Bathing Water Regulations
Emma Hardy Excerpts(1 month, 3 weeks ago)
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The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Emma Hardy)
It is always a genuine pleasure to serve under your chairmanship, Sir John.
I feel that we are having a little bit of a love-in this afternoon, which is always a nice way to start. Of course I will be more than happy to pass on the thanks from the Opposition spokesman, the hon. Member for Keighley and Ilkley (Robbie Moore), to the team who have worked on this issue. I thank the hon. Member for Taunton and Wellington (Gideon Amos) for securing this really important debate. There is so much agreement in the room that I almost wonder whether we are still in the House of Commons. I will certainly try to cover most of the points that have been made.
Just to set the issue in context, we completely accept and believe that the water system at the moment is broken. That is why, when we first came into office, we changed the articles of association to put customers and their opinions into the water boards. It is why we are doubling the compensation for people who face water outages. It is why we have ringfenced money so that it cannot be diverted from infrastructure improvements and into bonuses. It is why we have the Water (Special Measures) Act 2025, which just came into force and got Royal Assent last week—because we know that the system as a whole is broken. It is also why, just last Thursday, I was in Manchester with Sir Jon Cunliffe, launching the call for evidence on water. I strongly urge every Member here to respond to that call for evidence. There is a huge, 200-page consultation document that goes with it but, just because we are kind, there is a 20-page executive summary as well, so please have a look at that, respond to the consultation and make some of these points there.
Bathing waters in and of themselves are not under the water commission. The reason for that is that I wanted to do something on bathing waters really quickly; I did not want it to get delayed by the water commission when we already knew some of the things that we wanted to look at. I will quickly go over some of the things that we are looking at changing. At the moment, the regulations are one size fits all. I would like to reassure people talking about the dates around bathing waters. Obviously, we will officially respond to the consultation; there will be an official Government response, but so far I have yet to see put forward any evidence that seems to indicate that there is a wish to shorten the bathing water window. In fact, most people are advocating to keep it the same or extend it, recognising that some people go swimming all year round.
This is the perfect point at which to mention my mum, who has decided to do open water swimming and swims all year round, and now has her own wetsuit. I think it is amazing that she has discovered open water swimming in her retirement—slightly crazy, but definitely amazing. As I said, we will obviously have a formal response to the consultation, but so far I have not seen anybody advocating shortening the bathing season. I wanted to make a point of mentioning that.
On the de-designation points, I wholeheartedly accept the points made by the spokesman for the official Opposition and by the Liberal Democrats that it would be an incentive for companies not to invest in improving the water if they knew that after a certain number of years it would be de-designated—although of course I must add the proviso that we have not officially responded to the consultation. However, from looking at what we have had so far, that is certainly what I am feeling.
I also want to address this point. I am sure that it was not intended, but I wondered whether it was coming through that bathing water status is the golden ticket to improve the water in an area. I do not accept that, because if we are saying that bathing water status is the golden ticket to improve the water, that means that we are also almost accepting, on the flip side of that, that if people do not have bathing water status, we are okay with their water being completely polluted.
We are not okay with that. We want to clean up all our rivers, lakes and seas, and we have a plan to do so. We have £104 billion of investment going into the next five years. We are looking at what is happening in bathing waters, and looking at iconic sites around the country. The argument that somewhere needs to have bathing water status or its waters will remain polluted, is one that I challenge head on. That argument almost accepts that we are okay with things remaining polluted. No—we should focus on something much bigger than that, which is how we clean up all of our rivers, lakes and seas, especially looking at bathing waters.
There is a major public health aspect here. It is an important point, and it is why I am delighted that Sir Chris Whitty is one of the expert advisers on the Cunliffe review looking at this. An argument is being made that asks why we are setting a standard, as if to say, “If they are really poor, we don’t want to allocate them as bathing sites.” We should pause and think about that for a moment because, as was illustrated by the hon. Member for Keighley and Ilkley (Robbie Moore), if we are saying something is a bathing site and we give it bathing water status, it implies that it is safe to bathe there. If we designate a site that we know will not be safe for many years to come, and would take a huge amount of investment to become safe, is it right to call that a bathing water site and imply that people are safe to bathe there?
So, I think the sensible and correct decision is to improve all our water everywhere through reforms, which is why we are doing the water review and why we passed the Water (Special Measures) Act 2025. Let us look at the areas that are likely to improve more quickly, and say to people, “You can bathe here, because it will improve more quickly and we can see rapid progress, but these other sites that you want to bathe in—if we think seriously—are not going to improve for a long time.” As a Government, we think that it would be irresponsible to call those sites bathing water sites when we know full well that there could be serious damage to public health.
Pippa Heylings
I wanted to clarify that there are two bodies of argument here. Given that there has been a complete lack of regulations and ways to enforce the “polluter pays” principle with water companies until now, status has been seen as one of the only mechanisms to do it. However, I would like the Minister to recognise that these are already bathing sites because the criteria is that they have to show that they are already being used as bathing sites—that they are recognised as culturally and ecologically important. Given that, even though they are poor we should be investing in them to ensure that they continue. We know that if they are declared poor, people are warned of that and therefore do not swim. So we are not subjecting people to unsafe water; we are recognising that these are key bathing areas and have historical, cultural and ecological importance—now and in the future.
Emma Hardy
I do not disagree in the slightest. To be completely clear, sites that are already designated as bathing sites of course need enhanced investment and support to improve them, even if they are poor at the moment. I was addressing the point about when we are looking to designate new sites, and answering the question why we are looking at core reform 2.
Again, I stress that we have not officially responded to the consultation. If we are looking at a site that we wish to designate in the future, which is of a really low quality, is it irresponsible to designate that site knowing that it will not reach for five to 10 years the standard it needs to reach? Like everything, that is a question for debate. But for sites that are designated at the moment, I agree that we should be putting extra investment into them even if they are poor.
I do not want to rehearse the many debates and discussions we have already had. There were 36 amendments, I think, to the Water (Special Measures) Act on Report.
Emma Hardy
Forty-four amendments! We had many debates and discussions during the passage of that Act. To rehearse an argument we have had many times before, the reason why we are not focusing on the volume of water coming out is simply because volume can be very diluted, and therefore not a great threat. There can be a small amount of incredibly toxic waste causing a huge amount of damage. I would like to see the investment going into water quality monitors. That is part of the next price review—how can we put water quality monitors in? They would measure whether it is a huge amount and it is dilute, or a small amount and it is toxic. We just want to know what damage is being done to the river. My focus is, and remains, on water quality.
There were some genuinely helpful suggestions from the hon. Member for Westmorland and Lonsdale (Tim Farron) about where to place those monitors for measuring water quality. That was a really helpful contribution. While I am paying credit to him, the way we describe it—how we say it is safe to bathe—was also a helpful suggestion.
Emma Hardy
I will; I am praising the hon. Member for Westmorland and Lonsdale—let us get back to normal.
Joe Morris
The Government have moved quickly on this issue. Does the Minister recognise that it is important that we maintain an engaged and concerned public? I have met with the Wylam clean river group and with other concerned groups throughout my constituency along the length of the Tyne. One thing that continues to resonate with me is that these groups understand that this is a consistent piece of work, and that we need to be constantly iterating on making sure that our rivers do not just get clean, but remain clean into the future. The Government and the public need to consistently work in partnership.
Emma Hardy
I wholeheartedly agree with my hon. Friend. I know that he cares deeply about this issue and has spoken to me many times about the importance of cleaning up rivers, lakes and seas. I would like to think it is something that we are united on.
Many stakeholders, many people and many Members have called for bathing water regulations to be updated to reflect the new ways in which we are using our waters or falling into our waters, whatever it might be, and to continue to support public health outcomes. It would be irresponsible for us not to consider public health when we are thinking about designation.
We are a Government who listen. We are a Government who believe in co-production. We are a Government who actively engage. I encourage all Members to contribute to the water review. It is out there now; the consultation is only open for the next seven weeks, so please do not lose the opportunity to have your say.
I put on the record my thanks to all the environmental campaigners, Surfers Against Sewage and all those organisations involved in supporting our clean rivers, lakes and seas.
Freddie van Mierlo
The Minister made some points on the length of time it would take to get some popular sites up to standard. Would she consider a pre-designation status, so that those sites are not left on the shelf with no support whatsoever—so that we are recognising, as my hon. Friends have said, the importance of certain sites for sporting, cultural and historical reasons?
Emma Hardy
That is a really interesting consideration. I hope the hon. Member fed that into the consultation. I will not commit either way, but it is an interesting point and one I will reflect on—as I said, this is a Government who listen. On that note, I think it is time for me to finish talking. I thank everyone who has contributed to this debate.
Sir John Hayes (in the Chair)
Well done for getting your mum in Hansard. I call Gideon Amos to say a few words to sum up.
Independent Water Commission: Call for Evidence
Emma Hardy Excerpts(1 month, 4 weeks ago)
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The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Emma Hardy)
A secure water supply is essential for every home and business throughout the country. It is the foundation of our economy, our communities and our global security.
This Government inherited a water sector in disrepair. The rivers, lakes and seas that we all love have record levels of pollution. Droughts are set to leave parts of the country facing significant water shortages by 2050, particularly in the south-east, and it is forecast that the UK will need to find an extra 5 billion litres of water a day to fill the gap between supply and demand. A rising population and the increasing impacts of climate change are putting strain on the water system.
The water sector needs a complete reset. That is why, in October 2024, the UK and Welsh Governments launched the largest review of the water sector since privatisation: an Independent Water Commission, chaired by Sir Jon Cunliffe, former Deputy Governor of the Bank of England, and supported by a panel of experts.
This is the third stage in this Government’s strategy on water. It follows the Secretary of State’s immediate steps to better protect consumers when he came into office, followed by new legislation—the Water (Special Measures) Act 2025. This was signed into law this week as the most significant increase to enforcement powers in a decade.
The Independent Water Commission will explore the further changes needed to deliver a robust and stable regulatory framework that serves customers and the environment, attracts the investment needed to clean up our waterways, and restores trust in the sector. It is part of this Government’s determination to tackle the inherited issues in our water system head-on.
Today, Sir Jon Cunliffe is launching a call for evidence. This invites views from the public, parliamentarians, environmental groups, investors and all other interested parties on future changes.
The call for evidence will be live for eight weeks, with Sir Jon due to provide a final report to both UK and Welsh Governments in the summer. Interested parties can read the relevant documents on gov.uk at https://www.gov.uk/government/calls-for-evidence/independent-commission-for-water-call-for-evidence and share their views through DEFRA’s online consultation tool, Citizen Space.
The Commission’s final recommendations will shape further legislation that will transform how our water system works and clean up our rivers lakes and seas for good.
[HCWS475]
Environment, Food and Rural Affairs
Emma Hardy Excerpts(1 month, 4 weeks ago)
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Emma Hardy
By using existing capital, Flood Re Ltd is keeping the increase to 18%, while its reinsurance costs are expected to more than double. The reduction from £140 million a year to £135 million a year three years ago also demonstrates Flood Re Ltd’s commitment to its responsibility for keeping the levy as low as possible.
[Official Report, Fourth Delegated Legislation Committee, 26 February 2025; c. 4-5.]
Written correction submitted by the Under-Secretary of State for Environment, Food and Rural Affairs, the hon. Member for Kingston upon Hull West and Haltemprice (Emma Hardy):
Emma Hardy
By using existing capital, Flood Re Ltd is keeping the increase to 18%, while its reinsurance costs are expected to more than double. The reduction from £180 million a year to £135 million a year three years ago also demonstrates Flood Re Ltd’s commitment to its responsibility for keeping the levy as low as possible.
Draft Flood Reinsurance (Amendment) Regulations 2025
Emma Hardy Excerpts(2 months ago)
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The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Emma Hardy)
I beg to move,
That the Committee has considered the draft Flood Reinsurance (Amendment) Regulations 2025.
It is a pleasure, as always, to serve under your chairwomanship, Ms Vaz.
The regulations were laid before the House on 15 January. As most of the Committee will know, Flood Re is a reinsurance scheme that provides for accessible and affordable flood insurance for eligible households. This joint Government and industry initiative was launched in 2016, and it was designed to improve the availability and affordability of UK household flood insurance. For clarity, Flood Re Ltd is the name of the company established to administer the scheme.
Since its launch, Flood Re has provided for flood insurance cover to more than 500,000 households across the UK that are at risk of flooding. Before Flood Re, only 9% of policyholders with a prior flood claim could get flood insurance quotes from two or more insurers, and none could get quotes from five or more insurers. In 2023-24, 99% of households at high risk of flooding could obtain quotes from 15 or more insurers.
The Flood Re scheme has evolved since its launch back in 2016. When levy 1 was last reviewed in 2022, the regulations were changed to allow for Build Back Better to be included in the scheme, allowing for up to £10,000 to be offered as part of a post-flood claim to install flood-resilient measures at the property, helping to reduce the risk and impact of future flooding.
Flood Re has taken several steps to encourage take-up of its Build Back Better initiative, including running a series of workshops and developing a toolkit for insurers. I am pleased that insurers representing some 77% of the UK household insurance market are now committed to offering Build Back Better to their customers, whether or not they have policies ceded to Flood Re. All Members will know that this is something about which I care deeply, and I want all insurers to offer it before too long. I pressed home this point when I met industry representatives at my insurance roundtable last year. However, consumer influence is far greater than mine, so I encourage everyone to ask whether Build Back Better is included when considering or renewing their household insurance policy.
Of course, the Flood Re scheme is a joint initiative between Government and the insurance industry, and we are going further than the previous Administration to invest in flood defences. As part of this Government’s plan for change, a record £2.65 billion has been committed to better protect 52,000 properties by March 2026. Maintenance of existing flood defences will also be prioritised, ensuring that a further 14,500 properties will have their expected level of protection maintained or restored. This means that a total of 66,500 properties will benefit from this funding, which will help to secure jobs, deliver growth and protect against economic damage. We will focus on fixing the foundations of the nation’s flood defences and giving communities confidence that flood defences will protect them.
We are reprioritising £108 million of investment towards repairing and restoring critical assets, including £36 million this year to target repairs at assets damaged by storms last winter and by ongoing flood events. A further £72 million will go towards continuing those repairs, and ensuring that assets are as resilient and reliable as possible, and that they operate as expected during flood events. We are also investing in new defences by making £140 million available to allow 31 schemes to progress to construction, ensuring that nearby communities are protected as soon as possible.
Returning to the specifics of this statutory instrument, Flood Re Ltd regularly and continuously monitors the risk in the market it is supporting to ensure it is in a position to continue enabling affordable flood insurance for those who need it. To do so, Flood Re Ltd is required to purchase reinsurance on a three-year basis. Taking into account changes in risk, claim profiles and the expected increase in the number of household flood insurance policies ceded to it, Flood Re Ltd has projected that its liabilities could increase from £2.1 billion to at least £3.2 billion over the next three years. That is the level of cover it needs to purchase.
In addition, the global reinsurance market has become more challenging since Flood Re Ltd last negotiated its three-year reinsurance cover. Events around the world have affected the risk appetite of those providing reinsurance, meaning that the market Flood Re Ltd can purchase from is both more volatile and more expensive.
All these factors combined have resulted in Flood Re Ltd proposing this increase to levy 1 so that it can afford to purchase its required reinsurance and continue to provide the access to affordable insurance that we all recognise the need for. I reassure colleagues that this proposal was well scrutinised before reaching the House for approval, not only by policy and financial officials in the Department for Environment, Food and Rural Affairs, but also by colleagues in His Majesty’s Treasury. This scrutiny has been informed by the Government Actuary’s Department, which has advised that the increase to levy 1 is necessary to ensure the scheme’s viability. It will also minimise the risk of Flood Re needing to implement levy 2 on the industry.
I recognise that any increased insurance costs are unwelcome at any time. The cost of increasing levy 1 is spread across all insurance companies offering UK household insurance, proportionally based on their market share. Although this is an increase to the current annual levy 1, hon. Members will all recognise that it remains well below the £180 million a year that was in place when Flood Re was established. We can be confident that Flood Re Ltd has done its due diligence in seeking this increase, and we can be reassured that it would not be asked for if it were not needed. By using existing capital, Flood Re Ltd is keeping the increase to 18%, while its reinsurance costs are expected to more than double. The reduction from £140 million a year to £135 million a year three years ago also demonstrates Flood Re Ltd’s commitment to its responsibility for keeping the levy as low as possible.
