Water Bill

Ian Swales Excerpts

Monday 25th November 2013 Commons Chamber

[Ian Swales (Redcar) (LD)]

It is a pleasure to follow my hon. Friend the Member for Brecon and Radnorshire (Roger Williams), whose speech was comprehensive.

In my constituency, 5 September was a bright, sunny day, as was 7 September. In between, on 6 September, we had 10% of our annual rainfall in a single day. There was heavy flooding all around my constituency. That was not isolated at all; many communities were affected, including both homes and businesses, and some of the affected homes had been completed within the last two years. For some of the people affected, this was the third or fourth time they had been flooded in the last few years, and it was heartbreaking to go around hearing all the stories. There was the story of the 20-year relationship that had finally been broken by yet another flooding incident, and that of John and Margaret Cone, whose house I went to in 2008 to see the watermarks 2-feet up their walls just before they moved out. They had to move out again, now aged over 80, and watch builders taking down part of the outside skin of their house to try to dry out the cavity.

I know that many other Members have similar constituency stories, but Redcar is on the coast and is flanked by the tidal part of the river Tees, yet this flood was not caused by the sea. Just a few months ago we were celebrating the completion of the £30 million sea defences in Redcar, but this incident was all about rainfall on the land.

We might think that being on the coast would help because water can run to the beach and away, but we have problems with natural watercourses and culverts. Some of those natural watercourses are commemorated in current street names: the Fleet, Long Beck and West Dyke. Culverts, sewers and house building have together created environments in which the water cannot get away as it should, the most absurd example being in the village of New Marske, which is halfway up a hill yet has serious flooding problems. Northumbrian Water has been investing heavily in tanks around the town and they are there to hold up excess surface water, to avoid inundating the sewerage system and putting raw sewage into the sea. Of course, given the golden beaches from Redcar down to Saltburn, which are a Mecca for surfers, I very much welcome that I and attended the “Surfers against Sewage” reception in the House just a few weeks ago. However, I also have to say that I support householders against sewage and many householders in my constituency had raw sewage in their house that day. An investigation is going on into the role of these tanks, and it is concerning that a lot of the major flooding was in the area of these tanks—so-called hydro-break tanks. I therefore think they may well be part of the problem, and I am not convinced that their overflow arrangements work sufficiently well in times of very high rainfall.

My area is suffering from a set of man-made problems. It is by the sea and it is not in a valley, so drainage should be no problem. We need radical solutions. I think of the city of Valencia in Spain where, after serious flooding in the 1950s, the entire river was taken out of the city. If anyone watches the Formula 1 race at Valencia, they can see the cars racing around where the new river is now, and the old river is a very strange-looking park in the middle of the city. It is a nice green area, but with bridges all the way across it. We may need similarly radical solutions to help divert flooding away from towns and villages, and I hope that, once the needs assessment is made, DEFRA will look sympathetically at the possible solutions.

On the wider issues, one of the problems the water industry has is that the benefits of investment are not necessarily aligned with the costs. For example, councils and builders continue to build on flood plains because they benefit from that and do not bear the costs when things go wrong. Who pays if watercourses are not properly kept clear? The people responsible for keeping them clear do not pay the costs if they are not clear. Do developers pay for all the new infrastructure costs of water and sewerage when they do developments? One of the things the Government should therefore look at is the alignment of costs and benefits.

There is no doubt that in the current system, water companies play a very big role in paying for the costs of the whole infrastructure—and so they should. It is not acceptable that they come running to the taxpayer to meet extra costs, particularly when many of them are clever at avoiding taxes. Water companies must be made to pay the full investment and infrastructure costs of the areas they are responsible for.

I very much welcome the part of the Bill dealing with flood insurance. The Bill’s aims and the Flood Re proposals are an excellent way of addressing the issues. I note that clause 47 is going to be fleshed out in Committee, and the Chair of the Environment, Food and Rural Affairs Committee, the hon. Member for Thirsk and Malton (Miss McIntosh), said that she would like to see more included in the Bill in this regard. I certainly support that, because we should all be concerned that the devil might be in the detail. I hope the Minister will say something about how he sees clause 47 being fleshed out.

[Mel Stride (Central Devon) (Con)]

On making flood insurance available for properties most at risk, does the hon. Gentleman agree that it is vital that we drill down to the details, such as the excess arrangements in the policies that are made available to those in need?

