Water Companies: Regulation and Financial Stability

Emma Hardy Excerpts

Wednesday 23rd October 2024 Westminster Hall

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

It is a pleasure to serve under your chairmanship, Mr Pritchard. I thank the hon. Member for Westmorland and Lonsdale (Tim Farron) for securing this debate. I will make sure he has time to sum up at the end.

In response to the shadow Minister, I think the Government’s record speaks for itself. Although he might wish to rewrite history, he cannot actually change history. If people want to see what his Government achieved, they just need to look at a storm overflow pipe or perhaps the level of pollution in every river, lake and sea. The public outrage and outcry over this issue is felt by everybody. It is certainly felt by this Government.

The level of pollution in our iconic lakes such as Windermere and in our beautiful chalk streams—we have had debates on this before—is outrageous. It is right that that has become more of an issue as time has gone on. That is a positive thing. We need to value our nature to a far higher level than we ever did before, and change is needed. Indeed, we were elected on a mandate to bring about that change. I am pleased that climate change was mentioned in the debate as well. Our problems will only increase because of our changing climate. Everywhere will perhaps not be quite as wet as the constituency of the hon. Member for Westmorland and Lonsdale, but places will certainly be getting to those kinds of levels.

I pay tribute to all the campaign groups and organisations that have come to meet me since I became the Minister with this responsibility. Those people are incredibly passionate and dedicated, often citizen scientists giving their spare time to work on this issue, because they passionately believe in it.

I must mention the wonderful speech of my hon. Friend the Member for Easington (Grahame Morris), the quietly spoken radical. I welcome his support for the Water (Special Measures) Bill. Never let his quiet ways lead to underestimating the secret radicalness within him. I hope that he will contribute to the water review and the consultation. We will welcome his expertise.

I pay tribute to a fantastic new Member, my hon. Friend the Member for York Outer (Mr Charters), who is a brilliant local champion. I value his contribution and I share his outrage at the levels of sewage he has seen in his constituency. I agree with the very good point he made: when we look at the consultation, we should look at other regulatory systems to see what works well and at what lessons can be learned, so that we create a system that is effective for the future. I hope that that is something that he, too, feeds into the consultation.

The Water (Special Measures) Bill has been mentioned a number of times. Before it comes to this House, I will organise drop-in sessions for Members of Parliament, who are welcome to talk to me about possible amendments and things that they would like to see in the Bill. I am happy to discuss that. I will of course make time for all the Front-Bench spokespeople to talk to me about it, too.

I have to say, however, that I was rather surprised to hear criticism by Members of Parliament of the idea of inclusion, of consultation with our commission. This Government believe in doing things with people and not to people. I will go so far as to say that the Government are not arrogant enough to believe themselves to have all the answers and expertise, especially with so many experts out there. The Government want to reset our water industry for decades to come and—this is in my DNA and is stated on the back of my Labour party membership card—we believe

“that by the strength of our common endeavour we achieve more than we achieve alone”.

This is my philosophy of working with other people—looking at systems of co-production, at how we can create consensus, and at bringing together different ideas and expertise. I was therefore a bit surprised to hear that the idea of consultation and including others should be ignored. In fact, the previous Government had many examples of being arrogant enough to presume that they knew all the answers. Indeed, that Government created systems and policies that have been found to be utterly failing, because they did not listen to what the general public or campaigners were saying.

There is little point to different Members of Parliament talking about how they value the contribution of campaigners and organisations—how welcome those are and how well they have worked with them—when they also say that the ideas and expertise of those campaigners and other people should not contribute to Government policy. Deeds, not words—if we value people’s expertise and contribution, we must let them work with us to shape legislation for the future.

This commission will work with those experts, will value their contributions and listen to them, and will shape something that is fit for the future. It will conclude in June and, after a couple of months of looking at the consultation and Government response, further legislation will be brought forward. Some things will need primary legislation to change, as the shadow Minister, the hon. Member for Keighley and Ilkley (Robbie Moore), understands, but some things can be done more quickly. That very much depends on the recommendations. If primary legislation is required, obviously such things will take longer.

An important point to make is that the Government want to do things in a different and inclusive way. I reach out to each and every one of the people in this Chamber to say: “We want to do this with you.” Yes, there will be different points of view across the Chamber and there will be different ideas about what the right answer is, but let us act collectively on this, not just as Members of Parliament across the House, but as campaigners, organisations and members of all groups, even my mum’s wild swimming group—I am sure they have many an opinion on what the right policy should be. Let us come together to create something meaningful that will command cross-party support and make a difference. That is what we want from this consultation. I will be honest: I am a bit disappointed that people think consulting and working with others is a bad idea.

While I am having a slight moan about things that are slightly disappointing, there seems to be a confused message coming from the Chamber. Members have highlighted that some of the drought plans for water companies are rather, shall we say, extreme, as they involve shipping water over from other countries to deal with droughts, but they also criticised building reservoirs. They cannot do both. If we are going to plan for droughts, we need to talk about building reservoirs and ensure we have the infrastructure we need for the future.

What have the Government been doing? In week one, we got all the CEOs together in a room and talked to them about how we fix the industry. From that meeting, we secured a change to the articles of association, ringfenced funding for vital infrastructure, and new customer panels, and strengthened the protection and compensation for householders. In the week after the summer recess, we introduced the Water (Special Measures) Bill, so in our first 100 days we have hardly been resting on our laurels.

A lot has been said about the independent commission. It is really important that it is independent, and I am pleased that my hon. Friend the Member for York Outer paid tribute to Sir Jon Cunliffe, whose expertise and financial record are second to none, so is somebody we can work with collectively to produce something really effective.

[Robbie Moore]

On the commission, would the Minister be kind enough to outline to the House the timings? The PR24 process, which Ofwat is looking at, comes into effect next year and will be in place until 2029-30. Will any positive recommendations from the commission take effect within that price review period?

[Emma Hardy]

The shadow Minister is pointing out the way we plan and look at our five-year cycle. Whether that is the best way of doing things is a whole other question. The answer is the one I gave earlier: it very much depends on whether things need primary legislation. Some things that change the regulator will not affect the price review framework. The price review framework is based on the amount of money that people will invest in infrastructure, and changes needed for the next five years. That does not mean that things relating to regulation and the rules cannot be changed. I am sure he understands that.

I reiterate the Government’s commitment to driving meaningful, long-term improvements in the performance and culture of the water industry. We want to deliver on our ambition to clean up our rivers, lakes and seas, and the actions I have outlined today are only the beginning. I am passionate about this issue, and am very pleased to be leading on it. In fact, I asked to become the Minister for it, and we do not always get what we ask for in politics. I reiterate my invitation to work with each and every Member here. I think consultation and collaboration are good things, and I hope all hon. Members will embrace that. I look forward to working with them to achieve the goal that we all share: cleaner rivers, lakes and seas.

--- Later in debate ---

[Emma Hardy]

rose—

[Tim Farron]

If the Minister wants to say, “Yes”, she will meet me, I will be delighted to give way to her.

[Emma Hardy]

In the spirit of collaboration, which I have just spoken so much about, of course I will meet the hon. Member.

[Tim Farron]

Mr Pritchard, she’s a good ‘un. I thank the Minister very much indeed; I appreciate that.

Finally, I thank everyone who has contributed to the debate, but I also thank you, Mr Pritchard. That might sound a bit smarmy, but you and I go back a long way. I wish that when I first started here I had a Chair of Westminster Hall debates who talked us through the process as well as you have today. I am very grateful to you, and indeed to everybody else who has been here for this debate.