In summary, this statutory instrument allows for a necessary change to the Flood Re scheme by amending regulation 8(2)(a) of the Flood Reinsurance (Scheme Funding and Administration) Regulations 2015 to increase levy 1 placed on UK household insurance providers, from £135 million a year to £160 million a year, from 1 April 2025. This change will allow Flood Re Ltd to manage its changing risk profile, and to continue to operate the scheme effectively for those who benefit from it—notably, those households that would otherwise find it challenging to secure flood insurance—while also ensuring that the total levy is no higher than needed. Failure to increase levy 1 from April 2025 risks undermining Flood Re’s ability to provide flood cover to UK households.
I emphasise that this statutory instrument is necessary to ensure the effectiveness and continuation of the Flood Re scheme and its ability to provide affordable flood cover for the increasing number of homes in the UK that are at risk of flooding. I commend the draft regulations to the House.
Emma Hardy
I thank all hon. Members who have contributed to the debate. As has been mentioned, flooding affects so many of us. The shadow Minister, the hon. Member for Epping Forest, was right to highlight its mental health impact; we are united on that issue. It is no surprise that there has been lots of interest in the regulations, and I will do my best to cover all the points that have been raised. Not all of them were directly related to the SI, but those that were not were on no less important issues.
The shadow Minister mentioned the desire for eligibility for the Flood Re scheme to be extended. There are no plans at this time to make changes to the scheme; however, we keep all policies, including those related to flood insurance, under review, and hon. Members’ observations in this debate—and, to be honest, at DEFRA oral questions and in many other debates—are invaluable in helping to inform those considerations.
If any changes were made to the scheme in future, they would have to be able to secure appropriate reinsurance, which would be challenging in the current market. Indeed, the reason that the regulations are necessary is that it has been challenging to find affordable reinsurance for the industry. I just flag that none of the options are cost free; all of them come with a cost, and all of them would require being able to find the reinsurance in the market at the time. It might be worth putting this into the wider context in which we see the world, too—I will not go too far down the rabbit hole—and flagging that insurance is purchased globally and influenced by global events. The levy we are discussing would undoubtedly have to be increased if we were looking at any kind of increase to the scheme.
The shadow Minister also mentioned businesses. Business insurance operates very differently from household insurance; it is often bespoke, based on the individual nature of the business. Extending the scope of Flood Re to include businesses would fundamentally change the scope and the intention of the scheme, which was established to support householders who are unable to source affordable flood insurance. Any change to include any part of the commercial sector would necessarily create a new levy on all businesses, which is unlikely to be welcomed. Thinking through the implications of what the shadow Minister said, obviously, businesses are very different in nature, and if we were to create a similar scheme, we would be raising a cost on every business, in the same way that Flood Re works at the moment. There are already a number of products offered to businesses by industry, such as the British Insurance Brokers’ Association commercial property scheme, which is there to help small and medium-sized enterprises.
The shadow Minister also suggested including buildings built after 2009, but doing so would contradict planning policy. The national planning policy framework is clear that inappropriate development in areas at risk of flooding should be avoided by directing development away from areas of highest risk, including floodplains. Where development is necessary, and where there are no suitable sites available in areas with a lower risk of flooding, local planning authorities and developers should that ensure development is appropriately flood resilient and resistant, and safe for its users and for the development’s lifetime. We are committed to building more high-quality, well-designed and sustainable homes, and creating places that increase climate change resilience and promote nature recovery.
Planning was also mentioned. I am wary that we are straying into another Department’s responsibility, but I will do my best to address the issues as they relate to flooding. We are committed to building new homes and promoting nature recovery. In July 2024, the Government issued a consultation, inviting views on proposed reforms to the national planning policy framework to achieve sustainable growth, including views on the potential improvements to planning policy for flood risk. If developments need to be in locations where there is a risk of flooding as alternative sites are not available, they should be flood resilient and resistant, and safe for their lifetime, and really importantly they should not increase flood risk overall.
The food resilience taskforce was mentioned. It has met as an entire body twice. The idea is that everybody on the taskforce meets—it has about 30 members—and then we commission sub-groups to deep dive into some areas. Those groups then report back to the main taskforce. For example, on nature-based solutions, which the shadow Minister and I both care about, a sub-group of the original taskforce went away and looked at that in detail. It will then report back to the main taskforce.
The main taskforce is like a large convening body that includes National Farmers Union representatives, a Cabinet Office Minister and representation from the Ministry of Housing, Communities and Local Government—all the bodies are represented—and we then go away and look at things in detail. As a result of the most recent taskforce meeting, a smaller group is going to do a deep dive into flood warnings. A smaller group from the taskforce—not all 30 members, but the relevant ones—will go away and do that piece of work, which then feeds back to the taskforce and reports back to everyone.
It is envisaged that the big group will meet just a few times a year, and in between smaller groups will do deep dives into some of the particular issues. Rather than getting 30 people together every week, it feels more sensible to get those people together to look at the bigger picture and then have smaller groups doing deep-dive work into individual issues. That is the structure of the taskforce; I hope that reassures the shadow Minister as to how we intend it to work.
On frequent flooding, the flood funding formula review is looking at how it all works. The shadow Minister is right to highlight that the previous Government had the flooding formula and then the frequently flooded add-on. They then had another add-on for nature-based solutions. My vision—of course, this is subject to consultation, so Members should feed in their views—is that the flooding formula should incorporate those people at risk of frequent flooding, as well as nature-based solutions. Rather than having a formula to which we are almost sticking things to try to make it work, the formula itself should encompass many of the different issues. That is going to be out for consultation and, as I say, I am keen to hear feedback through that consultation about how the formula will work.
The formula was originally based only on the number of properties protected, which meant that it seemed to disadvantage people from rural communities because they were not as adequately represented because, by their very nature, rural communities have fewer properties. It is really important that we look at how that works. The shadow Minister mentioned the importance of the frequently flooded aspect and, yes, that must be part of the formula—not an add-on but an integral part of it.
I completely agree that it is important to get the information that people need. Each of us as leaders in our local communities can have a role in this. It is not just about flood alerts. The other thing that I am currently playing with in my mind is my feeling that people do not know what to do when they get a flood alert. It is not just about getting a flood alert; do people know what they need to do in that situation? I am thinking about how we can work across the House not only to encourage all our constituents to sign up for flood alerts but to say what they need to do when they get one. There are simple things—for example, so much damage could have been prevented in the last period of flooding if people had moved their cars. We want people to take those kinds of actions. How do we get that behaviour change so that when a flood alert comes people say, “Right, I’ve got to go and do this”? I am really keen to work with colleagues across the House on that.
Reinsurance and the increasing risk is also incredibly important. After this measure Flood Re will be buying three years’ worth of reinsurance, so for the next three years there will be enough reinsurance to cover all the properties needed. At the end of that three years, we might be here again talking about the flood insurance costs going up and having to rebuy it.
Coastal erosion is not part of Flood Re, because Flood Re is based on flooded properties, but I absolutely hear the hon. Member for North Norfolk’s point about the devastation caused by coastal erosion. My constituency is in Hull, but I am very near to the east coast and can see exactly what is happening there, where the roads and caravans are disappearing. I have nothing but sympathy and support for the people impacted. I know that East Riding of Yorkshire council has been working on this issue, and the hon. Gentleman’s local council will be working with the Environment Agency to come up with a coastal change plan. I encourage him to talk to the area director and the council and get them to explain their plan to deal with coastal erosion. DEFRA helps to fund that work, but it is not strictly part of the Flood Re scheme.
I hope I have covered most of the points raised, so let me turn back to the statutory instrument. I thank all Members for their support for the SI, which will ensure that Flood Re is able to purchase all the necessary reinsurance at the best possible price, so that it can continue to be dynamic in meeting the needs of those the scheme is intended to support. If the increase was not supported—although it is, so thanks everyone— Flood Re would have to look at other sources of income. It is good that it is not in that position. I commend the draft regulations to the Committee.
Question put and agreed to.
Resolved,
That the Committee has considered the draft Flood Reinsurance (Amendment) Regulations 2025.
Water (Special Measures) Bill [Lords]
Emma Hardy ExcerptsTuesday 11th February 2025
(2 months, 2 weeks ago)
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The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Emma Hardy)
I beg to move,
That this House insists on Commons Amendment 1 to which the Lords have disagreed, disagrees to Lords Amendment 1B, to the words restored to the Bill by the Lords’ disagreement to Commons Amendment 1, and proposes Amendments (a) and (b) to the Bill in lieu of the words left out by Commons Amendment 1.
Madam Deputy Speaker (Caroline Nokes)
With this, it will be convenient to consider the following Government motion:
That this House insists on Commons Amendment 2 to which the Lords have disagreed, and proposes Amendment (a) in lieu of the words so left out.
Emma Hardy
I am delighted to have another opportunity to debate this transformative Bill in this Chamber. I thank all Members for continuing to take an interest in this important piece of legislation, which demonstrates our shared commitment to improving the water sector. Today, this House will consider amendments made in the other place.
I recognise that there is huge interest across this House in wider issues relating to water. Though our debate today is solely focused on the changes made to the Water (Special Measures) Bill in the other place during the Lords’ consideration of Commons amendments on 5 February, I look forward to future opportunities to discuss wider concerns and actions, for example through work relating to the independent commission.
I turn first to the changes made in the other place that would require water companies to regularly report to Ofwat on their financial structure, and to ensure that that information could be readily accessed and understood by the public. It is important to highlight that water companies are already required under their licences to publish by a set date financial performance metrics within their annual performance reports. That includes the interest on their borrowings, their financial flows and an analysis of their debt. If water companies do not comply with these licence conditions, Ofwat can take enforcement action, including issuing fines.
However, the Government recognise that there is an opportunity to make financial data more accessible for members of the public. The Government have therefore worked at pace with Lord Cromwell and Ofwat to develop a way to achieve our shared objective of improving the transparency and accessibility of reporting on key financial metrics. The insertion of a new section 35E into the Water Industry Act 1991 will make it clear that water companies should provide an intelligible overview of their financial position at least once a year. That overview should include a summary of the significant changes that have taken place over the past 12 months, and will cover key aspects of water companies’ financial position, such as their share capital and debt.
Barry Gardiner (Brent West) (Lab)
Ofwat has said that it believes that the right level of debt should be 60%, yet it has taken no action against those companies whose level of debt has risen to as much as 80%. Can the Minister assure us that under the Bill, Ofwat will not only have the power to act when companies’ debt levels are too high, but will use it?
Emma Hardy
I thank my hon. Friend for his intervention. I know how much he cares about this and many environmental issues. Amendment (a) refers only to the reporting arrangements for levels of debt rather than specifying the levels of debt that would be acceptable. It is about increased transparency, whereas his points fall more into the remit of the water commission, which is looking at all those issues as part of its wider work. I stress that the amendment is just about how information is reported and transparency.
The information must be made available in a prominent place on the water company’s website, ensuring accessibility for members of the public. Subsection (4) of proposed new section 35E also provides Ofwat with the power to determine the information that a water company must publish, as well as the ability to review requirements on financial reporting from time to time. That addition will ensure that reporting requirements keep pace with changes in the expectations and needs of bill payers. I would like to be clear, however, that the Government expect the power to be used to ensure that reporting requirements remain relevant, rather than to dilute or diminish the ambition of reporting requirements.
Financial reporting will also continue to be underpinned by pre-existing statutory obligations and licence conditions. In line with other requirements brought forward in clause 1, this new requirement will commence on Royal Assent. These amendments will help to rebuild public trust in the sector and provide the public with the levels of openness and transparency that they deserve.
I turn to the other Government amendment, which relates to the requirement for Ofwat’s rules to be confirmed by way of affirmative statutory instrument, as reintroduced by the motion tabled by Lord Blencathra in the other place. While the Government recognise that there were calls in the other place for increased parliamentary oversight of Ofwat’s rules, we have significant concerns that a requirement for Ofwat’s rules to be finalised through an affirmative statutory instrument would delay the rules being implemented.
We are clear that Ofwat’s rules should be brought forward as soon as possible. That will ensure swift and meaningful improvements in the performance and culture of water companies as they begin to deliver on the largest investment package in the history of the water sector. Requiring the rules to be confirmed by statutory instrument would risk delay to the rules coming into force. We also maintain concerns that the Lords amendments would compromise the independence of Ofwat, because they would require Ofwat’s rules to be confirmed through legislation prepared by the Government. That independence must be protected if we are to ensure investor confidence in the water sector.
The Government are confident that the Bill already provides for sufficient scrutiny of Ofwat’s rules as it is required to conduct a statutory consultation on the rules before they are finalised. Separately, Ofwat has already concluded an initial policy consultation on a draft of the rules and how they will apply. It received 11,700 responses on the rules through its consultation, which it is actively considering. As such, the Government are seeking to reverse the requirement and to introduce provisions in its place that will require Ofwat to provide its first set of rules in draft to the Secretary of State at least seven days before they are issued. I hope that hon. Members across the House will support that change, which will ensure that Ofwat’s rules are put into place as soon as possible following Royal Assent, in addition to the Government’s amendments to introduce new financial reporting requirements.
Dr Neil Hudson (Epping Forest) (Con)
It is a great pleasure to speak in this final stage of the Bill. Before I start my remarks, I will respond to the pertinent question about levels of borrowing for water companies asked by my friend and former colleague on the Environment, Food and Rural Affairs Committee, the hon. Member for Brent West (Barry Gardiner). The Minister is right that Government amendment (a) is about reporting rather than the levels of borrowing. It is regrettable that the Government chose to reject the Conservative amendment in Committee that would have allowed the Secretary of State to set the amounts of borrowing for water companies. I hope that, as we move towards Cunliffe review, the Government may look at that again so that we can have tighter control on the water companies and their levels of debt.
Before I make my remarks on the Lords messages, I will say that getting to the Bill to this stage has been the result of much hard work across this House and the other place. I thank everyone, both front of house and behind the scenes, who has worked hard to get us here. That includes: the Minister for her willingness to listen to those across the House throughout the Bill’s passage; similarly, her counterpart in the other place, Baroness Hayman; those who have worked to draft the Bill and amendments; the Bill Committee; parliamentary staff from the Department for Environment, Food and Rural Affairs; and campaign groups and stakeholders who provided their insights to the Committee to help make the Bill even stronger, not least the Conservative Environment Network, the Angling Trust, and the Wildlife and Countryside Link.
Sadly, however, as the Opposition have stressed throughout the Bill’s passage in this House and the other place, this final stage of the Bill risks being yet another missed opportunity to act holistically on this important issue. It is unfortunate that the Government have been unwilling to go much further than their copy-and-paste approach, rebooting measures that the Conservatives took in government to address this issue.
We heard in previous stages how the bans on bonuses for water company chief executives and ensuring that 100% of storm overflows are monitored—up from 7% under Labour—were introduced by the previous Conservative Government. None the less, ever the optimist, I came to the Chamber hoping that the Government might be willing to reconsider their position on the issues of the amendments and the reasoning from the other place, which cover familiar ground. We debated these issues in the previous stages, not only in this House but in the other place.
At the heart of the Lords amendments is a theme that His Majesty’s most loyal Opposition have emphasised throughout the Bill’s passage: accountability. The previous lack of accountability for water companies created many of the issues that the water industry has faced. The Conservatives in government and now this Government have attempted to try and address that. This is another chance for the Government to go even further and inject some of what is really needed into their approach.
I turn to Lords amendment 1B, which reverses the Government’s decision to remove measures from the Bill that would require financial reporting to be collected by Ofwat for its remuneration guidance. We know that one of the most worrying aspects of our water industry has been its financial resilience, as Ofwat’s “Monitoring financial resilience” report back in November made clear, with 10 companies at need of increased monitoring and three in the highest category of risk, with closer monitoring required at a more senior level with Ofwat.
We all know, too, the cases involving specific water companies and the real risk that financial mismanagement brings for the survival of those companies and the water provision that their consumers rely on. It is disappointing, therefore, that the Government have been unwilling throughout the Bill’s passage to accept Conservative amendments, or Cross-Bench amendments such as this one by Lord Cromwell, offered in a constructive spirit, which may have gone some way to address the issue. None the less, the Opposition truly want to see better financial resilience. Therefore, on financial reporting in particular, we want the Government to accept this as a reasonable step to regain accountability on financial resilience.
