Water (Special Measures) Bill [Lords]

Jerome Mayhew Excerpts

2nd reading
Monday 16th December 2024 Commons Chamber

[Steve Reed]

I agree that it is indeed amazing. I know that all of us on the Labour Benches, and perhaps on the Opposition Benches too, share the public’s anger at what happened to our rivers, lakes and seas.

The legacy of 14 years of Conservative Government is the highest level of sewage spills on record, economic growth held back by a lack of water supplies, and now potentially painful bill rises to fix the problems they left behind.

[Jerome Mayhew (Broadland and Fakenham) (Con)]

The Secretary of State says there was the highest level of spills on record. How does he know? When Labour was in power previously, only 7% of sewage outlets were even monitored.

[Steve Reed]

I have to say to the hon. Gentleman that there is very little point in monitoring sewage in the water if all you do is watch the sewage increase and keep on flowing into our rivers, lakes and seas. The Conservatives seem to be satisfied with the failure they presided over. The Labour party will fix the problem that they left behind.

If you find cracks in the wall of your house and ignore it for years, the problem gets worse and the cost of putting it right escalates. That is exactly what the Conservatives did to our water system. They refused to bring in the investment early enough, so ageing infrastructure crumbled even further and the cost to bill payers has rocketed.

Water (Special Measures) Bill [ Lords ] (First sitting)

Jerome Mayhew Excerpts

Committee stage
Thursday 9th January 2025 Public Bill Committees

[Catherine Fookes]

It is a pleasure to serve under your chairship, Mr Vickers. I take the opportunity to welcome the measures in the Bill, particularly those in clause 1, and to thank the Minister for her really swift work. We know all too well the damage that has been done by water companies and agricultural pollution across the UK. That damage has only been exacerbated by years of Conservative failure, allowing for record levels of illegal sewage dumping in our rivers, lakes and seas.

In my constituency of Monmouthshire, we have the majestic rivers the Wye, the Usk and the Monnow. Armies of citizen scientists, co-ordinated by the wonderful Save the River Usk group in Usk with Angela Jones, have been monitoring the river over the past few years. Sadly, it is getting worse and worse. The levels of phosphate pollution in the River Usk are the worst in all the nine Welsh rivers that are special areas of conservation—SACs.

This Labour Government have only been in office for six months, yet we are already taking more action to tackle the scourge of sewage than the Conservative party did—indeed, more than the Conservative party and the Liberal Democrat party did—when they were in government. Instead of obfuscation and delay, we are getting serious action to end the disgraceful behaviour that we have been discussing. That is especially evident in clause 1, which seeks to ban bonuses for water bosses unless high standards of protecting the environment are met. Water bosses must also involve consumers in decision making. In addition, the clause ensures that failing water bosses will no longer be able to be water bosses. This action is essential if we are to hold water company bosses to account and ensure that they act in the best interests of the public and the environment, rather than in the interests of their own pockets.

I am pleased that in Wales we have the not-for-profit water company Dŵr Cymru. Sadly, however, that status has not stopped the company from leaking sewage. In 2023, we had 2,383 sewage dumping incidents in Monmouthshire, which is 2,383 too many. In 2022, chief executive Peter Perry took home £332,000 and a further £232,000 in bonuses, while in the latest financial year Ofwat had to step in and stop the company from paying out £163,000 of bonuses from customers’ money.

I am sure that I am not alone in recognising the injustice of such bosses’ being paid hundreds of thousands of pounds in bonuses while polluting our environment. It is clear to me that significant Government action and regulation is needed, and the clause delivers it. It finally ensures that the polluter pays. I support it wholeheartedly.

[Jerome Mayhew (Broadland and Fakenham) (Con)]

I am pleased to see you in your place, Mr Vickers.

I am not going to speak to the Government amendments; I merely repeat the very good arguments put forward by my hon. Friend the Member for Epping Forest. At this stage, however, I will just express a couple of concerns that I have about amendment 18, tabled by the Liberal Democrats.

I understand the rationale or the intention behind amendment 18; we all want the water companies to pay closer attention to the interests of their consumers. I note in passing that they already have a statutory duty—a consumer-focused statutory duty—but the actions taken by the Conservative Government over the past 14 years to ask questions about the state of sewage discharges and to get information about them, so as to take effective action to bring them to an end, bring with them an additional need.

The hon. Member for Westmorland and Lonsdale highlighted a loss of trust in the water undertakers, and I agree with him on that. There has been a significant loss of trust as their poor behaviour, which was uncovered by the Conservative Administration, has been met with considerable outrage—justifiable outrage—by the Government and by members of the public.

However, I fear that there will be some significant unintended consequences associated with the drafting of amendment 18, relating to the legal obligations of a board member. The hon. Member for Westmorland and Lonsdale referred to those new positions being on the boards of companies. There are legal obligations that apply to all board members and I question whether the representatives of consumers and of the voluntary organisations that have been so active in this area over the past few years would really want to be exposed to the legal obligations of being a member of the board of a plc, because those obligations are significant and onerous.