[Ian Swales]

I certainly agree and the hon. Gentleman makes an excellent point, which I will cover in the next few minutes. We have heard from other Members today examples of great excesses being charged. Some, but not many, of my constituents are being refused insurance on any terms at all. However, the ones who do get insurance are reporting high premiums and high excesses; some excesses are so high that they are effectively insured only for an Armageddon situation. I therefore urge the Minister not just to concentrate on the availability of insurance but to make the premium levels and excess levels stick with the industry.

I was interested to hear the speech of the hon. Member for Kingston upon Hull North (Diana Johnson), who made some very good points about houses completed since 2009. I hope the Minister will define what he means by houses built on a flood plain. What will happen to houses not deemed to have been so built, but which have nevertheless been flooded recently, like some in my constituency? What will happen to houses built since 2009 that have yet to be flooded but will flood in future? Will the insurance industry take the opportunity to withdraw insurance? The planning systems need looking at. Building regulations would help a lot in dealing with water consumption, and a lot more attention needs to be paid in the planning system to the issue of building on flood plains.

Some of the measures in the Bill are undoubtedly designed essentially to deal with water shortages, particularly in the south-east. This is yet another capacity issue for the south-east, to add to those of housing, schools, transport and many others. Water is plentiful in the north-east and, I understand, in the north-west too. I therefore hope that DEFRA Ministers will lend their full weight to the Government’s efforts to rebalance the economy away from the south-east.

[Tessa Munt (Wells) (LD)]

I apologise for not being present for the opening of the debate; this was because I was attending a Committee elsewhere in the House.

I want to address three areas: fracking, flooding on farmland and flood insurance. I shall start with flood insurance. Much of the patch that I represent is at or below sea level, and it is prone to flooding. Many planning permissions on land in areas that have already flooded are in existence now, but I want to concentrate on future developments. In large parts of my constituency, it would be hard to build any sort of home or business without it being on the flood plain. Would the Minister consider encouraging local authorities to look at the townhouse model? Homes should be built on stilts in flood areas, or at least with garages at ground floor level so that people are not put at risk through flooding and so that goods and property can be moved to upper floors more easily to avoid damage.

I have a minor suggestion for the Minister. It was suggested earlier that the water companies should be a statutory consultee, but would it also be possible for representatives of the Association of British Insurers to clarify the insurance situation on new property proposals being put before development committees, when they involve developments in areas of flood risk? In that way, developers would be forced to use design to mitigate the risk, and purchasers would understand the risks and insurance costs involved, as well as knowing that they would be able to get insurance for their home or business.

Turning to flooding on farmland, I should like to pay tribute to my hon. Friend the Member for Newbury (Richard Benyon), who took the trouble to visit my constituency when he was the Minister with responsibility for this issue. He visited the Axe and Brue valleys in April this year and met more than 100 farmers and smallholders whose homes, stock and businesses had been severely affected by months of flooding. The farmers made it clear that the rivers, rhynes and waterways had suffered over the past 13 to 15 years because they had not been cleared or maintained. They had been neglected in the areas served by the Axe and the Brue rivers. There were problems with silt, blockages and overgrowing. In Somerset, money usually goes to the areas surrounding the Tone and Parrett rivers, but it is important that all our waterways should be maintained and improved.

The Environment Agency’s six aims and objectives recognise wildlife, flora and fauna, but there is no recognition whatever of the value of productive land. There should be, particularly at a time when food production is so important and we desire to be self-sufficient, or at least self-supplying. That point was also highlighted regularly. I hope that the Minister will use this opportunity to ensure that the residents and businesspeople in my part of Somerset get the dredging that they need and the ongoing maintenance that they deserve from the Environment Agency. I also hope that the agency and the Government will recognise the value of productive land, and that there is a response to the need to protect agricultural interests as well.

[Ian Swales]

Does my hon. Friend agree that failure to dredge does not often result in a cost to those who should be dredging, and that it mainly results in a cost to the insurance industry? Does she think that something should be done about that?