The Lords amendment to clause 1 would quite simply mean that, when it comes to financial reporting, there would be nowhere to hide for water companies and the decisions they make in this area. I note that, following the Lords’ rejection of Commons amendment 1, the Government have tabled amendment (a) to Lords amendment 1B, which will go some way to improving the financial transparency of water companies, as a formal concession to Lords amendment 1B.
Subsection (4) of Government amendment (a) states that what water companies must publish should be decided “from time to time”. I hope the Minister can see that such vagueness might be a problem moving forward, as “from time to time” could allow the regulator not to review when the need arises, because it had done so a few years prior or even longer ago, and justify that by arguing that it was doing so “from time to time”, as the law outlines. Even if nothing or little would need changing from year to year, or every few years, surely it would be better to require this at least to be reviewed at precise regular intervals so that the most valuable information is provided in the best possible format.
That aside, however, His Majesty’s most loyal Opposition acknowledge the Government’s concession on financial transparency, and indeed public access, including characteristics of capital and debt. We are pleased to see that addition to the Bill.
In the same spirit, I move on to Lords reason 2A to disagree with Commons amendment 2, which urges this House to consider again the requirement that any rules under clause 1 be brought into force by means of a statutory instrument from the Secretary of State. Again, this amendment is familiar territory that we have debated at many stages, having been a measure consistently called for by His Majesty’s Opposition in the other place and in this House, both in the Chamber and in Committee. We have maintained throughout that accountability is needed to deliver and enforce change in the water industry, but that must include the Government of the day, no matter which party they are.
It is odd that, on the one hand, this Government have claimed that they want a tight grip on water companies, while on the other, they consistently oppose a measure that would allow them to do exactly that. It is odd, too, that in Committee, the Liberal Democrats sought to amend the same part of the Bill that would have that effect. Their intentions were to bring in guidance as soon as possible, but there is a distinction between intent and effect. Removing some of the same lines would have had the same exact effect in ridding the Bill of the statutory instrument requirement that this amendment seeks to maintain.
The Government have argued—as the Minister has again today—that they fear that Ofwat’s flexibility to adapt their rules as necessary could be impeded in some way. But statutory instruments remain a timely measure to introduce any changes if needed. So once again, the Government’s argument does not stack up. It is only right that we, as parliamentarians elected by the British public to represent their interests with our voices and votes, are able to look at the proposed rules and exercise our ability to voice concerns if they risk falling short of protecting the public’s interests. Why deny the public and Members of this House the ability to uphold accountability of the water industry, which has been missing for too long? As such, once again we have urged the Government to accept what we believe is a reasonable set of amendments in the name of accountability.
Now, at the 11th hour, the Government have tabled Government amendment (a) in lieu of Lords reason 2A that disagrees with Commons amendment 2, the amendments tabled and argued for by my Conservative friends in the other place the noble Lord Roborough and Lord Blencathra, and add that the remuneration and governance rules may not be not be enacted until they have been provided in draft to the Secretary of State. There is a move towards some Government accountability, but sadly, not what the Opposition had wanted: a statutory instrument laid by the Secretary of State and approved by both Houses.
None the less, I am grateful that the Government have listened to Lord Roborough, me and the other Conservative colleagues who have argued for more accountability, and that they have moved a little towards us with this amendment. However, I am still unclear why the Government appear scared of full accountability. Sadly, I fear that some of these last-minute concessions, which we would like to go further, look like the Government trying to avoid double insistence and the Bill failing. We do not wish the Bill to fail, as we all want the same thing: to see our waters improve and for the Government to continue with the measures that the Conservatives set in train in the last Parliament. In that spirit, we will not stand in the way of the Government’s amendments.
There has been many a chance for the Government to grab opportunities to bolster the Bill with both hands. Many chances have been missed throughout its passage, not least by the Government continually rejecting our water restoration fund to ringfence fines to restore local waterways, rather than to balance the Treasury’s books. They did not accept our sensible proposals to go further with nature-based solutions to flood risk. They rejected our proposals for fines on water companies to result in equivalent reductions in customers’ bills, and our sensible proposals to allow the Secretary of State to place limits on the amount that water companies can borrow. They blocked our proposals to protect consumers in different parts of the country from paying for failing water companies that do not supply them.
As the Bill progresses and the Cunliffe review begins, I again urge the Government, for the sake of our water, environment, constituents, communities and, indeed, fairness, not to let political pride and dogma stand in the way of doing the right thing and making water legislation the best it can be. We wish the Bill well as it ends its journey in this House.
Tim Farron
I have already taken two interventions from the hon. Gentleman, so I will not.
My simple comment is that this Bill will do good, and we are supportive of it. We wish only to trouble the House a short time to ensure greater scrutiny is brought in. We have accepted throughout this process, with some reluctance, the Government’s position that this is part 1, and that part 2 is to come, and that the review led by Sir Jon Cunliffe will potentially consider more radical action. We hope that is the case, and we shall engage with things on that basis. I have in my hand some pieces of paper that I propose to send to Jon Cunliffe, which tighten up some of the smorgasbord of amendments, as they have been called.
We care deeply about our waterways. I am honoured to represent the bulk of the English Lake district, with so many lakes and rivers, as well as our coastal areas in Morecambe bay. The quality of our waterways is deeply personal to me and to my communities. We shall continue to campaign unashamedly for something far better for our constituents, and indeed for our water right across the United Kingdom.
Emma Hardy
With the leave of the House, I thank all hon. Members for their thoughtful and valuable contributions to today’s debate. Without stepping into the territory of a Second Reading debate, I suggest gently to the House that we are here today debating the Water (Special Measures) Bill precisely because of the public outrage caused by previous lack of investment, and the fact that every single river, lake and sea in our country has been polluted. Had the previous Government, as stated by the now official Opposition, done the marvellous, wonderful job that they seem to want to suggest they did, there would not be the need for this Bill in the first place—neither would there be the need for all the campaigns that have taken place up and down the country. However, I will go no further into that.
I have respect for the hon. Member for Epping Forest (Dr Hudson), as he knows. However, I say gently that it is dishonest to suggest that legislation is needed for the water restoration fund, because, in fact, the Conservatives created the fund without legislation. To imply that legislation is required to have the fund would, therefore, be inadvertently dishonest. It was created without legislation, and therefore it does not need legislation to be held.
Dr Hudson
I am slightly concerned that the Minister is raising questions about my honesty. The water restoration fund exists, but where is it now? What has happened to it? Are the Government going to use it again? That is why we wanted to push, at every stage of the Bill, the point that the water restoration fund needs to be used to ringfence money so that fines on water companies can be ploughed back into restoring local waterways. I will be very happy if the Minister says today that the water restoration fund is carrying on, and then my honesty will be intact.
Emma Hardy
I thank the hon. Gentleman. As I have said throughout, he will have to wait and see, but to imply that legislation is required for the fund would be dishonest. I am sure the hon. Gentleman does not want his honesty to be questioned. The implication that legislation is required for the water restoration fund is simply not true.
As I outlined in my opening speech, I recognise that there remains a strong interest in issues wider than the scope of today’s debate. I reiterate that the Bill is not the limit of our ambition. The Government will continue to work with hon. Members across the House to discuss and make progress in addressing the fundamental issues facing our water sector.
The hon. Gentleman mentions the words “time to time”. The wording has been specifically designed to allow Ofwat to review requirements as and when appropriate, and adapt quickly where needed. We do not want to pre-empt how often this kind of review might need to take place. To reassure him, that was discussed at length in the other place.
On parliamentary scrutiny, the Government worked with Ofwat to offer peers and MPs an opportunity to raise questions on Ofwat’s rules in a parliamentary drop-in session, providing further insight on the rules. However, that proposal was not accepted by hon. Members’ colleagues in the other place, which feels like a shame.
It has always been our intention to bring about, through the Bill, meaningful change in the performance and culture of the water sector. The amendments tabled by the Government are in keeping with that objective. I hope the House will support the Government amendments, which will ensure that the public can easily access an overview of water company financial information, and will give Ofwat a duty to issue rules on financial transparency that will commence on Royal Assent. Together, the amendments will enable the Government to take another positive step forward in restoring public trust in the water sector, which has sadly been destroyed over the past 14 years.
Similarly, I hope the House will support the Government in bringing forward amendments to ensure that Ofwat’s rules are brought forward promptly and that its independence is protected. The Government acknowledge the intention behind the changes made in the other place, but we cannot accept the risk that they create in delaying the introduction of Ofwat’s rules. I therefore hope that Members across the House will also support the Government in ensuring that these vital rules are brought forward without delay.
Madam Deputy Speaker (Caroline Nokes)
I am sure the Minister did not meant to imply that the shadow Minister was in any way dishonest, and she might perhaps seek to correct the record to say she felt that he was mistaken or incorrect.
Emma Hardy
I am very happy to issue that correction.
Question put.
A Division was called.
Madam Deputy Speaker (Caroline Nokes)
Division off.
Question agreed to.
Resolved,
That this House insists on Commons Amendment 1 to which the Lords have disagreed, disagrees to Lords Amendment 1B to the words restored to the Bill by the Lords’ disagreement to Commons Amendment 1, and proposes amendments (a) and (b) to the Bill in lieu of the words left out by Commons Amendment 1.
Motion made, and Question put,
That this House insists on Commons Amendment 2 to which the Lords have disagreed, and proposes amendment (a) in lieu of the words so left out.—(Keir Mather.)
Oral Answers to Questions
Emma Hardy Excerpts(2 months, 2 weeks ago)
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Mr Joshua Reynolds (Maidenhead) (LD)
The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Emma Hardy)
The first duty of any Government is to protect our citizens, so we are investing a record £2.65 billion over two years in building, maintaining and upgrading flood defences, which will protect 66,500 properties across England.
Zöe Franklin
Across my constituency of Guildford, the local flood forums work tirelessly, bringing together agencies and residents to address the growing concerns they have about flooding. Will the Minister provide detail on how the Government will ensure that constituencies like mine, which often miss out because they are semi-rural and urban, get the funding they need to address current flooding issues? How can we mitigate the growing flooding issues across Guildford in a holistic and sustainable way?
Emma Hardy
The hon. Lady is right to highlight that under the previous funding formula, rural communities often missed out on the defences they desperately need. We have set out plans to consult on a new formula that is going to be announced fairly shortly, and she will be very welcome to contribute to that.
Mr Joshua Reynolds
Will the Minister confirm what portion of the £2.6 billion allocated to flood preparedness will be used in my constituency of Maidenhead, specifically to protect the villages of Hurley and Cookham?
Emma Hardy
I think I will be getting a lot of questions like this today, Mr Speaker. We will announce where the 31 projects will be by the end of March. We will also be looking at where we have had to put money into maintenance and upgrading defences. We were left with flood defences in their worst state on record because of a complete dereliction of duty by the previous Government, so we have had to prioritise maintenance as well as building new defences, but I am hoping that the hon. Gentleman will not have to wait too long.
Mr Toby Perkins (Chesterfield) (Lab)
My hon. Friend the Minister and my right hon. Friend the Secretary of State deserve great credit for attracting the large investment that they have secured, but once they have finished the lap of honour, they will be aware that this is the first step up the mountain. The Minister is right that the Government have inherited flood defences that are in an appalling state, and the latest estimate shows that as many as 6 million houses are at risk of flooding. I call on her to get on with the flood improvements that we demand in Chesterfield. First, will she tell us more about how she will ensure the money will be spent wisely? Secondly, how will she ensure that the Treasury understands that this is not a one-year commitment, but something that we will need for the rest of this term in office?
Emma Hardy
I thank my hon. Friend for his question, and may I congratulate him on his recent engagement? He is right to point out the importance of money being spent wisely now to save money in the future. There are a couple of interesting factors: every £1 we spend on maintenance of flood defences saves £13 in damage prevention, and every £1 we spend on new defences saves £5 in damage prevention. Those are important statistics that I use frequently in negotiations about future spending reviews with Treasury officials.
Ms Julie Minns (Carlisle) (Lab)
In the north of my constituency, between the Scottish border and Hadrian’s wall, lie the debatable lands, but in the centre of Carlisle lies a forgotten land along the River Caldew. It is forgotten because of the incompetence of the Conservatives, who failed to deliver the flood defences along the Caldew that were promised after Carlisle was devastated in 2015. Will the Minister remember the forgotten lands of Carlisle?
Emma Hardy
My hon. Friend makes a persuasive case, as she has done at every oral question time we have had so far. She is right to highlight the fact that not only did the previous Government leave our defences in the worst state on record, but they failed to spend some of the money that had been allocated. This Government are having to deal with that, along with the many other issues we are cleaning up.
Sarah Dyke (Glastonbury and Somerton) (LD)
Yet another wet winter across Somerset highlights the need for the Government to urgently deliver solutions to mitigate the impact of flooding on farmland and protect domestic food production. The Brue headwaters multi-benefit project, facilitated by the Farming and Wildlife Advisory Group South West, is working with farmers and landowners in Bruton, Charlton Musgrove and Wincanton to address flooding issues and to hold workshops that focus on natural flood management, to slow the flow of water across the upper Brue, thus reducing flooding, sediment run-off and the associated pollution of water- courses. Despite those efforts, many farmers in the catchment, and indeed the county and the country, are angry at the level of inundation of land that could be prevented by better flood management. How will the Minister work to support farmers, build flood resilience and protect food security?
Emma Hardy
The hon. Lady is right to point out how angry farmers are and how they feel they have been let down by the previous Government on flood defences. The previous formula allocated funding only based on numbers of properties protected and paid little regard to rural areas. She also mentioned one of my favourite themes: natural flood management. We recently held a roundtable on that, with representatives from the NFU and the Country Land and Business Association, to talk about how we can better protect our rural areas in a more nature-friendly way.
Mr Peter Bedford (Mid Leicestershire) (Con)
Munira Wilson (Twickenham) (LD)
The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Emma Hardy)
I thank the hon. Lady for her important question. The Government are developing a series of interventions to reduce emissions, so that everybody’s exposure to air pollution is reduced. We are also conducting a comprehensive review of how we communicate air quality information, to ensure that members of the public and vulnerable groups have the information they need to protect themselves and understand the impact on air quality. Of course, no further decisions have been made regarding other developments.
Harpreet Uppal (Huddersfield) (Lab)
Perran Moon (Camborne and Redruth) (Lab)
Emma Hardy
I thank my hon. Friend for raising this important issue and for the work he is doing in championing what is obviously a crucial issue for his residents. I would of course be happy to meet him.
Charlie Maynard (Witney) (LD)
Constituents in Witney were extremely distressed to receive letters this week from Thames Water saying that their bills are going up by £19 a month from April, putting more pressure on household bills. Does the Minister think that is acceptable, given that the restructuring plan in the High Court is putting £800 million to £900 million of interest expenses on to this company—
Jacob Collier (Burton and Uttoxeter) (Lab)
Emma Hardy
I thank my hon. Friend, who is right to highlight how the previous flooding formula discriminated against rural communities because it was based purely on the number of properties protected, not on creating the right solution in the right area. That is exactly why we wish to reform the formula, and we will be announcing a consultation very shortly.
Jeremy Hunt (Godalming and Ash) (Con)
Given that the Office for Budget Responsibility refused to endorse the £22 billion black hole figure—in fact, it refused to say that there was any black hole at all—will the Secretary of State tell the House what possible justification there can be for the removal of agricultural property relief, which will do untold damage to the growth prospects of family farms in my constituency and across the country?
Marine Environment
Emma Hardy Excerpts(2 months, 4 weeks ago)
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The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Emma Hardy)
Making Britain a clean energy superpower is one of this Government’s five missions. This is critical to our country—to cut bills; to create jobs; to deliver energy security, with cheaper, zero-carbon electricity by 2030; and to meet our net zero target.
This Government have taken immediate action by setting up Great British Energy, a publicly owned company to invest in clean, home-grown energy. We have also already committed to the biggest investment in clean energy in British history.
Offshore wind will play a pivotal role in our achieving clean power by 2030 and accelerating to net zero by 2050—our recently published clean power action plan sets a capacity range for between 43 GW and 50 GW by 2030. The UK is already a world leader in offshore wind technology, and the Great British Energy partnership with the Crown Estate will bring forward new offshore wind developments, with the potential to deliver up to 20 GW to 30 GW of extra offshore wind seabed leases to the market by 2030.