[Charlie Maynard]

It is fairly standard on boards today to have directors and officers insurance; indeed, all board members have it. What is the problem with the new people also having D&O insurance?

[Jerome Mayhew]

I am grateful for that intervention. However, it seems an odd way to proceed if it is recognised that there is a risk to voluntary members who join boards, exposing them to personal obligations, such as a fiduciary duty of care. There is also a legal duty of loyalty to the organisation, which such volunteers might find quite difficult to stomach. There is a duty of obedience to the organisation as well. It seems odd at this drafting stage to say, “We recognise that there is a risk, but don’t worry: you can take out insurance and you’ll probably be okay.” It seems odd to introduce an amendment in an imperfect form, rather than perfecting it.

[Charlie Maynard]

First, it is up to each individual to sign up or not; they do so of their own free will. Secondly, this is standard insurance which almost all boards have in the UK and internationally nowadays, which protects board members. It would not be specifically for those board members; it would be for all board members. To say that that is a concern, and that we should not make this provision on those grounds, seems odd.

[Jerome Mayhew]

I have expressed my concerns. It would be perfectly possible to achieve the object, which I share, of improving the voice of the customer in water companies, or of improving the implementation of the existing obligation on water companies to take account of the consumer interest. I do not think that the current drafting is the best that we can do. I raise these concerns so that they may be properly considered.

[Helena Dollimore]

I thank the Minister for all her work in introducing this Bill so quickly in the new Parliament. It is a Bill that my constituents in Hastings and Rye desperately need. As I have said many times in this House, our constituency of Hastings, Rye and the villages has suffered hugely at the hands of Southern Water. Litres of raw sewage has been pumped into the sea. Our town centre has been flooded twice, leaving homes and businesses under sewage water, and our taps have run dry twice in less than a year. We in Hastings and Rye felt the impact of 14 years of Conservative failure to crack down on water companies’ bad behaviour.

--- Later in debate ---

[Helena Dollimore]

I think Opposition Members are slightly confused about the record of the Government of the past 14 years, of which both the Liberal Democrats and the Conservatives were a part at different points. My constituents in Hastings, Rye and the villages would find the hon. Gentleman’s assertion that the last Government fixed the crisis in our water companies very bizarre indeed. I draw his attention to the powers that this Government are introducing to ban bosses’ bonuses when they fail our constituents. The last Government left thousands of outlets unmonitored, and when there were monitors, they were reporting to the water companies themselves. What this Government are doing differently is not allowing the water companies to mark their own homework; we are saying that monitors should report directly to Government, not the water companies.

[Jerome Mayhew]

The hon. Lady says that it was the last Government who allowed the water companies—the undertakers—to mark their own homework. Does she not recall that it was actually the Labour Government in 2008 who specifically changed the rules to allow water companies to do just that in relation to their environmental performance?

[Helena Dollimore]

I am yet to hear an apology from the Conservatives for their failure to put monitors on any outlet in my constituency, their failure to make those monitors report to Government at all, and their failure to address the severity of the sewage scandal that has caused so much disruption for my constituents, for local businesses and for so many people up and down this country.

I pay tribute to campaigners in so many of our constituencies. Many are in the Public Gallery and they have done so much work exposing this scandal for what it is. We would not be discussing the scale of this scandal were it not for their hard work. In my constituency, Clean Water Action Group campaigners go out regularly of their own accord and out of their own pockets to test the water to expose what Southern Water is doing in our community. I pay tribute to them.

What we are discussing today is a measure to ban bosses’ bonuses, because it is so important that we do not see what we have seen over the last 14 years of Conservative Government—the continued failure to prevent Southern Water from rewarding bosses with bonuses. Laurence Gosden, the chief executive of Southern Water, received a bonus last year when we had seen repeated failure in Hastings and Rye under Southern Water’s watch. As I said earlier, the chief executive of Ofwat confirmed to the Select Committee that had the measures in the Bill been put in place last year by the Conservative Government, the bonus would not have been paid. Laurence Gosden only received that bonus because of the failure of the Conservatives to act when they had 14 years to do so.

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It is absolutely right that this Labour Government have acted to ringfence the water companies’ money for investment in the crumbling pipes in my constituency of Hastings and Rye, and are stopping that money being diverted into bosses’ bonuses and rewarding failure.

[Jerome Mayhew]

Will the hon. Member give way?

[Helena Dollimore]

I will make some progress, because I know that we need to make progress in the debate.

In conclusion, I thank the Minister for her work on bringing the Bill before the House so quickly. I know that this is just the start of the change that we need to deliver on our water companies. This Government are acting where the previous Conservative and coalition Governments failed, and are working to clean up our water system.

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[Tim Farron]

In that case, I will speak to amendment 19, which is about revolving doors. Amendment 19 seeks to prevent a revolving door between water companies and the regulator. In July 2023, the chief executive of Ofwat stepped down to very swiftly pick up the role of interim chief executive of Thames Water. An analysis by The Observer in 2023 found 27 former Ofwat directors, managers and consultants working in the industry they helped to regulate until shortly beforehand, with about half of them in very senior posts.