[Tessa Munt]

My hon. Friend is absolutely right. It would be so much better if we could get the dredging programme sorted out, because it would get rid of the need for massive insurance claims. In my area, if water can reach the pumps, it can be pumped away. Because of the lack of dredging, however, it cannot reach the pumps. It is possible to see the pumps from the flooded areas, but the water cannot reach them and therefore cannot be taken away. Dredging would cure that problem.

My final area of concern is the risk that fracking for shale gas poses to our rivers and groundwater in terms of pollution and water stress. The Bill already amends the 2010 environmental permitting regulations that cover fracking activities, making it an excellent opportunity to address these concerns and strengthen the existing regulatory framework. The House has heard repeatedly that our regulatory regime for fracking is the most stringent in the world, and it is true that, if properly implemented and enforced, the existing regulations could mitigate many of the risks posed by fracking. However, although fracking has been taking place for years, this particular new technology that is planned for the UK brings more serious risks that we cannot properly assess at this early stage. Even the best regulatory regime can only mitigate risk; it cannot eliminate it. That means that a water pollution incident cannot be ruled out. It is therefore of considerable concern that it is not clear who would be liable if something does go wrong. One of the main risks from fracking is pollution of groundwater, which can occur because of faults in production wells. Groundwater clean-up is very costly and can take decades. For example, the contamination of a chalk aquifer near St Albans in Hertfordshire in 2000 led to an extensive contamination of the public drinking water supply, and the cost of the clean-up, which took a decade, was about £16 million.

Even if liability for pollution can be proven, there remains a risk that fracking companies could go bankrupt, leaving taxpayers or water companies with the costs. That has been a major issue in the case of Scottish Coal, whose liquidators have been given permission to abandon coal mines and polluted land without carrying out restoration or in any way controlling pollution from the sites. Instead of identifying and addressing these risks, it appears that the opposite direction of travel is being taken. Not only is there pressure to simplify and streamline regulation, with the Environment Agency committing to, for example, a dramatic reduction in the time it takes to issue permits to fracking operators, but there is evidence to suggest that existing regulations are not being adequately enforced. For example, at Preese Hall, the Environment Agency did not issue environmental permits for the disposal and management of flow-back waste water; it only discovered after the site had been hydraulically fractured that the flow-back fluid should be classified as radioactive waste.

If experiences in the United States have taught us anything, it would be that we need a strict regulatory regime. We cannot rely on putting our faith in the industry behaving well on a voluntary basis. In a groundbreaking peer-reviewed study of aquifers overlying the Marcellus and Utica shales in Pennsylvania and New York, Osborn et al, 2011, uncovered systematic evidence of methane contamination of drinking water linked to shale gas extraction.

In England, a third of all our domestic water supply comes from groundwater reserves, which are also essential for industry and farming. It is vital that we go as far as possible to mitigate risks in advance and ensure that we make provision to cover the full costs of clean-ups. With that in mind, I ask the Minister to ensure the Bill addresses these issues by implementing a liability guarantee. Such a guarantee would ensure the public purse and the taxpayer are not hit when anything goes wrong.

My next big concern is the amount of water that is required for the production of shale gas. Shale gas exploration and production is a highly water-intensive industry, and the process of fracking requires enormous volumes of water. At Preese Hall up to 8,400 cubic metres—about the equivalent of three and a half Olympic-sized swimming pools—is required per well. The fracking process may have to be repeated several times over the life of the well to keep the gas flowing. With proposals for thousands of sites, each with multiple wells, the potential drain on our already stressed rivers and groundwater could be huge.

I ask the Minister and his Department to consider the Bill as an opportunity to address these concerns by reforming the abstraction regime for taking water from the environment. That should go a long way to ensuring that additional pressure on water resources from fracking does not result in the over-abstraction of water from areas already under water stress. If the Government choose to exploit this new resource, we can make sure that we do so in a way that does not place unacceptable risks on the environment or on the public purse. Such an approach will also guard against unnecessary resource risks to our communities, our countryside and our businesses.

--- Later in debate ---

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

I particularly welcome that last comment from the hon. Member for Dunfermline and West Fife (Thomas Docherty) and I look forward to discussing some of these issues in Committee. I thank all hon. Members for their participation in this interesting debate, which has been well informed. Hon. Members have covered a number of aspects of the Bill and, as it is a debate on Second Reading, some things that they would like added to the Bill. I will try to cover as many of those issues as I can.