The Department for Environment, Food and Rural Affairs is playing a crucial role in supporting the growth of offshore wind, to help de-risk and accelerate planning decisions for offshore wind while protecting and enhancing the marine environment. The nature and climate change crises are of equal importance, and we must address them together.
To do this, we will implement an offshore wind environmental improvement package. Work is well advanced, and recent and upcoming milestones include:
underlining our commitment to use the powers conferred in the Energy Act 2023 to ensure that compensatory measures for unavoidable environmental impacts to marine protected areas (MPAs) can be delivered strategically rather than on a project-by-project basis, including through a library of measures that DEFRA is developing in collaboration with stakeholders;
publication of an updated joint position statement on unexploded ordinance that sets out that low noise clearance should be the default in the marine environment. This has also been published alongside a marine noise policy paper highlighting the further actions we are taking to reduce noise in our seas;
consulting on an offshore wind piling noise limit in the first half of 2025, followed by a pilot programme in 2025 and 2026, to reduce the risk of project delays because of the need to limit the amount of underwater noise generated;
consulting in spring 2025 on reforms to the environmental compensation requirements for offshore wind projects, with the aim to bring in legislation by autumn 2025. This will aim to increase the number of measures available to developers to offset the adverse impacts of offshore wind developments, while retaining a robust process that ensures that damage to our precious marine environment remains compensated for; and
the launch of a marine recovery fund in late 2025 to provide an optional mechanism for developers to fund delivery of strategic compensatory measures.
We are already delivering on the clean power action plan. Today I am announcing an action that my Department will take to help accelerate and de-risk the consent of offshore wind projects while continuing to protect the marine environment.
Multiple offshore wind projects are at risk because there are currently no ecologically effective options that developers can deliver themselves to compensate for their unavoidable impacts on seabed habitats within special areas of conservation and marine conservation zones. Without suitable measures, these projects cannot be delivered. DEFRA commits to designating new MPAs and/or extending existing MPAs in Secretary of State waters to deliver sufficient strategic compensation to compensate for likely environmental effects of offshore wind development. We do not expect this to be available to any project outside the following:
Projects that received a seabed lease from the Crown Estate under leasing round 3, round 4 or the 2017 extensions round;
Projects in the current leasing round 5 in the Celtic sea;
Associated transmission infrastructure projects—for example, those forming part of the holistic network design. We will be working with devolved Governments on how this relates to projects in their waters where cabling will come through English waters; and
Projects that have already been granted consent but are unable to discharge their consent conditions, or where adaptive management may now be required as the agreed compensation measures have not had the impact expected when consent was granted.
We are also aware that offshore wind projects might sometimes be required to compensate for essential maintenance activities carried out once the wind farm is operational and/or for unforeseen impacts. For this reason, we will aim to deliver additional environmental compensation so that projects eligible to request MPA designation to support project consent—those listed above, in paragraph 7—as well as operational projects delivered in leasing round 2, can access this measure if available and deemed suitable.
In all cases, MPA designations will be delivered by DEFRA. Those designations and associated management will be funded by the offshore wind developers that successfully apply to use this measure through the marine recovery fund.
We anticipate that the total area of new and/or extended MPAs required to compensate for the predicted impacts of offshore wind projects will be small in comparison to the tranches of MPAs previously designated in Secretary of State waters. We will be looking to protect a range of benthic habitats.
Working closely with our statutory nature conservation bodies, potential areas will be identified based on ecological principles. We will be following the established legislative processes for designation and will keep stakeholders, including the fishing industry, regularly informed, as well as providing opportunities for them to share any concerns as regards the proposed sites, so that the views and impacts on affected industries and communities are fully understood.
To avoid the risk that new MPAs designated for compensation might later be leased for energy or other projects that cause damage, we will also be working with the Crown Estate, the Marine Management Organisation and others to explore ways in which we might deliver additional long-term protection from future impacts that will require compensation.
Designating new MPAs and putting management measures in place to protect them will take time. Although work has already begun on this, we are aware that the timelines of some projects mean that they will still be delayed if they are required to wait for MPA designations and associated management to be functioning. Where this is the case, the Secretary of State for Energy Security and Net Zero and the Marine Management Organisation may consider circumstances in which the adverse effect can occur before compensation is in place. However, this would need to be considered against other factors. Where this is permitted, a greater amount of environmental compensation is likely to be needed to make up for the time delay and developers will be required to pay into the marine recovery fund before any adverse effect can occur. DEFRA will also be producing high-level implementation and monitoring plans in advance of final MPA designations to assist developers in providing the necessary information at this stage, with final updated plans being provided once designation has taken place.
We recognise that accelerating development of marine activities, and environmental protection and restoration measures such as the designation of new MPAs, is increasing marine spatial tensions. Though not caused by their actions, these competing priorities and demands for space present a challenge for the fishing industry, particularly as it is unlikely that it will be possible to avoid causing an impact on fishing activities in all cases. Fishing is an incredibly important part not just of the UK’s food system, but of our cultural identity as a country—so much so that we will not let these impacts on the industry go unaddressed. That is why DEFRA established, and continues to lead, the cross-Government marine spatial prioritisation programme, working with the Marine Management Organisation, to address this spatial squeeze and ensure that the industry’s interests are represented. The Government will ensure that the sector is supported to adapt to increased pressure on space. We will work with the industry to maintain its viability into the future and ensure that it continues to make a significant contribution to coastal communities. The Government are committed to finding ways for different industries to co-exist and benefit from our marine space. We will also work with the Crown Estate and other relevant stakeholders to see how they can help in this process. Food security is national security, and a sustainable fishing industry is an important part of that.
Alongside designating MPAs for benthic compensation, we will be undertaking a wider review of the MPA network and we will be keeping delivery of the MPA target under review, with the aim of future-proofing the network, for example in terms of climate change adaptation and mitigation, while allowing us to still meet our international commitment to effectively protect 30% of our seas by 2030. A wider network review will also look to provide higher certainty for the fishing industry on the future MPA network.
My announcement today demonstrates this Government’s dual commitment to enabling offshore wind and protecting our precious marine environment, while supporting our fishing industry. The fragile state of our natural environment means that we cannot afford to press ahead without considering the impact on nature—we need to address both the climate and biodiversity crises together.
Our action will help unlock the capacity needed to meet this Government’s ambitious but achievable target of clean power by 2030, building a home-grown energy system that takes back control and can bring down bills for households and businesses for good.
[HCWS394]
Water (Special Measures) Bill [Lords]
Emma Hardy ExcerptsTuesday 28th January 2025
(2 months, 4 weeks ago)
Commons ChamberRead Full debate Water (Special Measures) Act 2025 View all Water (Special Measures) Act 2025 Debates Read Hansard Text Watch Debate Read Debate Ministerial Extracts Amendment Paper: Consideration of Bill Amendments as at 28 January 2025 - large print - (28 Jan 2025)
The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Emma Hardy)
I beg to move, That the clause be read a Second time.
Madam Deputy Speaker (Ms Nusrat Ghani)
With this it will be convenient to discuss the following:
New clause 1—Water Restoration Fund—
“(1) No more than 60 days after the day on which this Act is passed, the Secretary of State must by regulations make provision for the establishment, operation and management of a Water Restoration Fund.
(2) A Water Restoration Fund is a fund—
(a) into which any monetary penalties imposed for specified offences must be paid, and
(b) out of which payments must be made for expenditure on measures to improve the quality of the freshwater environment in England.
(3) The Secretary of State must by regulations list the specified offences for the purpose of this section, which must include—
(a) any relevant provisions of the Water Resources Act 1991, including—
(i) section 24(4) (unlicensed abstraction or related works or contravening abstraction licence); 22 Water (Special Measures) Bill [HL];
(ii) section 25(2) (unlicensed impounding works or contravening impounding licence);
(iii) section 25C(1) (contravening abstraction or impounding enforcement notice);
(iv) section 80 (contravening drought order or permit);
(v) section 201(3) (contravening water resources information notice);
(b) regulations under section 2 of the Pollution Prevention and Control Act 1999 (regulation of polluting activities etc);
(c) regulations under section 61 of the Water Act 2014 (regulation of water resources etc).
(4) A statutory instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.
(5) The Secretary of State may by regulations made by statutory instrument add to the list of offences specified in subsection (3).
(6) The provisions in this section replace any existing provision for the sums received for specified offences, including in section 22A(9) of the Water Industry Act 1991 (penalties).”
This new clause would require all funds from fines on water companies for environmental offences to be ringfenced for the Water Restoration Fund, for spending on freshwater recovery.
New clause 2—Abolition of the Water Services Regulation Authority—
“(1) The Water Industry Act 1991 is amended as follows.
(2) For section 1A (Water Services Regulation Authority) substitute the following—
‘1A Abolition of the Water Services Regulation Authority
(1) The body corporate known as the Water Services Regulation Authority (in this Act referred to as “the Authority”) is abolished.
(2) All references to the duties and functions of the Authority in this Act or any other enactment are null and void.’
(3) Omit Schedule 1A (The Water Services Regulation Authority).”
This new clause abolishes Ofwat.
New clause 3—Impact of the Act on the Environment Agency—
“The Secretary of State must, within 12 months of the passing of this Act—
(a) review the impact of this Act on the Environment Agency;
(b) consider whether the Environment Agency requires any additional resources to meet the additional requirements placed upon it by this Act.”
New clause 4—Duty to publish maps of sewage catchment networks—
“After section 205 of the Water Industry Act 1991 insert—
‘205ZA Duty to publish maps of sewage catchment networks
(1) Each relevant undertaker must publish a map of its sewage catchment network.
(2) A map published under this section must illustrate any relevant pumping stations, pipes, and other works constituting part of the undertaker’s sewerage network.
(3) Maps published under this section must be published within 12 months of the passing of this Act, and must be updated whenever changes are made to the sewage catchment network or the components listed in subsection (2).
(4) Maps published under this section must be made publicly accessible on the undertaker’s website.’”
New clause 5—Duty to prevent chemical pollutants entering the water environment—
“After section 68 of the Water Industry Act 1991 (Duties of water undertakers and water supply licensees with respect to water quality), insert—
‘68A Duty to prevent chemical pollutants entering the water environment
(1) It shall be the duty of a water undertaker to take such steps as are necessary to reduce and prevent chemical pollutants, including but not limited to poly- and perfluorinated alkyl substances, entering the water environment.
(2) In fulfilling its duty under subsection (1), a relevant undertaker must publish a strategy outlining how it intends to reduce and prevent chemical pollutants entering the water environment.
(3) In developing a strategy under subsection (2), a relevant undertaker must consult with appropriate agencies, including but not limited to—
(a) the relevant Government department;
(b) the Authority;
(c) the Environment Agency; and
(d) the Drinking Water Inspectorate.
(4) A strategy under subsection (2) must include consideration of how the costs of reducing and preventing chemical pollutants entering the water environment are to be borne or recovered, where such consideration must prevent such cost recovery from resulting in additional charges being made upon consumers.’”
New clause 6—Licence conditions about nature recovery—
“In the Water Industry Act 1991, after section 17FB insert—
‘17FC Nature recovery
(1) reducing flood risk and pollution incidents, improving water quality and benefiting nature restoration in their catchment area.
(2) The Authority must not take any action that discourages or prevents a relevant undertaker from making an investment in accordance with subsection (1).’”
This new clause would make it a condition of all water companies’ licences to consider nature-based solutions to flood risk, improving water quality and benefiting nature restoration in their catchment area, and prevent the regulator from discouraging or stopping such investments.
New clause 7—Review of price review process—
“In section 2 of the Water Industry Act 1991, after subsection (2B) insert—
‘(2BA) In furthering its objectives and purposes under subsection (2A), the Authority must, within 12 months of the passing of the Water (Special Measures) Act 2025, review its practices as to reviewing price limits.
(2BB) A review under subsection (2BA) must consider—
(a) whether the current practice of price reviews every five years should be replaced with an annual, or otherwise more frequent, system;
(b) how changes to inflation and other financial or economic changes could or should be reflected in prices charged by water companies;
(c) how any future system of price reviews could better support undertakers in planning and delivering investments beyond a single asset management plan period.’”
New clause 8—Prohibition on bail-out of water company shareholders and creditors—
“(1) The Secretary of State and His Majesty’s Treasury must not directly or indirectly discharge, assume, or guarantee any debts of legal entities in any water company group subject to proceedings under section 24 of the Water Industry Act 1991 (special administration orders made on special petitions), except in accordance with subsection (2).
(2) The special administrator of a water company may reduce the debts owed by the regulated entity to its creditors by up to 100 per cent, taking into account the future forecast expenditure over the short, medium and long term and subject to the administrator’s confidence in the company’s ability to accommodate this spending.
(3) The prohibition set out in subsection (1) and the reduction of debts set out in subsection (2) must not include pension, wage and other obligations owed to employees, excluding any past or current member of a board of directors, within the water company group.”
This new clause aims to allow up to 100% of debts to be cancelled in the event of special administration proceedings, taking into account the scale of investment required to hit the future targets established by the Authority.
New clause 9—Ofwat to publish guidance on debt levels after administration—
“In section 2 of the Water Industry Act 1991, after subsection (2D) insert—
‘(2DZA) For the purposes of ensuring that relevant undertakers are able to finance the proper carrying out of their functions under subsection (2A)(c), the Authority must establish guidelines to be followed by relevant undertakers who have been in special administration.
(2DZB) Guidelines produced under subsection (2DZA) must—
(a) set out a maximum level of debt which can be accrued by the undertaker;
(b) set out a process for agreeing capital expenditure necessary for service improvements, bill increases, and changes to operating costs while the undertaker is subject to the Special Administration Regime;
(c) state the penalties which will be imposed for breaches of such guidelines, which may include—
(i) financial penalties;
(ii) prohibitions on the payment of dividends or other bonuses; or
(iii) such other special measures as the Authority deems appropriate.’”
New clause 11—Duty on sewerage undertakers to monitor overflows at sewage treatment works, pumping stations and on the sewer network—
“(1) The Water Industry Act 1991 is amended as follows.
(2) In section 94—
(a) after subsection (1)(b) insert—
‘(c) to make provision for the accurate collection of data relating to its performance in fulfilling its duties under paragraphs (a) and (b).’
(b) after subsection (2) insert—
‘(2A) In performing its duties under subsection (1)(c), a sewerage undertaker must—
(a) install volume flow meters in all locations where sewage overflows occur, including sewage treatment works, pumping stations and on the sewer network for which it is responsible;
(b) establish appropriate required capacities for each sewage treatment works and pumping station;
(c) publish information on the data and calculations used to establish such required capacities; and
(d) install all required monitoring tools within 12 months of the passing of this Act.’”
New clause 12—Rules about performance-related pay—
“(1) The Water Industry Act 1991 is amended as follows.
(2) After section 35D (inserted by section 1 of this Act) insert—
‘35E Rules about performance-related pay
(1) The Authority must issue rules prohibiting a relevant undertaker from giving to persons holding senior roles performance-related pay in respect of any financial year in which the undertaker has failed to prevent all sewage discharges, spills, or leaks.
(2) The rules issued under subsection (1) must include—
(a) provision designed to secure that performance-related pay which, if given by a relevant undertaker, would contravene the pay prohibition on the part of the undertaker, is not given by another person;
(b) that any provision of an agreement (whether made before or after the issuing of the rules) is void to the extent that it contravenes the pay prohibition;
(c) provision for a relevant undertaker to recover any payment made, or other property transferred, in breach of the pay prohibition.
(3) For the purposes of subsection (1)—
(a) “performance-related pay” means any payment, consideration or other benefit (including pension benefit) the giving of which results from the meeting of any targets or performance standards on the part of the relevant undertaker or the person to whom such payment, consideration or benefit is given;
(b) a person holds a “senior role” with a relevant undertaker if the person—
(i) is a chief executive of the undertaker,
(ii) is a director of the undertaker, or
(iii) holds such other description of role with the undertaker as may be specified.’”
This new clause creates a new section in the Water Industry Act 1991 to require Ofwat to ban bonuses for water company bosses if they fail to prevent sewage discharges, spills, or leaks.
New clause 13—Rules about competitive procurement in water infrastructure—
“(1) The Water Industry Act 1991 is amended as follows.