Some work that the Liberal Democrats did in the last 18 months found that the director for regulatory strategy at the country’s largest water firm, Thames Water, was previously an Ofwat employee. Meanwhile, a senior principal at Ofwat moved directly from Thames Water, where they worked on market development. We also found links between Ofwat and Southern Water, Northumbrian Water and South West Water, including directors who work on regulation. The amendment tries to prevent that revolving door, which clearly brings in a potential conflict of interest. It also builds the quite justified absence of trust. I can feel an intervention brewing—go for it.

[Jerome Mayhew]

I am not against the principle of this—in fact, I am strongly in favour of it—but I have some practical questions. I wonder whether this would bump up against individuals’ human rights and restraint of trade arguments in the courts. I must confess that I was previously a barrister. That was a long time ago, so I have dangerously little knowledge now, but it was certainly the case that the courts would habitually not enforce a restraint of trade clause on a contractual basis that was in excess of 12 months. I know that this would be legislation, but to have such a wide-ranging blanket prohibition for such a long period against all employees, irrespective of the role they undertook and the role that they might in future undertake with a water company, might be challenged successfully under human rights legislation. I wonder whether the hon. Gentleman has considered that in his drafting.

[The Chair]

I remind Members that interventions should be short—much shorter than the last two. I have been very generous.

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With this amendment, we are trying to ensure that the water company pollution reduction plans, as required by the Bill, have the maximum effect, so I hope that the Government will consider accepting it. As I said to the Government on Second Reading, we want to ensure that the Bill is the best that it can be to deliver for the constituents of all Committee members and Members right across the House of Commons and the other place. We tabled it and other amendments in exactly that spirit: not as a hindrance or for the sake of party politics, but to make this Bill even better for the country that we serve. We will therefore be pressing amendments 6 and 9 to a vote.

[Jerome Mayhew]

I will speak primarily in support of amendment 6. I pay tribute to the former Member for Ludlow, the right hon. Philip Dunne, who throughout the previous Parliament was the Chair of the Environmental Audit Committee, on which I sat. The EAC’s work on water quality and the seminal report that we produced started this huge public interest in water quality and led to the legislative changes in the Environment Act 2021, among other things.

One of the key lessons we learned from the work that we did on the EAC was the need for transparency of data and information, which can unlock the power of citizen science. We visited the citizen scientists working on the River Windrush, who had difficulty analysing the data that was then publicly available but very hard to find to work out whether storm overflows were being used in the way the water companies were describing. Their very detailed, hard-to-do work exposed the shocking misuse of storm overflows.

As those citizen scientists understood, an event duration monitor is a very simple piece of equipment: it is either on or off. It is set on the outflow of the storm overflow tank. When it detects flow on that channel, it turns on, and when that flow ceases, it turns off. What it does not do, as the hon. Member for Westmorland and Lonsdale rightly pointed out, is measure volume. It also does not measure what is passing. It says that something is passing or not passing, but it does not measure volume or quality. That leads me to support amendment 6, tabled by the loyal Opposition, and to question not the intention behind the Liberal Democrat amendments—amendments 24 and 25 and those to clause 3, which I suspect we will talk a bit more about—but the effectiveness of having new machines that measure volume, in addition to whether it is on and off, but not quality.

A better solution may be the one that the Environmental Audit Committee recommended all those years ago—I stand to be corrected, but I think we wrote that report in 2021. It called for the upstream and downstream monitoring of water quality, typically in the outflow river, so that in addition to a signal that there has been an event, there is close to real-time reporting of the comparative water quality upstream and downstream of a discharge outlet. That would simplify the technical requirements of having to install a whole load of new equipment, which other amendments from the Liberal Democrats anticipate, at an unknown cost and implementation speed. Instead, it would look at the actual real-time impact on a particular water body.

Amendment 6 would require the publishing of the information on the undertaker’s website. I am surprised that that was not part of the Bill in the first place and, given that it was not, that the Government have not adopted the amendment. All it does is to apply consistency to the legislative programme. Section 81(2) and (3) of the Environment Act 2021—I know the Minister is familiar with it, but just in case she is not—require the publishing of event duration monitor data within an hour and in a format that is readily accessible by the general public. The loyal Opposition’s amendment is simply trying to ensure consistency between what we already require for EDMs on undertakers’ websites and this area.

Ordered, That the debate be now adjourned.—(Jeff Smith.)

Water (Special Measures) Bill [ Lords ] (Second sitting)

Jerome Mayhew Excerpts

Committee stage
Thursday 9th January 2025 Public Bill Committees

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

Before I start my response to this group, I just want to note that there has been considerable discussion on the monitoring of the volume of discharges during this debate. In the interests of time, I will respond to those points when we debate amendment 13 next week, if that is agreeable to everyone. I thank hon. Members for tabling the amendments relating to pollution incident reduction plans.

