoigne. It aims to remove the size and complexity tests currently required for awarding a water infrastructure project licence. While this is a technical amendment, it would have significant implications.

Under existing regulations, a water infrastructure project licence is awarded only if the project is considered large or complex enough to potentially threaten the incumbent water undertaker’s ability to deliver services. The test involves assessing factors like projected costs, risk profile, delivery complexity and the water company’s competencies, among others, to determine whether specifying the project to an extended provider would result in better value for money and service stability. The amendment’s goal is clear: it is to remove this test.

I have listened to what the noble Baroness said. It is argued that the amendment would allow smaller or less complex projects potentially to be outsourced or treated as specified infrastructure projects, SIPs, and offer better economic efficiency. While we recognise that this could lead to broader applications of the project licences and potentially facilitate more third-party infrastructure projects in the water sector—we share this ambition to accelerate infrastructure delivery—we are cautious on this amendment, and I follow the line that we took in Committee. The current regulatory framework, which includes a size and complexity threshold, exists as a crucial safeguard. Ofwat’s regulations are intended, and the test ensures it, for ambitious projects, if managed by an incumbent company, not to threaten the water company’s fundamental services obligations to its customers.

Given the widely acknowledged fragility of the water sector more generally and the broken infrastructure that has led to substantial water wastage, we must think carefully before rushing to add to this. Instead of risking unintended consequences through a quick legislative fix, we prefer a more robust path that could be considered by the Government co-funding models, for example, similar to those used in the nuclear sector, if crucial projects exceed what companies can realistically deliver.

It is also essential to take note of the Government’s concerns raised in Committee regarding the amendment. They confirmed that they actively resisted this amendment, certainly in Committee. They have already made a commitment to review the specified infrastructure projects, SIPR, framework. Our understanding is that Defra intends to amend it to help major water companies to proceed more quickly and deliver better value for bill payers. The Government stated their concerns that removing the size complexity threshold now would pre-empt that planned review process. They emphasised the importance of ensuring that any changes are properly informed by engagement with regulators and industry to create a regime that remains targeted and proportionate to the sector’s diversity needs. The Minister assured the Committee that this essential review, which follows the publication of the Cunliffe review on water industry modernisation, will be completed in this calendar year.

For those reasons, while we welcome the spirit of Amendment 58A, we believe that the responsible course of action is to allow the Government to complete their committed to and planned regulatory review, so we are unable to support this amendment.

[Baroness Scott of Bybrook (Con)]

My Lords, I support Amendment 58A, tabled in the name of my noble friend Lady Coffey. As we have heard, under the current framework, only projects deemed sufficiently large or complex can be considered for a separate infrastructure licence. This threshold may have made sense at the time that the regulations were introduced, but it now risks being a barrier to innovation and investment in the sector, which is already under increased strain. By removing this test, the amendment would allow projects to be assessed on their value for money alone—a clearer, more practical standard. It would not lower the bar for scrutiny but rather broaden the scope for alternative delivery models, where they can be demonstrated to give clear public benefit.

Given the ongoing challenges around water security, pollution and climate resilience, we should be enabling a wider range of solutions and not limiting them to outdated regulatory constraints. This is a modest and targeted amendment that would give Ofwat and the relevant authorities greater flexibility to support efficient investment in our water infrastructure. We agree with its intent, we support it, and we hope that the Government will think again.