(2) After section 35A insert—
‘Rules about competitive procurement in water infrastructure
(1) The Authority must issue rules requiring relevant undertakers to use competitive procurement processes in respect of procurement relating to water infrastructure.
(2) If the Authority considers that a relevant undertaker is contravening the rules, the Authority may give the undertaker a direction to do, or not to do, a particular thing specified in the direction.
(3) It is the duty of a relevant undertaker to comply with a direction given under subsection (2), and this duty is enforceable by the Authority under section 18.
(4) Rules under this section may—
(a) make different provision for different relevant undertakers or descriptions of undertakers;
(b) make different provision for different purposes;
(c) make provision subject to exceptions.
(3) The Authority may from time to time—
(a) revise rules issued under this section, and
(b) issue the revised rules.’”
New clause 14—Ofwat consideration of pollution targets for price reviews—
“(1) The Water Industry Act 2011 is amended as follows.
(2) After section 17I insert—
‘“17IA Duty to have regard to pollution targets in carrying out price reviews
When carrying out a periodic review for the purpose of setting a Price Control in respect of one or more relevant undertakers, the Authority must have regard to the performance of the relevant undertaker or undertakers against pollution targets across the previous five years.’”
New clause 15—Database of performance of sewerage undertakers—
“(1) The Water Industry Act 1991 is amended as follows.
(2) In Chapter 3 of Part II (Protection of customers etc), after section 27ZA (Power to require information for purpose of monitoring) insert—
‘27ZB Duty to establish database
(1) It shall be the duty of the Authority to establish and maintain a database containing information relating to the performance of sewerage undertakers.
(2) The database must—
(a) be publicly and freely accessible;
(b) enable uploaded information to be updated in live-time;
(c) contain such data or information as the Authority thinks is necessary for the purposes of public transparency as to the performance of sewerage undertakers; and
(d) contain—
(i) current and historic data; and
(ii) data and information which has been independently collected or analysed including—
(a) the start time, end time and duration of all sewage spill events,
(b) flow data from flow monitors,
(c) the location of each flow meter from which flow data is provided.
(3) The Authority may make rules about the provision of data and information under this section.
(4) Rules under subsection (3) must include rules relating to information provided about the location of flow meters.
(5) The Authority may impose penalties on undertakers who fail to provide such information as is required by this section.’”
New clause 16—Establishment of Water Restoration Fund—
“(1) The Secretary of State must, within 60 days of the passing of this Act, make provision for the establishment, operation and management of a Water Restoration Fund.
(2) A Water Restoration Fund is a fund—
(a) into which any monetary penalties imposed on water companies for specified offences must be paid, and
(b) out of which payments must be made for expenditure on measures—
(i) to help water bodies, including chalk streams, achieve good ecological status, and improve ecological potential and chemical status;
(ii) to prevent further deterioration of the ecological status, ecological potential or chemical status of water bodies, including chalk streams;
(iii) to enable water-dependent habitats to return to, or remain at, favourable condition;
(iv) to restore other water-dependent habitats and species, especially where action supports restoration of associated protected sites or water bodies.
(3) The Secretary of State must, by regulations, list the specified offences for the purposes of this section, which must include—
(a) any relevant provisions of the Water Resources Act 1991, including—
(i) section 24(4) (unlicensed abstraction or related works or contravening abstraction licence);
(ii) section 25(2) (unlicensed impounding works or contravening impounding licence);
(iii) section 25C(1) (contravening abstraction or impounding enforcement notice);
(iv) section 80 (contravening drought order or permit);
(v) section 201(3) (contravening water resources information notice);
(b) any relevant regulations under section 2 of the Pollution Prevention and Control Act 1999 (regulation of polluting activities etc) related to water pollution;
(c) regulations under section 61 of the Water Act 2014 (regulation of water resources etc).
(4) A statutory instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.
(5) The provisions in this section replace any existing provision for the sums received for specified offences, including in section 22A(9) of the Water Industry Act 1991 (penalties).”
New clause 17—Rules about borrowing—
“After section 154B of the Water Industry Act 1991 (financial assistance for major works) insert—
‘Chapter III
Rules about borrowing for undertakers
154C Restrictions on undertakers relating to borrowing
(1) The Secretary of State may by regulations made by statutory instrument implement a limit on borrowing by a relevant undertaker.
(2) Where a relevant undertaker has total borrowing exceeding the limit set by regulations made under subsection (1), the relevant undertaker may not make a payment of dividends, capital, assets, or interest to shareholders or controlling entities.
(3) A statutory instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.’”
This new clause would enable limits to be placed on the amount of money that can be borrowed by a water or sewerage undertaker, and prevent an undertaker who has exceeded such limits from being able to pay dividends to shareholders.
New clause 19—Civil penalties: equivalent reduction to customer bills—
“(1) The Secretary of State must make provision for any monetary penalties imposed on a water company to result in equivalent reductions to the amounts charged to customers by the relevant water company.
(2) In fulfilling its duties under subsection (1), the Secretary of State must arrange, annually—
(a) for the total amount of monetary penalties imposed on a water company in the previous year to be calculated;
(b) for that total to be divided by the number of customers of the water company;
(c) for each customer’s next bill from the water company to be reduced by that figure.
(3) Any reduction applied under this section must be indicated on a customer’s statement of account.
(4) In this section, ‘water company’ has the meaning given by section 6(5).”
This new clause would provide for any fines imposed on water companies to result in equivalent reductions to customers’ bills.
New clause 20—Principles of best regulatory practice—
“In section 2 of the Water Industry Act 1991, after subsection (4) insert —
(4A) For the purposes of having regard to the principles of best regulatory practice, the Authority shall not employ any individual who has been employed by a relevant undertaker in the preceding three years.”
New clause 21—Environmental duties with respect to protected landscapes—
“After section 4 of the Water Industry Act 1991 insert—
‘4A Environmental duties with respect to protected landscapes
(1) Where a relevant undertaker operates, or has any effect, on land within protected landscapes, that undertaker must—
(a) Secure and maintain “high ecological status” in the water in these areas by 2028;
(b) further the conservation and enhancement of wildlife and natural beauty;
(c) improve every storm overflow that discharges within these areas by 2028;
(d) reduce the load of total phosphorus discharged into freshwaters within these areas from relevant discharges by 2028 to at least 90% lower than the baseline as defined in Regulation 13(1) of the Waste Water Targets set under the Environment Targets (Water) (England) Regulations 2023.
(2) A relevant undertaker must be put into special administration, and not be eligible for a further licence, if it fails to—
(a) demonstrate adequate progress each year;
(b) meet the targets in subsection (1).
(3) Within one year of the day on which the Water (Special Measures) Act 2025 is passed, the Secretary of State must lay a report on the undertakers’ implementation of the environmental duties in subsections (1) and (2) before Parliament.
(4) Following the first report being published under subsection (3), a progress report on implementation must be included in the annual environment improvement plan, issued under section 8 of the Environment Act 2021.
(5) The Secretary of State must by regulations make provision requiring an undertaker to achieve bespoke objectives for specific iconic and the most culturally and ecologically significant waterways, including, where appropriate, complete removal of sewage discharge from the undertaker’s infrastructure.
(6) A statutory instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.
(7) In this section—
“protected landscapes” includes national parks, national landscapes and national trails;
”land” includes rivers, lakes, streams, estuarine and other waterways;
”High Ecological Status” means the classification of water bodies defined in Regulation 6 of The Water Environment (Water Framework Directive) (England and Wales) Regulations 2017.’”
New clause 22—Consultation on public ownership of water companies—
“(1) The Secretary of State must within three months of this Act coming into force, publish a public consultation on making provision for the transfer of ownership of undertakers to public ownership.
(2) The consultation must consider—
(a) the process of transferring private water companies to public ownership;
(b) the circumstances in which water companies will be transferred to public ownership;
(c) the establishment of new public bodies to manage water services;
(d) transition arrangements for employees, contracts, and ongoing operations;
(e) governance structures for publicly-owned water services, including provisions for local democratic control and accountability.
(3) The Secretary of State must, within twelve months of the passing of this Act, lay before both Houses of Parliament a report on this consultation.”
New clause 23—Special administration for breach of environmental and other obligations—
“(1) Section 24 of the Water Industry Act 1991 (special administration orders made on special petitions) is amended as follows.
(2) After subsection (2)(a), insert—
‘(aa) that there have been failures resulting in enforcement action from the Authority or the Environment Agency on three or more occasions to—
(i) maintain efficient and economical water supply,
(ii) improve mains for the flow of clean water,
(iii) provide sewerage systems that are effectually drained,
(iv) comply with the terms of its licence, or
(v) abide by anti-pollution duties in the Environmental Protection Act 1990, Water Resources Act 1991, or the Environmental Permitting (England and Wales) Regulations 2016 (SI 2016/1154);’
(3) After subsection (2), insert—
‘(2A) In support of an application made by virtue of subsection (1)(a) in relation to subsection (2)(aa), the Secretary of State must compile and present to the High Court records of—
(a) water pipe leaks
(b) sewage spilled into waterways, bathing waters, and private properties, and
(c) falling below international standards of effective water management.’”
This new clause aims to require the Secretary of State to place a water company into special administration arrangements if they breach certain environmental or other conditions.
New clause 24—Special administration: criminal convictions—
“After subsection (2)(e) of section 24 of the Water Industry Act 1991 insert—
‘(f) that has been the recipient of two or more criminal convictions in the last five years.’”
This new clause aims to exert pressure on companies to operate within the law by preventing water companies with numerous criminal convictions from remaining in business.
New clause 25—Companies to be placed in special measures for missing pollution targets—
“In section 2 of the Water Industry Act 1991, after subsection (2D) insert—
‘(2DZA) For the purposes of ensuring that the functions of water and sewerage undertakers are properly carried out, the Authority must establish—
(a) annual, and
(b) rolling five-year average pollution targets which must be met by water and sewerage undertakers, and the penalties to be imposed for failure to meet such targets.
(2DZB) The performance of a water or sewerage undertaker against such targets must be measured through independent analysis of monitoring data.
(2DZC) A timetable produced under subsection (2DZA)(b) must require the following reductions in the duration of sewage spill events, using the annual total hours’ duration of all sewage spill events recorded by Event Duration Monitors, based on an average from the last five years, as a baseline—
(a) a 25% reduction within five years;
(b) a 60% reduction within ten years;
(c) an 85% reduction within fifteen years; and
(d) a 99% reduction within twenty years.
(2DZD) A water or sewerage undertaker which fails to meet pollution targets set out by the Authority will be subject to such special measures as the Authority deems appropriate, which may include—
(a) being required to work on improvement projects with or take instruction from the Authority, the relevant Government department, or such other bodies or authorities as the Authority deems appropriate; and
(b) financial penalties.’”
New clause 26—Independent review: companies exiting a special administration regime—
“(1) The Secretary of State must, within six months of the passing of this Act, either—
(a) commission an independent review, or
(b) take steps to extend the terms of reference of any existing independent review or commission,
to consider the merits of changing the law to provide that a water company exiting a special administration regime becomes a company mutually owned by its customers.
(2) A review under subsection (1) must consider—
(a) the general merits of mutual ownership of water companies in such circumstances, and
(b) what model of mutual ownership would be most suitable.
(3) The Secretary of State must, as soon as practicable after receiving a report of a review under subsection (1), lay before both Houses of Parliament—
(a) a copy of the report, and
(b) a statement setting out the Secretary of State’s response to that report.”
This new clause would require the Secretary of State to commission an independent review of the potential merits of changing the law so that a water company exiting a special administration regime becomes a company mutually owned by its customers.
Amendment 23, in clause 1, page 1, line 11, at end insert—
“(1A) The Authority must use its power under subsection (1) to issue rules which require—
(a) the interests of customers, and
(b) the environment,
to be listed as primary objectives in a relevant undertaker’s Articles of Association.”
Amendment 15, in clause 1, page 2, line 3, at end insert—
“(d) requiring the management board of a relevant undertaker to include at least one representative of each of the following—
(i) groups for the benefit and interests of consumers;
(ii) groups for the benefit and interests of residents of the areas in which the undertaker is operational;
(iii) experts in water and sewerage policy and management; and
(iv) environmental interest groups.”
Amendment 16, in clause 1, page 2, line 3, at end insert—
“(d) preventing a relevant undertaker from employing any individual who has been employed by the Authority in the preceding three years.”
Amendment 17, in clause 2, page 4, line 34, after “occurrence” insert “and impact”. Amendment 19, in clause 2, page 5, line 15, after “occurrence” insert “and impact”.
Amendment 18, in clause 2, page 5, line 17, at end insert—
“(ea) the use the undertaker plans to make of nature-based solutions for reducing the occurrence and impact of pollution incidents,”.
Amendment 11, in clause 3, page 7, line 35, at end insert—
“(e) the volume of the discharge.”
Amendment 12, in clause 3, page 7, line 38, leave out “subsection (1)(d)” and insert “subsections (1)(d) and (e)”.
Amendment 1, in clause 3, page 8, line 5, at end insert—
“(c) be published on the home page of the undertaker’s website.”
This amendment would ensure that information regarding a discharge from an emergency overflow must be published on the home page of the undertaker’s website.
Amendment 13, in clause 3, page 8, line 5, at end insert—
“(c) be uploaded and updated automatically, where possible;
(d) be made available on the undertaker’s website alongside searchable and comparable historic data.”
Amendment 14, in clause 3, page 8, line 5, at end insert—
“(3A) The undertaker must ensure that, within 12 months of the passing of this Act, appropriate monitors are installed to collect the information required by subsection (1).”
Amendment 22, in clause 3, page 8, line 27, leave out from start to “in” and insert
“a Minister with specific responsibility for issues relating to the coast,”.
Amendment 2, in clause 3, page 9, line 23, at end insert—
“141H Failure to report discharge from emergency overflows
(1) If a relevant undertaker fails to comply with its duties under section 141F—
(a) the undertaker commits an offence, and
(b) the chief executive of the undertaker commits an offence, subject to subsection (2).
(2) It is a defence for the chief executive to prove that they took all reasonable steps to avoid the failure.
(3) A person who commits an offence under this section is liable, on summary conviction or conviction on indictment, to imprisonment for a term not exceeding 5 years or an unlimited fine, or both.”
This amendment would make it an offence for an undertaker to fail to comply with its duty to report discharges from emergency overflows.
Amendment 3, in clause 3, page 9, line 23, at end insert—
“141H Restriction on the use of emergency overflows in areas used for aquatic sports
(1) A sewerage undertaker must not permit a discharge from an emergency overflow in an area used for aquatic sports.
(2) In this section, an “area used for aquatic sports” is a section of any body of water connected to and within a one mile radius of—
(a) the clubhouse of a rowing club affiliated with British Rowing,
(b) a Royal Yacht association training centre or the clubhouse of an affiliate member, and
(c) the properties or facilities used by any organisation that the Secretary of State deems to provides water-based sporting activities for the purpose of teaching, training or leisure.
(3) If a relevant undertaker fails to comply with its duties under section (1)—
(a) the undertaker commits an offence, and
(b) the chief executive of the undertaker commits an offence, subject to subsection (4).
(4) It is a defence for the chief executive to prove that they took all reasonable steps to avoid the failure
(5) A person who commits an offence under this section is liable, on summary conviction or conviction on indictment, to imprisonment for a term not exceeding 5 years or an unlimited fine, or both.”
This amendment creates an offence for a sewerage undertaker to use an emergency overflow in an area used for aquatic sports.
Amendment 20, in clause 4, page 9, line 29, leave out
“use that is to be made of”
and insert
“priority that is to be given to”.
Amendment 21, in clause 9, page 13, line 40, leave out from “duties” to end of page 14, line 2.
Government amendment 4.
Amendment 9, in clause 12, page 15, line 34, leave out from “to” to “such” in line 36 and insert “recover from its creditors”.
Amendment 26, in clause 12, page 15, line 39, at end insert—
“(2A) The Secretary of State may not require or permit any modified charges to be imposed on persons who do not receive services from the company for the purposes of making good any SAO loss.”
Amendment 10, in clause 13, page 18, line 13, leave out from “to” to “such” in line 15 and insert “recover from its creditors”.
Amendment 27, in clause 13, page 18, line 18, at end insert—
“(2A) The Secretary of State may not require or permit any modified charges to be imposed on persons who do not receive services from the company for the purposes of making good any SAO loss.”