On amendments 23 and 25, tabled by the hon. Member for Westmorland and Lonsdale, we agree that companies should seek to reduce the impact of pollution incidents in their pollution incident reduction plans. That, of course, is the core purpose of the plans. That is why the clause requires water companies to set out the measures they will take to reduce the frequency and seriousness of the pollution incidents and their causes. The impact of a pollution incident on people and the environment will be taken into account when the undertaker determines how serious it is, as required in the pollution incident reduction plan. In fact, it would be impossible to determine whether something was serious without looking at the impact the pollution was having. These amendments are therefore not needed, and I ask the hon. Member not to press them.

I thank the hon. Member for Epping Forest for tabling amendment 9. The Government agree that national parks form a vital part of our environmental heritage and must be protected. For that reason, the Government have committed to strengthening the statutory purpose of national landscapes and national parks to give them a clear mandate to recover nature. We will also strengthen through new regulation the role that public bodies, including water companies, must play in delivering better outcomes for nature, water, climate and access to nature in these special places.

Ofwat made significant funding available to water companies in the price review for 2024 to support work to reduce pollution in national parks. As an example, Ofwat approved four storm overflow schemes related to improvements in the Windermere catchment, with potential to include 12 additional schemes via the large scheme gated process. We do not believe it is necessary to include a specific reference to national parks in clause 2. All sites, including national parks, are already in scope of the duty. Creating a statutory hierarchy of priority sites risks deprioritising other important areas such as bathing and shellfish waters. For those reasons, the Government will not support the amendment.

I thank the hon. Member for Westmorland and Lonsdale for tabling amendment 24. The Government agree that nature-based solutions are an essential tool for tackling the root cause of sewage pollution, while also delivering significant ecological benefits. That is why, in line with the Government’s strategic policy statement, Ofwat has allowed companies to increase the use of nature-based solutions with £3 billion-worth of green schemes in water companies’ final determinations for price review ’24. Although the benefits of nature-based solutions are clear, we believe their use is better supported through drainage and sewerage management plans than through pollution incident reduction plans.

Pollution incident reduction plans are intended to set out the steps that companies intend to take to reduce the frequency and severity of pollution incidents. These issues are often best addressed by monitoring and maintenance measures such as burst pipe detection, checking pumps and re-lining sewers. Drainage and sewerage management plans are intended to address the resilience of the whole sewerage network over a long period of time. That is why the Government have introduced a duty through the Bill for sewerage undertakers to consider nature-based solutions in their drainage and sewerage management plans. That will ensure that nature-based solutions are considered at the very start of the investment planning, increasing their development and potential future delivery. The amendment is therefore not needed, and I ask the hon. Member not to press it.

Regarding amendment 6, which was tabled by the hon. Member for Epping Forest, I agree that improving transparency and accountability is key to the success of pollution incident reduction plans. That is why clause 2 already requires water companies to publish the implementation report alongside the pollution incident reduction plan. Details of where and how to publish the plan and the implementation report, and in which format, may change over the years as technology and best practice evolve, so that is best addressed in the guidance that the Environment Agency is producing about how to fulfil the duty.

[Jerome Mayhew (Broadland and Fakenham) (Con)]

I am grateful to the Minister for giving way; she is being generous with her time. The problem with the position she is taking now is that it is at variance with the Government’s position and with section 81 of the Environment Act 2021. If she is right about the efficacy of leaving it to the Environment Agency to publish such information, buried in its website or its regulations, should she not also amend section 81 of the Environment Act so as to have consistency?

[Emma Hardy]

I understand the point that the hon. Gentleman is making, which is that people need to have access, clearly and simply, to as much information as possible. My point is that if we put such details into law in the Bill, the way in which we want people to access such information may change—technology or best practice may evolve—and we will have to resort to altering legislation using statutory instruments. That is why I think it is better that we look to the guidance produced by the Environment Agency as the best way to present that information, while continually evaluating how we do so. I completely understand the essence of what the hon. Gentleman is saying, however, because we all want information to be transparent and clear for everyone, and certainly not buried on a website.

To conclude, I will briefly speak to why clause 2 should stand part of the Bill. The occurrence of pollution incidents is unacceptably high and has not reduced in the last four years. Water companies must reduce pollution incidents as a matter of urgency. Currently, sewage companies in England produce pollution incident reduction plans on a non-statutory basis. These plans vary in standard, content and frequency, and that makes them hard to scrutinise. It is particularly difficult to identify the progress that companies have made on the actions that they committed to in these plans. More transparency and greater accountability are needed.

That is why the clause will require both water supply companies and sewerage companies in England and Wales to publish annual pollution incident reduction plans to address matters such as the seriousness of pollution incidents and their causes. These plans will need to set out the actions that the water companies intend to take to reduce pollution incidents, and an assessment of the impact that those actions will have.

In addition, the Secretary of State will be able to direct water companies to include other matters in the plans as needed. Moreover, companies will be required to produce an accompanying implementation report detailing the progress they have made with the measures to which they committed in the previous year. Companies must clearly explain the reason for any failure to implement their plans and set out the steps they are taking to avoid similar failure in the future. This will create a high level of transparency, enabling the public and regulators to hold water companies accountable for making the improvements that they have committed to.