I start by responding to the closing remarks from the hon. Member for Dunfermline and West Fife. He dangled the prospect of something to do with affordability and helping people with their bills. I was in the House in the previous Parliament when constituents throughout the country and particularly in areas such as mine in the south-west were facing a real challenge, as the hon. Member for Plymouth, Moor View (Alison Seabeck) pointed out. I had meetings with the hon. Gentleman’s Front-Bench colleague who is no longer in his place, the hon. Member for Ogmore (Huw Irranca-Davies), and we debated these issues. It was felt that nothing could be done. It was a very difficult problem. What we had from the previous Government was a series of reviews, some of which were good, well informed reviews that made a number of suggestions, but it has taken this Government to act upon them. That is the difference between the Government and the Opposition.

The hon. Member for Dunfermline and West Fife says that he will not oppose the Bill today. That is encouraging, and I look forward to working at that level of consensus to deliver the aspects of the Bill that will assist many of our constituents around the country, as well as updating the framework around the water industry for the future and dealing with the flood insurance issues, to which I shall return in a little while. These are hugely important issues. As a Member for an area where water issues have been a live topic of debate and as a member of the Select Committee, as the hon. Gentleman helpfully pointed out, I am all too aware of the range of challenges that we face, from the cost of living for hard-pressed families to future pressures on water resources and flooding. We heard many contributions about those issues.

I have witnessed at first hand the environmental benefits that investment in the water sector have delivered over the past 24 years since the industry was privatised. I could raise some issues about how that occurred at the time. My hon. Friend the Member for South East Cornwall (Sheryll Murray) sought to give us a history lesson about the political balance in Cornwall and what that may or may not have delivered. There were no proposals to deal with the lack of affordability in the south-west until the coalition Government came in. Single-party Governments of both stripes did not deal with the problem, so I leave hon. Members to draw their own conclusions on what might have led to the change.

[Ian Swales]

We heard about the real-terms cut applied by the previous Government. Do we know the average annual value of that cut?

[Dan Rogerson]

We saw bills cut for a period, but then they went back up again. If we talk to our constituents about their memories of water bills over the past few years, both in the run-up to the general election and since in the price review period presided over by the previous Government, we will hear that their experience was that bills were rising.

On the environmental benefits since privatisation, we have seen huge improvements—for example, in bathing water quality—and that is very much to be welcomed and something that we should dwell on. We have had the opportunity to consider how that progress has been made. Of course, we will see further challenging regulation on bathing water quality in future, so it is absolutely vital that the industry, along with everyone else in the community who can influence water quality, is ready for the challenge, to make it even better.

The Bill seeks to look at market reform, because we need water supplies that are resilient to future pressures, while keeping bills affordable and, indeed, minimising the impact on the environment. That is competition not for the sake of it, but to drive greater efficiencies in the water industry and encourage more innovation. The benefits to business customers are obvious: more choice, better customer service and packages tailored to their needs.

All customers, including householders, will benefit from an industry that is incentivised to look for the most efficient way to meet future demand. We know that that works in practice. Last week, I visited a housing development in Rissington in Gloucestershire, where Albion Water—a new entrant—is supplying water and sewerage services. With its innovative solutions, it can provide separate supplies of drinking water and recycled greywater to houses in the development. It can therefore compete successfully against the incumbent water company on price, while reducing daily drinking water consumption by nearly half. That is evolution, rather than a radical overhaul.

Since privatisation, the industry has been successful in bringing in investment, which has delivered huge improvements, as I have mentioned. We have a strong and stable regulatory regime and no intention of disrupting it. That is why we are working closely with the industry to develop future markets.

Market reform is understandably of great interest to hon. Members. They want to know about it from both perspectives: they are concerned in some cases that we might be going too far, and in others that we might not be going far enough. Some Members, such as my hon. Friend the Member for St Austell and Newquay (Stephen Gilbert), are keen to see competition in the residential sector, but we want to ensure that the change that we introduce is proportionate and that we proceed on a good evidence base. We can learn from the experience of Scotland, where business customers and non-domestic customers increasingly benefit from competition, so we know that the system can work. Competition in the residential sector would be a huge change, so we would have to come to anything that we wanted to do in that area at a later date. However, I take on board my hon. Friend’s comments and am reassured that he is observing that.