Amendment 24, in clause 15, page 21, line 4, leave out subsections (2) to (8) and insert—
“(2) The provisions of this Act come into force on the day on which this Act is passed.”
Government amendments 5, 6, 7 and 8.
Emma Hardy
What a delight it is to be back in the Chamber debating this transformational Bill. I will keep my opening comments brief, because I know that many want to speak, and I will respond to amendments tabled by hon. Members when closing this debate after hon. Members have spoken to them, as is established practice.
I want to start by thanking all members of the Public Bill Committee for their careful consideration and scrutiny of the Bill and, dare I say, their comradery in discussions and debates. It is clear that this is an area that everyone acknowledges is in need of change and reform. I also thank the Chairs, the hon. Member for Brigg and Immingham (Martin Vickers) and my hon. Friend the Member for Ealing Central and Acton (Dr Huq). It was a pleasure to serve under them.
Since being in Committee, I have had several further insightful conversations on the Bill with Members from across the House and on the amendments tabled by the Government for consideration on Report, which I will take the opportunity to speak to now. I will start with Government amendment 4, which is a minor and technical amendment that ensures that clause 10 encompasses new enforcement functions arising from the changes made to clause 2 in the other place.
Government amendment 4 clarifies that cost recovery powers for the Environment Agency, expanded by the provisions in clause 10, also extend to costs incurred when enforcing the requirement to publish implementation plans. That requirement was added on Report in the Lords after cross-party discussions and collaboration. The amendment also clarifies that EA cost recovery powers concerning both pollution incident reduction plans and implementation reports are available for plans covering areas that are wholly or mainly in Wales, as well as for plans covering England, which are already included in clause 10. Such clarifications ensure that the EA regulators in both England and Wales can fully recover costs for the extent of their water company enforcement activities and carry out their duties and functions effectively.
The Government have tabled amendments 5 to 7 in order to commence clause 1 on Royal Assent. That will give Ofwat and companies certainty on when the powers to make rules on remuneration and governance will come into force and will therefore be useful to companies in planning for the 2025-26 financial year. Commencement of clause 1 on Royal Assent will ensure Ofwat can implement its rules as soon as possible following its statutory consultation with relevant persons, which include the Secretary of State, Welsh Ministers and the Consumer Council for Water. I know that some Members have expressed concerns around the timeline over which Ofwat’s rules will come into effect. I therefore hope the alteration to the commencement provisions for clause 1 will reassure those Members that the Government and the regulators are absolutely committed to ensuring Ofwat’s rules are put in place as quickly as possible.
I now turn to new clause 18, which is the most substantial of the Government amendments. As I have stated before, this Government are a Government of service, and we are absolutely committed to taking action to address water poverty. We are working with industry to keep existing support schemes under review to ensure vulnerable customers across the country are supported. We also expect companies to hold themselves accountable for their public commitment to end water poverty by 2030 and will work with the sector to ensure appropriate measures are taken to deliver that.
That is why we have tabled the new clause, which adds to the existing powers to provide for special charging arrangements for customers in need. The new provision will enable water companies to provide consistent support for consumers across the country. It will also allow for automatic enrolment on any future scheme and broader information sharing between public authorities and water companies. The clause imposes a requirement for consultation on any future scheme, and it also amends the Digital Economy Act 2017 to ensure that water companies identify eligible customers and that they get the full support to which they are entitled.
Sir John Hayes (South Holland and The Deepings) (Con)
I am grateful to the Minister for giving way and for her ongoing discussions about drainage and local authorities and other water-related matters. On the issue of water poverty, can she confirm that, either as part of the Bill or as an adjunct to it, when water companies fail to deliver an adequate service in new build situations—where new houses are built, but the water infrastructure is insufficient to furnish those new houses with the proper supply of water—the Bill and the regulatory environment that she has just described will allow customers to get their entitlement and to free themselves from water poverty, as she put it?
Emma Hardy
I thank the right hon. Gentleman for his intervention and also for the many times that he has talked to me about internal drainage boards since I became a Minister. On his question, if customers are not getting the service to which they are entitled, that is absolutely something that should be taken through Ofwat and the regulators. I am more than happy to pick that matter up with him outside the Chamber.
I hope that Members across the House will agree that new clause 18 is a welcome addition to the Bill, ensuring that the Government have the necessary powers in place to bring forward secondary legislation in future—once we have thoroughly considered all options for improving the support available for vulnerable customers.
David Chadwick (Brecon, Radnor and Cwm Tawe) (LD)
Does the Minister agree that it is supremely unjust that, in Wales, customers face some of the highest bills for their water, despite having some of the lowest incomes in the United Kingdom?
Emma Hardy
Bills have obviously had to increase in the latest price review because we have had record levels of under-investment in our infrastructure. However, new clause 18 is intended to ensure greater fairness. It is important for struggling customers that he, as the local Member of Parliament, is talking to the water companies to ensure that they are informed about the support mechanisms that are available, and about how they can access them and everything else to which they are entitled.
Graham Stuart (Beverley and Holderness) (Con)
I am extremely grateful to the Minister for giving way. She will know that just 7% of outfalls were monitored when Labour last left office. I am pleased to say that that figure is now 100%. Does she not agree that new clause 16 would ensure that the fines collected from polluting water companies through the water restoration fund, which was founded by the Conservatives in 2022, are used to improve and prevent further deterioration of our waterways, including our precious chalk streams? Will she now do what we all look to Ministers to do, which is pirouette at the Dispatch Box, recognise the rightness of the cause and change course?
Emma Hardy
The right hon. Gentleman is indeed an eager beaver. As much as I do not wish to pour water on his enthusiasm, I will of course respond to all the amendments at the end of this stage of the Bill, as protocol expects. I hope he is able to contain his excitement, and is looking forward to my final comments on that area. And I shall be practising my pirouettes in anticipation.
I wish to pay special thanks to the Welsh Government, the Deputy First Minister and the officials who have worked so openly and collaboratively with the UK Government throughout the development and passage of this Bill. I also thank the Senedd for their consent, which we received on 21 January. I look forward to continuing to work closely with our Welsh counterparts to protect our rivers, lakes and seas, particularly those that cross our borders.
Catherine Fookes (Monmouthshire) (Lab)
I thank my hon. Friend for all her work on this Bill. Does she agree that we have made much more progress on banning bosses’ bonuses in the six months that we have been in office than the Conservatives did in 14 years?
Emma Hardy
That excellent point was well made by my hon. Friend. I hope all hon. Members agree that the amendments tabled by the Government will only strengthen this Bill and will support new clause 18.
Several hon. Members rose—
Emma Hardy
I thank Members for their constructive engagement throughout this debate. As I have said before, it is wonderful to hear the shared passion across this House for improving the performance of the water sector so that it better delivers for customers and the environment. Given the limited time that I have to address over 50 amendments—I am not looking in any one direction—
Jerome Mayhew (Broadland and Fakenham) (Con)
The Minister makes reference to the very limited time. Why is that? This is a Government who hold general debates on Mondays and Thursdays. They have no business, yet we have less than two hours to debate this really important issue.
Emma Hardy
The hon. Member and I served on the Public Bill Committee, where we spent much time discussing many of the amendments. I cannot comment on decisions about the business of the House and urgent questions.
As I say, I will do my absolute best to cover all the points raised by hon. Members. I hope they accept that I generally try to be generous with interventions, but I want to put on the record my response to the amendments. I hope the House will give forgive me.
A number of hon. Members have tabled amendments that seek to increase transparency around water company operations and pollution incidents. The Government absolutely agree that greater transparency is needed to better enable the regulators and the public to hold water companies accountable. Although I have previously explained why it is not practical to prohibit all discharges from emergency overflows, which are a necessary safety valve in our sewage system, I reiterate this Government’s commitment to reducing the harm caused by sewage discharge. Ensuring that all emergency overflows are monitored is a critical step in enabling the outcomes that we all want to see. Information on the frequency and duration of discharges will help to direct investment to further reduce sewage discharges into our waterways, and to better enable the public to make informed decisions about accessing their local waterways.
Mr Gagan Mohindra (South West Hertfordshire) (Con)
Will the Minister give way?
Mr Mohindra
I thank the Minister for being so generous with her time. As she will be aware, the United Kingdom has most of the world’s chalk streams, and the River Chess runs through my constituency. How can she ensure that we continue to monitor our unique environment and protect it from the threat of overflows, to which she just referred?
Emma Hardy
I share the hon. Gentleman’s passion and love for chalk streams—the rainforests of the United Kingdom. Part of this Bill will drive the performance change in the industry that we want to see and reduce sewage discharges, which are doing such damage to such precious habitat.
Although some Members have called for the Government to go even further on monitoring, I reassure the House that we have carefully considered how best to increase transparency without driving unmanageable increases in customers’ bills. As promised in Committee, I have provided a factsheet on this issue, and I can make it available in the House of Commons Library. Rolling out event duration monitors over two price review periods will provide the best value for money for customers and the environment, and does not risk compromising water companies’ ability to deliver other vital improvements to our sewage system.
It is important that we direct investment at improving the sewage network to decrease overflow charges, and not just at monitoring, particularly where it does not provide valuable insight into the harms associated with discharge. There is a balance to be struck, and I believe we have got it right. The public know that there is too much sewage in our waterways. Whichever way we look at it—be it through volume or duration—they know there is too much. The focus must be on reducing it.
Anna Dixon (Shipley) (Lab)
My hon. Friend talks about the importance of water quality. Will she join me in commending campaigns such as the Ilkley Clean River Group and other citizen scientists across the country? In the absence of data collected under the Conservatives and the work of the Environment Agency, they had to do the work themselves to expose the sewage scandal.
Emma Hardy
I wholeheartedly pay tribute to the Ilkley Clean River Group and to the work that my hon. Friend does in championing it in this House.
Ms Polly Billington (East Thanet) (Lab)
I remind my hon. Friend how much this matters to my constituents in East Thanet. We are surrounded on three sides by the sea, yet we manage to clean up our water. However, I was struck by the fact that the Reform manifesto did not contain one word about water pollution or safety. I also want to point out the emptiness of the Opposition Benches in this debate. That should be put on the record.
Emma Hardy
I thank my hon. Friend for her intervention. I would have thought that this would be an important issue for all political parties.
Alison Hume (Scarborough and Whitby) (Lab)
Residents in Grosmont in my constituency have had a van parked in the street processing raw sewage, with a pipe left open in the street, for months between the processing of the sewage and the holding tank being emptied. Does my hon. Friend agree that disgusting incidents such as these illustrate our crumbling water infrastructure and the importance of the Bill, which will ringfence funding for vital infrastructure?
Emma Hardy
I wholeheartedly agree with my hon. Friend. What she is witnessing in the streets of her constituency is a perfect example of the crumbling infrastructure that we have inherited.
Several hon. Members rose—
Emma Hardy
Let me try to get through my remarks.
If it becomes feasible in future for companies to install monitors more quickly, they will be encouraged to do so. In addition to reporting requirements for emergency overflows, other measures in this Bill will ensure that water companies have robust plans to reduce pollution incidents and empower the regulator to punish wrongdoing effectively. This includes requirements to produce pollution incident reduction plans and implementation reports, as set out in clause 2 of the Bill, and requirements for water companies to consider the use of nature-based solutions in the production of their drainage and wastewater managements plans, as set out in clause 4.
The transparency provided by these measures will drive a culture change ensuring that water companies have the right incentives to reduce discharges of sewage into our precious rivers, lakes and seas. Let me be clear that the Bill also provides comprehensive powers for Ofwat to enforce the requirements introduced by the Bill to increase transparency, including through use of significant fines. I can reassure the House that where discharges are found to have breached permit conditions, the regulator will not hesitate to take action. In relation to new clause 14, I also make it clear that Ofwat has a duty to secure that companies are able to finance the delivery of their statutory obligations, including meeting pollution targets.
The Government are committed to acting as fast as possible to reduce sewage pollution in our waterways, and already have stretching pollution targets in place, informed by detailed analysis and extensive engagement. These targets will drive £60 billion of investment between 2025 and 2050, and almost £12 billion of that investment will begin this year, improving 2,800 storm overflows by 2030. I hope this reassures the House that, where water companies do not comply with requirements around pollution incidents and the reporting of those pollution incidents, the regulator will not hesitate to take action.
Pippa Heylings
The water restoration fund was created by the previous Government, yet not one penny of the £11 million levied on water companies between 2022 and 2023 reached any restoration of the waterways. Does the Minister agree that our precious chalk streams could be helped by the water restoration fund being continued?
Emma Hardy
As I have mentioned, I am a huge fan of our chalk streams. The hon. Member is right to point out that the much-lauded water restoration fund that some Members are so keen to talk about was established in November 2022, yet 18 months later the grand total of the number of projects supported by it was zero.
A number of hon. Members have also put forward suggestions to improve information and data sharing more broadly. The hon. Member for Beaconsfield (Joy Morrissey) has put her name to some of these amendments. Although the Government do not think it necessary to bring forward legislation in this space, we are actively considering ways of making data more accessible to the public through non-legislative means. This includes information on water companies’ performance and data on local sewer networks in map form, which must be made available free of charge under the Water Industry Act 1991.
Matt Rodda
I am grateful to the Minister for giving way. Her comments on this point will be welcomed by many of our local residents. Will she provide further information about the greater powers for Ofwat?
Emma Hardy
This Bill will, of course, empower Ofwat to take necessary action where it finds wrongdoing, including through changes to remuneration under clause 1. I know my hon. Friend cares a lot about this.
Several hon. Members rose—
Emma Hardy
I am sorry, but I will have to stop taking interventions if I am to respond to all the amendments.
Water UK has published a centralised map on its website of discharge data from all storm overflows operated by English water companies. I genuinely found it clear and useful, so I encourage all hon. Members to have a look.
I have heard calls from across the House for reforming the planning frameworks, the regulators and the incentives that govern the water industry model. Although I understand and, believe me, fully share hon. Members’ frustrations with the performance across the water sector, the fundamental issues facing the water industry and the regulatory framework in which it operates can no longer be addressed in a piecemeal way. I have spoken at great length throughout the Bill’s passage about the independent commission led by Sir Jon Cunliffe, which will make recommendations to fundamentally transform how our water system works.
The broad-ranging commission is bringing together a wide range of expertise to make recommendations in line with eight objectives to deliver the necessary reset to ensure a resilient, innovative and sustainable water sector in England and Wales. It will report to the Government by summer 2025. This includes specific objectives to review the roles, structures, duties and powers of the regulators, the planning frameworks—including the price review process—and the resilience of water companies. That includes financial resilience, which I know matters to many hon. Members.
Points have been raised about taking water companies into public ownership, and the Government have repeatedly made it clear that we do not consider nationalisation to be within the commission’s scope. Nationalisation would cost over £90 billion, and it would take years to unpick the current ownership model, at the expense of delivering and addressing more immediate public priorities. However, the commission will consider alternative water industry models within its scope. I take this opportunity to invite all hon. Members to put forward their views to the commission through the upcoming call for evidence, which will be launching soon.
Emma Hardy
Despite our political differences, the hon. Gentleman and I had a very interesting and—what is the right word?—comradely debate in Committee.
As we explained in Committee, conversations on the water restoration fund are still ongoing. I honestly do not believe that primary legislation is needed, which Conservative Front Benchers know, as they established the fund without primary legislation. I gently point out, as I have already mentioned, that within the 18 months of its establishment under the previous Government, the fund did absolutely nothing.
Emma Hardy
I have two minutes remaining, so I have to skip through as much as I can, as I know Members will want me to answer questions, particularly on the SAR.
Some hon. Members have expressed concern about the rules on performance-related pay and consumer representation. Although the Government agree it is crucial that consumers’ voices are heard and considered in water company decision making, we have already taken action on this. It is not necessary to require environmental experts to be placed on company boards because, following the agreement made with my right hon. Friend the Secretary of State for Environment, Food and Rural Affairs in his first week in office, nine of the 16 companies have updated their articles of association to include a social and environmental commitment. DEFRA is working with all of them to ensure they do the rest as soon as possible.