Chief executives will be personally liable for the production of these plans and must approve them before publication. If a company fails to publish a compliant plan and implementation report by the deadline each year, the company or the chief executive could be prosecuted for the offence. That could result in a fine and a criminal record. This emphasises that taking action to minimise pollution incidents should be at the core of the chief executive’s role.

We believe that this provision will ensure that the right people, with the right incentives, lead water companies through the changes necessary to drive down pollution incidents. Furthermore, regulators will be required to take companies’ compliance records in relation to implementation reports into account when carrying out their enforcement duties.

I hope that all hon. Members agree with me about the importance of clause 2, and I commend it to the Committee.

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[Charlie Maynard (Witney) (LD)]

Amendment 13 is about volume. It would add volume to the list in clause 3, which includes

“the location of the emergency overflow…when the discharge began…when the discharge ended.”

The Liberal Democrats seek to add the volume of discharge to that list, and that is common sense. As many Members have said, we want to know how much sewage is coming out, and we are looking for help from all Members to get the amendment into the Bill. If we are serious about solving the problems in our rivers, we need to know how much sewage is coming down.

[Jerome Mayhew]

I am grateful to the hon. Member for giving way and for the conversation that we had over the lunch recess. One challenge with the measuring of volume is what we are measuring the volume of. The industry estimates that 97%-plus of volume from a storm event is water—it is just rainwater. How do these amendments address the measurement of what is being passed, and is this something on which we could co-operate?

[Charlie Maynard]

Let us talk about the spectrum of information here. We have got the number of spills, where we have no idea how long those spills went on. We then have EDMs—event duration monitors—which count the number of hours of pollution. There is then the volume of flow, and then various iterations around measuring dissolved oxygen, or whatever it might be. I do not want the perfect to be the enemy of the good. We need to make progress. Thames Water is installing flow monitors all over its network, upstream of its sewage treatment works, but not downstream. That is because it is scared of actually having to count and have in the public domain the volume of sewage that it is dumping.

As my hon. Friend the Member for Eastbourne (Josh Babarinde) said, “If you have a coke bottle of sewage, and you don’t know how diluted it is, you still don’t want it in your bath.” Of course we want to know how diluted it is—that would be nice—but if we are serious about addressing these problems, we need to know how much is coming out of those overflows.

To quantify what has been going on over the last few years—I give the previous Government some credit—some 14,000 monitors have been installed in the last seven years, which is good news. The figure was less than 1,000, and 15,000 have now been installed on the storm overflows, but another 7,000 do not have monitors. Amendment 16 talks about where those locations are. We can have overflows at a sewage treatment works, at a pumping station or on the sewer network. I believe that everyone on this Committee wants to capture wherever that overflow is, which is what the amendment would do.

I will try to quantify some of the numbers, and I will talk about my favourite, Thames Water. Right now, Thames Water has 30 event duration monitors at inlet storm overflows at waste water treatment works. It has 183 EDMs on storm tanks at waste water treatment works and 137 EDMs at storm discharge overflows at pumping stations, and it has 320 storm overflows on the sewer network—not in a pumping station or at a treatment works. We are trying to capture all those areas, because we need to know what is going on. If we do not know what is going on, we cannot fix it.

Amendment 13 is on the volume of discharge. Amendment 14 concerns the same count, so I will not go into it in more detail. Amendment 15 relates to reporting on discharge from overflows and would add to existing stipulations about the form in which the information must be published. I will read it out: the information must

“be uploaded and updated automatically”.

Let us get rid of human involvement. We are in 2025—all this stuff can, and should, be automated.

Professor Peter Hammond has done some great research, and I am incredibly grateful to Windrush Against Sewage Pollution, which has been one of the drivers of information and campaigning in this space. Well done to Peter, Ash, Vaughan and Geoff; I give them many thanks. Peter spotted that when Thames Water monitors its sewage, it does so at the wrong times of day, when the level of sewage is at its lowest. We want to automate that so that it is monitored all the time. That means less human interaction and lower costs, and it is much more achievable.

There is a map that shows whether sewage has been dumped in the last 48 hours, is being dumped currently or has not been dumped in the last 48 hours—Thames Water was actually one of the first to put that in the public domain—but it does not give the historical information. We need the historical information in there and it needs to be downloadable, so that any citizen scientist can come along, pull the data off and act on it. Without amendment 15, we do not have that. These are very nuts-and-bolts, practical things that we want to head along.

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[Jerome Mayhew]

I will start with the Liberal Democrat amendment to add volume measurers to storm outflows. I hope I made it clear in my earlier intervention that I am sympathetic to the amendment’s objective, but I have questions about whether the route that the Liberal Democrats have gone down is the right one. Legislating for another piece of kit—volume-measuring equipment, alongside the EDM—yes, would go some way to solving the problem, but it would not solve the real problem, which is that we need to know when a discharge is happening, the volume of the discharge, the level of sewage as opposed to water in that discharge, and the consequential impact on the watercourse into which it is being discharged.