I agree with the hon. Member for Westmorland and Lonsdale (Tim Farron) about the representation of environmental non-governmental organisations on company boards. Members of water company boards are subject to a number of duties under the Companies Act 2006, including a duty to promote the success of that company. A director’s fiduciary duties may conflict with the organisational objectives of the environmental group in question, thus preventing their objective participation in board membership. We cannot have a situation in which an environmentalist on a water company board is not comfortable with their duty to promote the success of that company.
I produced a factsheet detailing how the SAR is used to ensure the continued provision of vital public services. However, I remind the House of the facts. I am being very clear: the shortfall recovery power can only be used to recover shortfalls in repaying Government funding. For the last time, I hope, it cannot and would never be used to recover financial creditor or shareholder losses relating to investment in the company. If the amendments were accepted as proposed, it would involve a radical change to insolvency policy, which has been a long-established practice since 1986.
Question put and agreed to.
New clause 18 accordingly read a Second time, and added to the Bill.
Water (Special Measures) Bill [ Lords ] (Fifth sitting)
Emma Hardy ExcerptsThursday 16th January 2025
(3 months, 1 week ago)
Public Bill CommitteesRead Full debate Water (Special Measures) Act 2025 View all Water (Special Measures) Act 2025 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 16 January 2025 - (16 Jan 2025)
Charlie Maynard
That may be a chink of light, because all I have heard from the Government so far is “Only private companies welcome here.” My understanding is that the Cunliffe review’s remit purposely excludes ownership. If that is now on the table, it is great news, because it is one of the fundamental problems in the water sector. If the commission’s remit now includes ownership structures, I am delighted. I would love the Minister to clarify the point.
The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Emma Hardy)
It is a pleasure to serve under your chairwomanship once again, Dr Huq. As promised, I have provided a fact sheet on the use of special administration. All Committee members should have received it by email, but hard copies are available on the table for their convenience.
Welcome to the last day of Committee.
Charlie Maynard
We all welcome one another, but I meant the fact sheet. I really appreciate your going to the trouble of putting it together; I thank your team as well. I have read it diligently and done my best, but I have a quiz question for you. The first bullet point refers to giving
“the power to recover HMG funding should there not be sufficient funds to pay HMG back at the end of a SAR.”
Then, under the heading “Context”, the penultimate bullet point states:
“If this shortfall occurred, and Ministers decided to use this new power, the Secretary of State and Welsh Ministers must launch a consultation prior to this power being used. This will ensure that those affected (e.g. water billpayers) are able to provide their views. It will also ensure that the shortfall recovery mechanism is implemented in a way that means costs are recovered fairly.”
To me, that completely confirms paragraph 69 of the explanatory notes published by the Department for Environment, Food and Rural Affairs, which says that the Government will make the bill payers, as opposed to the creditors, pay for the costs. Please confirm, if you could.
Emma Hardy
At the risk of having the same debate over and over, I refer the hon. Member to the last page of our fact sheet. I am not sure how much clearer we can make it:
“Would the shortfall recovery mechanism be used to compensate financial creditors or shareholders following a SAR?
No. The shortfall recovery mechanism could only ever be used to recover a Government shortfall in the unlikely event of a SAR.”
Once again, I welcome everybody to the last day of this Committee. As I may not have the opportunity to do so later, may I thank all Members for their contributions and for taking part? I especially thank the hon. Member for Westmorland and Lonsdale for tabling another new clause.
As I have said, a special administration regime enables a company that provides vital public services, such as water, energy or rail, to be put into administration in certain circumstances. During a SAR, a special administrator appointed by and answerable to the court takes over the affairs of the business.
The court-appointed special administrator’s statutory objectives, which are set out in legislation, are twofold: to continue the running of the company to meet its statutory functions until it is possible to rescue the company, for example via a debt restructure, or to transfer the company to new owners, for example by selling it. There is nothing to prevent the company, or parts of it, from being transferred as a going concern to mutual ownership by a company’s customers, should the special administrator deem that appropriate. Although in an insolvency scenario the special administrator’s primary purpose is to rescue the company as a going concern, mutual ownership could be an option following a SAR, provided that the organisation in question had sufficient funds and could ensure that the company, or parts of it, could continue properly to carry out its activities relating to water.
Tim Farron (Westmorland and Lonsdale) (LD)
We pushed the Minister earlier on the Cunliffe review. I thought it had been explicitly stated that ownership was off the table for that review. By talking about mutuals being a potential outcome, is the Minister saying that what is actually off the table is full-scale nationalisation, but that mutualisation, public benefit companies and not-for-profit companies could be a serious option in the Cunliffe review and in whatever legislation might follow?
Emma Hardy
Yes. We have ruled out nationalisation, but all other forms of ownership are in the scope of the Cunliffe review. I stress, however, that in a scenario in which a company was exiting special administration, it could go into mutual ownership if the organisation in question had sufficient funds and could ensure that the company, or parts of it, could continue to properly carry out its activities related to water. Of course, no one would want, in any situation, to transfer to a company incapable of operating and providing water.
It is important to emphasise that it would not be appropriate for the Government to dictate the terms of exit from a SAR, as that would interfere with the conduct of the court-appointed administrator and their statutory objectives.
Adrian Ramsay
I thank the Minister for the helpful clarification that the Cunliffe review will consider ownership models, including those that the hon. Member for Westmorland and Lonsdale has advocated. Will the Minister clarify why the Government are not permitting the Cunliffe review to consider full public ownership as one of the options? Why would they not allow an open assessment of all the potential options, especially given that, as we have heard, public ownership is so common in countries around the world for what is a natural monopoly?
Emma Hardy
The commission will focus on reforms that improve the privatised regulatory model. We have already been quite clear that nationalisation of the water sector is not in scope because of the high costs associated with that option, the lack of evidence that it would lead to improvements, and the delays that it would cause in achieving better outcomes for consumers and the environment.
The commission covers Wales and will review the model in Wales, where the largest water company operates a not-for-profit dividend model with no shareholders. In addition, as I have previously noted, the scope of the independent commission will include the governance of companies and the operation of existing tools such as the special administration regime. In the light of my comments, I hope that the hon. Member for Witney can see why the Government will not accept his new clause.
Tim Farron
We dealt with that with other amendments; even though they are not part of the Bill, that would be covered by the suite of things we have proposed. Fundamentally, all we are asking for is that the information and the evidence that is put out there will be searchable historically. That cannot be beyond the wit and capability of the very clever IT specialists who I am sure are already working for the water companies. This is important, and it is part of what those of us in this corner of the Committee Room are trying to do, which is to take the Government at their word when it comes to the elevation—and we support that elevation—of the role of volunteers and citizen scientists, equipping them to do their job properly and not expecting them to be at their computers 24/7 without sleep.
Emma Hardy
Very briefly, to return to the SAR—our favourite subject—it might be best if we take the conversation out of Committee and sit down with officials to make sure we are both having the same conversation about the same thing and we can clarify that. We will follow up on that, and of course I extend that offer to the shadow Minister.
New clause 30 would require Ofwat to establish a public database on the performance of sewerage undertakers. I understand and acknowledge the intent behind the new clause, and I echo the hon. Gentleman’s thanks to all the environmental campaign groups that have been working in this area to make information available. It is vital that the public are able to access and scrutinise information on the performance of water companies.
To support this, the Government are focusing our efforts on ensuring that the most salient information is published in a transparent way and is publicly accessible. That is why clause 3 already requires water companies to publish information on discharges from emergency overflows in a way that is readily accessible and understandable to the public. As mentioned, this matches the pre-existing duty for storm overflows. To support the storm overflow duty, Water UK has published a centralised map of discharge data from all storm overflows operated by English water companies on one website. A similar approach is intended for emergency overflows.
We have also requested that water companies begin installing continuous water quality monitors for storm overflows in the 2024 price review. This will provide useful information on the impact of sewage discharges on water quality, and we will be working with water companies to consider how best to publish the information in near-real time. That is in addition to the duty to publish information on pollution incidents in clause 2, as well as existing regulatory requirements for the Environment Agency to publish water company environmental performance data. This data includes the annual environmental performance assessment of the water sector, which provides information on the performance of waste water treatment works.
Information from flow monitors, as we have discussed previously, is very technical and does not relate to the impact of the discharge, unlike continuous water quality monitoring data. Therefore, we do not think there is sufficient additional value in requiring this data to be published. As the industry is already centralising data on sewage discharges from storm overflows on one website, and given the existing environmental performance reporting, the Government do not believe that an amendment to require further publications by Ofwet—Ofwat—to do the same thing is necessary. I therefore hope that the hon. Member feels able to withdraw his new clause.
Tim Farron
We are not going to push this to a vote. I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
Charlie Maynard
I beg to move, That the clause be read a Second time.
New clause 32 is about procurement. I will read out the key point:
“The Authority must issue rules requiring relevant undertakers to use competitive procurement processes in respect of procurement relating to water infrastructure.”
What are we getting at here? There is an unholy trinity that is causing trouble inside our water sector: too much debt, regulatory capital value—a concept that is misfiring big time—and the ownership model. I hope that the Government will take on that unholy trinity and find a stake.
The new clause addresses RCV, because it is not working in the water sector. I touched on that in our last sittings, so I will not drag the Committee through it again. Regulatory capital value encourages as big an asset base as possible, which gives water companies an incentive to source product as expensively as possible—to pour really expensive concrete. It has been going on over the last few decades, so I am not pinning the blame on this Government, but I am asking for their help to stop it.
It is not in the customers’ interests for us to continue to have faulty procurement processes that encourage water companies to buy things expensively. With new clause 32 the Liberal Democrats are trying to highlight that problem and address it. I suspect that the provision will not be passed, but I am going to be talking about it. RCV is the issue, and I am interested to see if the Government will recognise it as such and look to address it.
Emma Hardy
I thank the hon. Member for Westmorland and Lonsdale for the intention behind new clause 32. On a personal level, I welcome the scrutiny and the level of detail that we have gone into. As the Bill started in the other place, there was a lot of cross-party work and the Government have taken onboard some of the recommendations. I gently push back on the idea that this is not a necessary or valid way to examine legislation.
The Government agree that competitive procurement can be a successful way to provide better value for money for consumers, and greater innovation within major infrastructure projects. In the 2019 price review, Ofwat developed the direct procurement for customers approach, or DPC, building on the success of the Thames tideway tunnel. The DPC allows the water company to competitively tender for services in relation to the delivery of major infrastructure projects. At price review 2024, Ofwat noted that, by default, all projects with a total life cost of over £200 million should be delivered through a DPC. Following final determinations in December 2024, Ofwat announced that 26 major water company projects would be delivered by competitive tendering processes, including a DPC, with a total whole-life cost of almost £50 billion.
Charlie Maynard
Two-hundred million is a really big number. In my patch in Witney, we have sewage treatment works as far as the eye can see that are undercapacity and are leaking sewage all over the place—at Bampton, Cassington, Carterton, Witney, Milton; you name it. It is awful, and I am sure that is the case in other constituencies, too. Two-hundred million pounds is miles higher than any of their spend, so—correct me if I am wrong—all those sewage treatment works are going to carry on without the new procurement processes because they are below the £200 million threshold.
Emma Hardy
The point is that competitive tendering processes were introduced back in 2019, including looking at where money is being used and how that money can be used most effectively. As I have just mentioned, we have £50 billion-worth of competitive processes in the next price review determination. Water companies are already actively using competitive procurement processes. This is something that Ofwat already encourages through the price review process. I therefore hope that the hon. Member is content that this amendment is unnecessary.
Charlie Maynard
I thank the hon. Member for Monmouthshire for her excellent point. It is very interesting that a mutually owned water company is taking that very sensible decision and approach. It highlights that that is a benefit. They are not trying to make money hand over fist. They are trying to do the right thing.
Emma Hardy
With your indulgence, Dr Huq, I will clarify something that I should have mentioned in the previous debate. Ofwat reserves the right to explore the use of DPC for major projects below the £200 million threshold where it offers value for money for customers. I just wanted to put that on record.
I thank the hon. Member for Westmorland and Lonsdale for tabling new clause 33, which would increase the responsibilities of water companies where they participate in the planning process. As we all do, I genuinely recognise the intent behind the clause and where the hon. Member is trying to get to. We absolutely recognise concerns surrounding water and sewage companies’ ability to keep pace with the needs arising from new property developments.
David Reed (Exmouth and Exeter East) (Con)
This is an active issue across many of our constituencies, and we have heard many personal stories. In my constituency of Exmouth and Exeter East, we have had a new town built called Cranbrook. A sewage treatment works was promised but has not been delivered. That has put pressure on systems elsewhere, and we have seen big sewage outflows in other parts of the constituency. We know that in the Ministry of Housing, Communities and Local Government there are big reforms coming for the national planning policy framework. Will the Minister please confirm whether her Department is having active conversations about what we are speaking about, and whether or not there will be changes in this space?
Emma Hardy
Conversations are ongoing, but I would not want to pre-empt their results. I recognise from previous conversations that this is a concern for the hon. Gentleman.
The Government consider that the Bill is not an appropriate vehicle to resolve this issue. It should be addressed through measures such as the water resources management plans or draining and waste water management planning. As was mentioned earlier, it is our job as legislators to ensure that we draft the right amendments to the right Bills in order to achieve the aims we are seeking.
Water companies already account for local plan growth forecasts in their water resource management plans. These plans for water provision over a five-year period with a forward look over 25 years provide for a development outline. We recognise the need for stronger and earlier join-up between local planning authorities, regulators and water companies. As I mentioned, work is under way to consider such questions and to ensure timely and mutual understanding of water resource requirements at a local scale to support sustainable development. That work includes the independent commission on the water sector regulatory system, which will provide recommendations for the roles and responsibilities of the water industry regulators that govern the water industry model and strategic planning.
As such, it would be premature to legislate in this area or to impose any additional responsibilities for regulators until the commission has concluded its review, but I reassure hon. Members that the Government recognise the need for water companies and local planning authorities to co-operate effectively in considering the water infrastructure requirements that will underpin development plans, housing growth and sustainable development. The proposed new clause is unnecessary, and I ask the hon. Member for Witney to withdraw it.
Charlie Maynard
We wish to press the new clause to a Division.
Question put, That the clause be read a Second time.
Tim Farron
I am grateful for that well-informed and thoughtful intervention. The hon. Member is absolutely right: that is what we should do. To be reasonable, we want people who understand the industry working for the regulators. We understand why there could be a benign reason for what is happening, but nevertheless, we trace it to some of the reluctance in the culture of Ofwat towards taking action. I talked about the £168 million-worth of fines still not collected by Ofwat from three transgressing water companies. Some of the reluctance comes not from corruption but cosiness, and we need to make sure we address that, as the new clause seeks to do. We dealt with this issue on amendment 19 and it was pushed to a vote. I do not want to trouble the Committee again, so I will be happy to withdraw the new clause.
Emma Hardy
I thank hon. Members for their contributions. Again, we recognise the intent behind new clause 34, tabled by the hon. Member for Westmorland and Lonsdale. However, it would be disproportionate to prevent all water company employees from being able to accept employment in Ofwat.
Ofwat seriously considers the handling of actual and potential conflicts of interest. Staff in Ofwat are bound by the civil service business appointment rules, which do not apply to every agency, but they do in terms of Ofwat, and by the duty of confidentiality and the Official Secrets Act. Any new employees in Ofwat, regardless of their previous employment, would be bound by those rules. Compliance is mandatory and any breach may result in disciplinary action being taken.
Individuals with experience working in the water sector have a wealth of knowledge—the hon. Gentleman mentioned this—that might be a valuable asset to Ofwat and could support better policymaking. I hope that this reassures him on his concern about the potential conflicts of interest in Ofwat, and that the new clause, as drafted, is therefore unnecessary.
Tim Farron
I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 35
Companies to be placed in special measures for missing pollution targets
“In section 2 of the Water Industry Act 1991, after subsection (2D) insert—
‘(2DZA) For the purposes of ensuring that the functions of water and sewerage undertakers are properly carried out, the Authority must establish—
(a) annual, and
(b) rolling five-year average
pollution targets which must be met by water and sewerage undertakers, and the penalties to be imposed for failure to meet such targets.
(2DZB) The performance of a water or sewerage undertaker against such targets must be measured through independent analysis of monitoring data.
(2DZC) A timetable produced under subsection (2DZA)(b) must require the following reductions in the duration of sewage spill events, using the annual total hours’ duration of all sewage spill events recorded by Event Duration Monitors, based on an average from the last five years, as a baseline—
(a) a 25% reduction within five years;
(b) a 60% reduction within ten years;
(c) an 85% reduction within fifteen years; and
(d) a 99% reduction within twenty years.
(2DZD) A water or sewerage undertaker which fails to meet pollution targets set out by the Authority will be subject to such special measures as the Authority deems appropriate, which may include—
(a) being required to work on improvement projects with or take instruction from the Authority, the relevant Government department, or such other bodies or authorities as the Authority deems appropriate; and
(b) financial penalties.’”—(Charlie Maynard.)
Brought up, and read the First time.
Charlie Maynard
This is a big one: companies to be placed in special measures for missing pollution targets. I will read out the key bits:
“(2DZA) For the purposes of ensuring that the functions of water and sewerage undertakers are properly carried out, the Authority must establish…annual, and…rolling five-year average pollution targets which must be met by water and sewerage undertakers, and the penalties to be imposed for failure to meet such targets.”
On the five-year average, obviously we have wet years and dry years. We cannot just have flat numbers. We have to take an average. The new clause also states:
“A timetable produced under subsection (2DZA)(b) must require the following reductions in the duration of sewage spill events, using the annual total hours’ duration of all sewage spill events recorded by Event Duration Monitors, based on an average from the last five years, as a baseline…a 25% reduction within five years;…a 60% reduction within ten years;…an 85% reduction within fifteen years…and…a 99% reduction within twenty years.”
What are we trying to get at? Clause 2 is about pollution incident reduction plans. That is about specific events, so it is at a micro level. We have a national problem and need to think about things at a national level. We have a lot of data already. I think it was Peter Drucker who said, “If you can’t measure it, you can’t improve it.” We have been advocating for measuring it; we have had that debate. The good news is that we already have one metric of measurement—event duration monitors—that tells us how many hours of sewage are spilled per year. EDMs are a long way from perfect in two respects. First, we do not know the volumes going out or how much of that is actually sewage, as we have discussed at length. Secondly, a lot of EDMs are sub-par. I will give a shout-out to Professor Peter Hammond, who has highlighted some essential messages about that. However, that is still the best dataset we have, and we should all take the view that we should not let the perfect be the enemy of the good.
As soon as we put in flow monitors and quality monitors—I know the Government do not support that—we will advocate using those as a metric, but we do not have those now. However, we do have EDM data, so I am advocating that we use that metric. We already know how many hours are spilled by operator. We can take the five-year average and start setting out targets.
Businesses like knowing where they stand. I am a naive politician who is only six months into the job, so there is an awful lot I do not know. I probably committed a key error here by putting in numbers, so some smart politician could come along and say, “That is an incredibly generous number. We’ll go lower than that.” Fine—I do not really care if someone wants to play that game. I want our rivers fixed, and we get our rivers fixed by setting targets, telling the water companies that we want them to meet those targets and giving them sticks, and possibly carrots, to meet them.
We are missing an opportunity—respectfully, I feel that we have missed a lot of opportunities. We did not have to have this Bill now, but we do have it. We ought to be going for the wins now, but every single amendment has been rejected regardless of which party tabled it. That is a loss for our rivers as much as for hon. Members present. However, this new clause provides an opportunity to set some targets. Whether it is today—although this new clause will almost certainly fail because we will not push it to a vote—or in the future, I encourage the Government to take the metric they have, which is hours of sewage spilled, set benchmarks against which to measure water companies and set out bad news or good news depending on whether they miss or hit them. If we hit those targets, we are seriously getting closer to fixing our rivers. Without them, we are not.
I echo my hon. Friend the Member for Westmorland and Lonsdale in saying that I have really enjoyed most of the three days of this Committee. I appreciate the courtesy and generosity in the answers. I thank the Chair, the team of Clerks, who have been so helpful, and the DEFRA team.
Emma Hardy
I would like to thank, as I have before, all the environmental groups and activists up and down the country who do so much to champion cleaner air, rivers, lakes and seas for us all. I look forward to seeing hon. Members on Third Reading and Report.
As I did before, I will gently push back and say that the Government did work collectively and cross-party in the other House and brought in compromise amendments before the Bill came here. It would be slightly disingenuous to imply that the Government have not accepted amendments or worked with other parties on the Bill.
I thank the hon. Member for Westmorland and Lonsdale for tabling new clause 35. We must ensure that companies accelerate action to reduce pollution to the environment, halting the unacceptable harm they have caused in recent decades. That is why we have introduced a new requirement for water companies to produce annual pollution incident reduction plans and the accompanying implementation reports through the Bill. Again, I gently note that the implementation reports and the strengthening of that provision was done cross-party in the other place.
The plans will need to set out the actions that water companies intend to take to reduce pollution incidents, and an assessment of the impact that those actions will have. Companies must then report on the progress they have made with measures they committed to in the previous year, and must clearly explain the reasons for any failures to implement their plans and set out the steps they are taking to avoid similar failures in the future.
In addition to the new requirements that increase accountability for pollution incidents, the Government are committed to acting as fast as possible to reduce sewage pollution in our waterways and upholding stringent performance criteria for water companies, as evidenced by the significant forthcoming programme of investment in price review ’24. A delivery programme of this scale, improving thousands of storm overflows with billions of pounds of investment, requires clear and robust regulation. The new clause as drafted would unfortunately undermine that.
The Government’s storm overflows discharge reduction plan sets stretching timebound targets to eliminate ecological harm from all storm overflows by 2050, and for water companies to significantly reduce harmful pathogens from storm overflows discharging into bathing waters by 2035. This is supported by an ambitious backstop target. By 2050, no storm overflow will be permitted to spill more than 10 times a year on average. Those stretching targets are informed by detailed analysis and extensive engagement. They will drive £60 billion of investment between 2025 and 2050—the largest infrastructure programme in water company history. Almost £12 billion of that investment will begin this year, improving over 2,800 storm overflows by 2029-30.
Those targets bolster underpinning legislative requirements to limit pollution from storm overflows. The Environment Agency monitors and enforces against breaches of environmental requirements, utilising monitoring data to support its investigations. Where breaches are identified, it has significant powers to ensure enforcement orders and financial penalties, and where appropriate, to pursue criminal prosecution. The measures in the Bill will further strengthen its powers, including by introducing automatic penalties.
Charlie Maynard
These timelines are too slow. Setting the date at 2035 for monitor installation will mean that this is done at a much slower rate than the rate over the last seven years. That is disappointing. Targets set for 2045 and 2050 are too far away. We do not need to, and should not, move that slowly. We must do better.
Emma Hardy
I think when we had this debate, it led to the first of the fact sheets that we produced for the Committee. The hon. Member is talking about the speed of installation, and we highlighted that we will double the rate of the previous Government. We also highlighted that some of the improvements involve engineering and work. That is why we think that with £12 billion of investment, we are improving things, and I mention again the 2,800 storm overflows by 2029-30. So in the next few years, there will be billions of pounds-worth of improvements.
We all want opportunities to go quicker—everybody would want everything to be done quickly. As a Government, there is always a balance between making promises we cannot keep—which is never the best way to go—and being stretching and ambitious. I feel that we are being stretching and ambitious while also ensuring that we do not make promises we cannot keep. Obviously, however, if there was a way to go faster, everybody would accept that.
The Environment Agency is currently consulting on proposals to add new spill frequency thresholds to storm overflow permits. That will maintain the performance of storm overflows that have undergone improvements, and make it easier for the Environment Agency to act quickly if storm overflow performance deteriorates. Ofwat sets specific performance targets for water companies in the five-yearly price review. Ofwat is expanding those performance commitments for price review ’24, to include an ambitious storm overflow spill reduction target, which, if achieved, would see average spill per storm overflow reducing by 45% by 2029, compared with the 2021 levels across the industry. Where the commitments are not met, companies must reimburse customers, holding water companies to account to deliver outcomes.
Charlie Maynard
I am sorry, but with spill per overflow, I again think we are drinking the water industry’s Kool-Aid. We are doing its metrics, and that is not doing anybody any favours. We are talking about spill per overflow; what we should be talking about is how many hours. We have that information. Why are we not saying how many hours? Let us think about it. We could have a spill for one hour or a spill for a month. That is just one, in that metric. It is missing a huge amount of what is going on. Please can we move away from these metrics towards spill hours, at a minimum?
Emma Hardy
Again, I recognise the intent behind the hon. Gentleman’s comments. Whichever way we want to address this, talk about it or set targets, ultimately what we want from a Government is less sewage going into our rivers, lakes and seas. If we can find a way to all agree on the best way to move that forward, that is something we can unite behind.
As I mentioned, the Government cannot accept the new clause, but I recognise the intent behind it. It would cut across the existing targets that I have set out, creating confusion and uncertainty about which water targets the companies should meet. That would risk undermining the extensive forward investment programme that is already under way and is essential to delivering the changes that we all want. For those reasons, and for the last time, I ask the hon. Member to withdraw his new clause.
Charlie Maynard
We will not press this new clause to a vote. I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
Question proposed, That the Chair do report the Bill, as amended, to the House.
The Chair
Anyone else? In that case, for the last tearful time, I call Minister Emma Hardy to respond.
Emma Hardy
Thank you very much, Dr Huq, for your wonderful chairwomanship. I thank everybody on the Committee. It has been a new experience for so many of us, with Members in new positions and some new Members appearing on a Bill Committee for the first time. It has been really enjoyable, and there has been pleasant camaraderie. Where there have been disagreements, we have had them in a polite and courteous manner. I think we have set a wonderful example for many of the other debates, and long may it continue.
I thank the incredible Bill Committee team, who have done such an amazing job in supporting me in my work. I thank the Whip, my hon. Friend the Member for Manchester Withington, for making sure that we all voted in the right way at the right time, which definitely prevented me from getting into trouble while leading on my first Bill. And of course, we have had loads of written evidence, and for a small Bill, we have had lots of amendments, which shows the strength of feeling and interest in the Bill from the wider community.
What else can I say other than we’ve only just begun, and you ain’t seen nothing yet? Following this Bill, which is just part of our phased transition to transform the water sector as a whole, we also have the Cunliffe review, and in the words of Arnold Schwarzenegger, “I’ll be back”, with another Bill—similar time, same place. I hope to see many of you there, as we go again to clear up our rivers, lakes and seas for good.
Question put and agreed to.
Bill, as amended, accordingly to be reported.
Farmland Flooding
Emma Hardy Excerpts(3 months, 1 week ago)
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The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Emma Hardy)
It is a pleasure to serve under your chairmanship, Dr Murrison. I am delighted to contribute to this debate with the hon. Member for Broadland and Fakenham (Jerome Mayhew), although I feel that we are spending more time together at the moment than I am with my own family, what with the Bill Committee and other debates. I look forward to round 3—or is it 4?—tomorrow.
Emma Hardy
It is our secret.
I enjoyed the hon. Gentleman’s thoughtful contributions on the importance of using soil in the right way and how farming practices can be updated, which were valuable. As I mentioned to the House last week, and as I am sure people have heard me say before, I am fully aware of the impact of flooding on households, people’s mental health and, importantly, farmland. I have deep sympathy with farmers, so much of whose crop has been underwater this season, which has impacted yield.
The storms this winter highlight the urgent need for many of us to adapt to the threats of climate change, not least farmers, who often feel the impact directly. As climate change leads to more extreme rainfall, as has been mentioned, the number of people at risk from flooding and coastal erosion will continue to grow. I therefore want to make it abundantly clear that this new Government are committed to tackling this challenge, which is one of the top five core priorities for the Department for Environment, Food and Rural Affairs.
The good news is that work has already begun. Recognising the significant impact of flooding on farmers, the Government are bolstering England’s resilience to flooding by confirming an additional £50 million for internal drainage boards to improve assets. That is on top of the existing £25 million, and takes total investment to £75 million. That transformational investment will put IDBs on a firm footing to deliver their vital role in flood and water management. It will benefit projects that will improve, repair or replace IDB assets, including flood barriers, embankments and, as has been mentioned, the maintenance of watercourses. Projects will reduce risks and impacts from flooding for farmers and rural communities across England. To ensure that we protect the country from the devastating impact of flooding, we are investing £2.4 billion in 2024-25 and 2025-26 to improve flood resilience by building, maintaining and repairing flood defences.
However, I gently point out to the hon. Member for Broadland and Fakenham that this Government inherited our flood defence assets in the worst condition on record. We have had to come in and deal with the maintenance backlog.
Emma Hardy
I will give way to my hon. Friend the Member for Reading Central (Matt Rodda) and then to the hon. Member for Glastonbury and Somerton (Sarah Dyke), but I have only six minutes.
Matt Rodda
The Minister makes an excellent point. In my area, a major flood prevention scheme in Caversham, which is part of the Greater Reading area, has unfortunately been deferred. However, there is some good news regarding the point that she and the hon. Member for Broadland and Fakenham (Jerome Mayhew) made about landowners working together. I visited Kennet meadows and Fobney meadows, and saw three different landowners working together to rewild a flood meadow to enhance the land’s ability to soak up water. Much can be done if central Government and local government play a leading role in co-ordinating work with landowners, and build a team approach at a local level.
Emma Hardy
That sounds like an excellent example. I note that the hon. Member for Glastonbury and Somerton intervened earlier on the hon. Member for Broadland and Fakenham so, if she does not mind, I will use the last five minutes of the debate to respond to some of the comments made earlier.
We are looking at reviewing the flood funding formula, which was brought up by farmers during many of the visits that I made when I was in a shadow ministerial position. I want to work with all the various stakeholders on that, and I recognise that, in my opinion, at the moment the flood funding formula disincentivises investment in rural areas. I want to have a serious look at that.
I hate to see an outbreak of, almost, unity—although that is nice to have sometimes—but there is much love among Labour Members for natural flood management, so I welcome the comments made by the hon. Member for Broadland and Fakenham. The Government champion and support natural flood management, and I am keen to explore how we can encourage more of it, throughout England. I have therefore convened a roundtable on Monday to explore opportunities and challenges in the delivery of natural flood management. It will include experts and those directly involved in the projects, and will help inform our delivery of natural flood management. I look forward to hearing from farming representatives as part of that discussion, and have invited the National Farmers Union, the Nature Friendly Farming Network and the Country Land and Business Association. I am keen to hear how their views can feed into Government work.
As has been mentioned, various natural flood management methods can be used to protect flooded farmland, such as planting winter cover crops, soil management, matching grazing density to the capability of the land, avoiding growing certain crops on steep slopes, and blocking drainage ditches to slow down run-off and create wetland habitats. There will be measures that benefit flood mitigation in all three of the environmental land management schemes: the sustainable farming incentive, countryside stewardship and landscape recovery.
Jerome Mayhew
Those are all great projects, but farmers plan long in advance; it is not an 18 or 24-month process, and if the funding runs out in two years and there is no visibility beyond that, how are they expected to invest in these schemes?
Emma Hardy
To reassure the hon. Gentleman, the Government are committed to the environmental land management programme and are looking at funding natural flood management on farmland. As I said, we are having a meeting on Monday to discuss, with farmers, what more we can do for natural flood management.
Part of our vision for farming is a sector that recognises that restoring nature is not in competition with sustainable food production—on this point I agree with the hon. Gentleman—but actually essential to it: restoring nature helps food production. We will provide farmers and land managers with the support they need to help restore nature, which is vital to safeguard our long-term food security, support productivity and build resilience to climate change. That means continuing the transition away from payment for land ownership towards payment for delivering public goods for the environment, and continuing to use regulation to require minimum standards that will—importantly—be designed in partnership with farmers, and have sufficient lead-in times for change.
The countryside stewardship scheme already has specific flood resilience options, such as “making space for water”. I also flag that our land use framework will be coming out at some point, and that this year we will introduce new actions with flood mitigation benefits to our combined environmental land management offer, including actions to reduce flood risk, restore and enhance floodplains, and provide better storage of floodwater.
To sum up, I reiterate that the Government are dedicated to exploring ways that nature-based solutions to flooded farmland can be delivered for the benefit of farmers and others. We have already taken decisive action with the first steps to reviewing the outdated funding formula, the creation of the new, multi-agency floods resilience taskforce, and the updating of flood options under the environmental land management schemes. I look forward to continuing to engage with farmers on these incredibly important matters. I am grateful for this important debate, and grateful to have heard the views of Members in the room.
Question put and agreed to.