I was grateful for the intervention of the hon. Member for Hastings and Rye, who referred to the water report of the Environmental Audit Committee, of which I was one of the authors. We took a lot of evidence on the issue and we had a trip to Oxfordshire, to the River Windrush. We met the leading citizen scientists in the area and took evidence from them there and in our more formal evidence sessions in this place. The hon. Lady was right that the outcome of the combination of evidence we received was that the most appropriate form of technical solution was a measurer of water quality upstream and downstream, and for that water quality measurement to be published timeously. For that reason, section 81 of the Environment Act 2021 requires automatic publishing within 60 minutes of an event happening.

That leads me to a question. The hon. Member for Witney referred to Thames Water choosing when to measure, but with respect to him, the clause is about emergency overflows, not about standard monitoring, and under the existing legislation, Thames Water or any other water undertaker has no option as to when it measures—the EDM is triggered by the emergency event. It also has no option as to when it can publish, because it has to be within 60 minutes of the event being notified.

[Charlie Maynard]

Yes, of course, the EDMs are automatic; I was talking about the spot monitoring by individuals.

[Jerome Mayhew]

With respect, that is a separate point, because we are talking about amendments to clause 3, which is about emergency overflows. I accept the point. As with so many of our discussions this morning and this afternoon, we are all trying to get the right outcome, but this is line-by-line consideration of the Bill, which is rather boring and technical, but it is where we try to tease out some of the drafting issues and what can be improved. I am not sure that the problem that the hon. Gentleman is seeking to resolve sits naturally in this clause.

Moving on to amendment 15, again I highlight my fear that, given that the clause relates to emergency overflows, the amendment leads to a legal duplication of section 81 of the Environment Act. I do not want to do the Minister’s job for her, but from my perspective, that is a reason why we should look carefully at amendment 15 before we accept it. Of course, when I say that I do not want to do the Minister’s job for her, that is only pro tem—in the future, I definitely want to do this job for her.

The Liberal Democrats have not yet spoken in favour of amendment 16, so I will leave that until such time as they decide to. The hon. Member for Witney can come back to it.

Finally, on amendment 17, which the hon. Member for Westmorland and Lonsdale—

[The Chair]

Order. Amendment 17 is not in this grouping.

[Charlie Maynard]

Mr Vickers, may I revert to amendment 16? I am sorry; I thought I had mentioned it. I will read it out:

“The undertaker must ensure that, within 12 months of the passing of this Act, appropriate monitors are installed to collect the information required”.

That point is 12 months, so that is holding people’s feet to the fire, but we have a massive problem. This is totally doable in terms of timeline. If the Government came back and said, “No, we want 36 months, not 12 months,” then fine, I have no problem with that, but I have talked about being depressed by the desire to slow things down, and about the House of Commons Library data on giving another 10 years to install these monitors. Why are we going slow? We all say to the public that we are really serious about it; let us be serious. I thought that I had covered amendment 16, but there it is again.

[Jerome Mayhew]

I now rise to talk about amendment 16. My primary objection here is the overarching one: I am not convinced that this is the right technical approach, for the reasons set out in the report of the Environmental Audit Committee, and also in the Environment Act 2021. However, if I am wrong on that, I am happy to support this amendment as a probing amendment and look forward to the answer that the Minister gives; but if it were to be taken to a vote, without further information about the practicality of being able to obtain the required tens of thousands of these machines, install them and have them operational and reporting in a 12-month period, I am not sure that I, as a responsible legislator, could support amendment 16. I would need further information on whether that was a practical option.

[Emma Hardy]

I thank all hon. Members for their thoughts on this set of amendments. I would also like to pay tribute to all of the citizen scientists—in fact, many Members have paid tribute to them—and the incredible work that they do as volunteers, going out there to discover the true state of many of our rivers, lakes and seas. I think we can all agree that it is vital to understand the scale and the impact of sewage discharges by ensuring that water companies install monitors on emergency overflows as soon as possible and by encouraging public access to emergency-overflow discharge statements. As the hon. Member for Broadland and Fakenham said, I think this is about us all trying to move in the same direction.

Just before I turn to the amendments, I think there may be some confusion in the debate today about the different types of monitors and the different types of discharges being discussed. There is a big difference between fully treated waste water being released from treatment outlets and the discharge of untreated sewage from an emergency or storm overflow. I am therefore very happy to share a factsheet detailing the differences in the different types of emergency and storm overflows to help inform future debates.

On amendments 13 and 14, tabled by the hon. Member for Westmorland and Lonsdale, clause 3 requires water companies to provide information on the frequency and duration of discharges from emergency overflows in near-real time. Combined with the equivalent duty for storm overflows, which has just come into force, that will ensure that all sewage overflows on the network are monitored. That will enable regulators and the public to see, in near-real time, when a discharge from any overflow has occurred, and how long it has lasted for. Water companies will use that information to prioritise investment to mitigate the impact of the most polluting overflows, as guided by the regulator.

However, the monitors required to measure volume are much more difficult and costly to install compared with those used to monitor discharge duration. By comparing that with the cost of installing flow monitors at waste water treatment works, we estimate the cost of installing flow monitors on all 18,000 storm and emergency overflow sites in England to be up to £6 billion. Network overflows are not set up for flow monitors to be installed, which means that the majority of overflows would require complex works, such as pipework modifications, in order for monitors to record volume accurately. We do not think this added cost is proportionate to the additional value that volume information would provide, especially given that volume information alone does not provide a comprehensive account of the impact of a discharge. For example, a very small volume of very concentrated foul water could enter our rivers, which would be very damaging, or a large volume of diluted rainwater overflow. Volume cannot give an accurate assessment of impact. The measurement of water quality, as the hon. Member for Broadland and Fakenham has said, is required.

--- Later in debate ---

[Jerome Mayhew]

I do not want to steal the thunder of the hon. Member for Witney, but he has a good point on the speed of roll-out of the installation of water quality monitors. The 2024 price period is for five years, I believe. That suggests installation in 25% of the monitoring areas over a five-year period. If I am wrong on that, I would be very grateful if the Minister could correct me. What I am really interested in is how quickly the full network will be installed and what is preventing that from happening faster.

[Emma Hardy]

I feel as though we are comparing apples and pears here. The point I was making about the 25% at the next price review was around water quality monitors. The hon. Gentleman was talking about the monitoring on emergency overflows, and he was referring to the data on the speed at which they would be installed.

[Jerome Mayhew]

The Minister may be right, but it is important that we get to the bottom of this. From my perspective, the important data is the upstream and downstream of a discharge pipe water quality monitor being installed and activated. I would be very grateful if the Minister could set out during the course of the next hour and a quarter, either because she knows it off the top of her head or because her officials can give her the answer, the timeframe for those installations and the reasons why it is not happening faster.

[Emma Hardy]

I think the hon. Gentleman is probably moving on to amendment 16 with his point about the speed at which these were being rolled out. We were discussing amendments 13 and 14. That is where the confusion lies in this conversation. I will address the points about speed when we move on to amendment 16 —it is all to come.

I turn now to amendments 3 and 15, which were tabled by the hon. Member for Beaconsfield and the hon. Member for Westmorland and Lonsdale respectively. Clause 3 already requires companies to publish information on discharges in a readily accessible and understandable format. That includes information on the occurrence, location and start time of the discharges, which must be published within an hour of the discharge starting. To meet this requirement, water companies will install monitors that have telemetry technology to communicate discharges as they occur. To the point the hon. Member for Broadland and Fakenham made, that information cannot be falsified. It is not based on someone coming; it is automatic communication.

Those requirements are the same as those for publishing storm overflow discharges, which is now a statutory duty enforced by Ofwat. Water companies have already published individual maps for their regions to show storm overflow discharges in near real time. In addition, Water UK launched a national storm overflow hub in November last year to centralise all discharge information from water companies on a single national map. We expect that a similar approach will be taken for emergency overflows. If further direction for companies on how to approach the duty is needed, that can be more appropriately addressed through guidance. Furthermore, validated historical information on discharges from emergency overflows will be available through annual returns published by the Environment Agency. Those will allow for long-term trends in annual data to be analysed. If there are any specific requests from groups or organisations about how they would like to see information, they are of course welcome to communicate that to me.

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[Jerome Mayhew]

I understand that this will not be put to a vote, but I want to add my support for nature-based solutions and to draw to the Minister’s attention an experience I had with Anglian Water. It had a village-sized water treatment works just over the border in north Norfolk at a place called Langham. The chalk stream that the sewage works discharge into is the Stiffkey, which runs through my constituency and then just over the border. To its great credit, Anglian Water co-operated with a local landowner and created a wetland. I would have thought it would be the easiest thing in the world to have the treated sewage discharge into a secondary processing unit—it was, from memory, about two acres in size, so it is quite a large wetland with meandering going through it—and then exit back into the Stiffkey.

The Environment Agency eventually allowed this to take place, but it is worth highlighting that its initial response was, “No, you have to apply for a new licence to discharge effluent into the river.” That was because it was coming not from the pipe, which was semi-treated, but from a new entrance into the stream via the wetland. The “computer said no” attitude of the Environment Agency was quite extraordinary, because it was not going to get any worse with the discharged water going through a wetland before entering the stream, and yet it took several months. It was a very significant constraint, and it called into question whether or not the project would go ahead.

I would be grateful if the Minister could take that away with her and ensure that the Environment Agency sees the development of wetlands as a really positive step forward. I know its senior leadership does, but that message should go right through the organisation so that the time and delay of bureaucracy, and the requirement for new applications for licences, do not get in the way of what we all wish to achieve.

[Dr Hudson]

I rise to speak to new clause 5, tabled by His Majesty’s loyal Opposition. We are talking about practical nature-based solutions to flood risk. I welcome the comments made about nature-based solutions, not least from the hon. Member for Westmorland and Lonsdale, who talks passionately about the importance of nature-based solutions for flood mitigation and that side of things.

I noted that during the election campaign, he waxed lyrical about Windermere, which is a beautiful part of his constituency. I know that he was an active participant with the leader of his party in water sports as well, although I note that he was a lot more competent at staying on the paddleboard than his leader. I welcome his comments on the importance of protecting and preserving our water spaces, but very much encourage the Government to facilitate landowners, land managers and farmers to do nature-based solutions to mitigate flood issues.

New clause 5 would try to ensure that water companies consider practical, nature-based solutions to flood risk. That would also make water companies try to improve water quality and nature restoration in their catchment areas, so there would be a double win. In Government, we Conservatives set specific, legally binding targets to improve water quality and availability in order to try to reduce nutrient pollution and sediment pollution from agriculture to the water environment. We also set out how to reduce water pollution in our environmental improvement plan. Nature recovery was carried out under us, and opportunities to do that with nature-based solutions should be seized on as we move forward.

--- Later in debate ---

[Jerome Mayhew]

Will the Minister give way?

[Emma Hardy]

I am just about to finish. On the basis of what I have said, I hope that clause the clause can stand part of the Bill.

[Jerome Mayhew]

I think this is technically now a speech rather than an intervention. I am supportive of the content of the clause, but I have one technical question: if we choose to move a penalty from a fine to imprisonment, there has to be a person to apply that penalty to, rather than a body corporate. The question that obviously arises out of that is: is it the intention of the Government to apply the penalty to the controlling mind, or to a member of an organisation who may be several layers below that of the controlling mind? Who is it intended that the criminal offence should be applied to, and how will the Government ensure that there is no misunderstanding and uncertainty based on the current drafting? It is not at all clear.

Water (Special Measures) Bill [ Lords ] (Third sitting)

Jerome Mayhew Excerpts

Committee stage
Tuesday 14th January 2025 Public Bill Committees

[Jerome Mayhew (Broadland and Fakenham) (Con)]

The hon. Gentleman says it is the creditors who put the undertakers in the position that they are in, but surely that cannot be right. Creditors are the people who provide services for a fee to the undertaker—they will not be the organisations that put the undertaker into that position. Surely the hon. Gentleman agrees that if he were to replace the consumer or any other body with recovery from creditors, that would be meaningless unless Government debt was placed above those of other creditors. How would that be fair to the providers of services to water undertakers?

[Charlie Maynard]

I thank the hon. Gentleman—I think he jumped in before I had finished the sentence, which was on the creditors and the management. Who is responsible for this? Yes it is the management, yes it is the regulators and prior Governments, and yes it is the creditors who have provided the debt—they have gone into that with eyes and ears open and they have made that decision to provide that debt willingly. Therefore, they have put that money at risk and they have to take responsibility for that. That is what debt is.

I am not talking about Government debt, but about a loss and who is making good that loss. The Government are proposing that all the consumers pay for that—in other words, the bill payers. That is wrong. The bill payers should not be paying for this; the creditors should be, because they have put in, in Thames Water’s case, £17 billion—soon to be £20 billion very likely—which has saddled those companies with vast amounts of debt. More than a third of the bills of the bill payers of Thames Water is just being spent on paying interest on that debt.

[Jerome Mayhew]

The hon. Gentleman is conflating the term creditor with debt provision, but actually there is a plethora of suppliers to any large organisation such as a water undertaker. They are creditors—that is just how they are defined. His clause would cover small and medium enterprises that are providers of services, and in fact any provider of a service who would be a creditor of such an organisation. How does he propose that his clause only affects debt provision, which I understand is the direction he is trying to focus the clause on, and does not cover all creditors as it is currently drafted?

[Charlie Maynard]

The change in wording would mean that the clause states:

“The Secretary of State may make modifications of the conditions of the company’s appointment so that they include conditions requiring or enabling the company…to recover from its creditors such amounts as may be determined by or under the conditions”.

Let us talk through the special administration regime and what happens. I would like this to already have happened but it has not When a company is put into special administration—I would like this to already have happened, but it has not—a court appoints a special administrator. A special administrator looks at the creditors. It looks at the debt and the other creditors involved, and it will prioritise, according to the seniority of that debt and those creditors, who is senior to the other. Suppliers will be a lot more senior.

[Jerome Mayhew]

They will be right at the bottom.

--- Later in debate ---

[Jerome Mayhew]

The hon. Gentleman will perhaps know that under current insolvency law, there are secured creditors. There is a hierarchy of debt, and the least protected—not the most protected—are suppliers. Does he envisage changing the rules to give additional protection in this process to unsecured creditors and essentially reverse the security of credit? That would be an odd thing to do, but I understand why he might need to do it to make this process effective.

[Charlie Maynard]

We are seeking for the debt providers to take the hit. They have gone into this process and been part of the problem that has led to the state of our rivers today. They should be taking the hit ahead of the customers. That is our direction of travel, and I think that is fair and reasonable. What the clause does is the opposite, and that is what we are going after.

We fully support the losses being recovered by the administration process—we have no issue with that—but if we support the clause as drafted, we will find a very large bill on the customer’s account. That is something we want to avoid. I am keen to hear the Minister’s view as to why it is reasonable for the customer to be paying rather than the lenders.

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[Dr Hudson]

I beg to move, That the clause be read a Second time. The proposed new clause would introduce a legal requirement that money collected from water companies from financial penalties imposed by the Bill are legally required to be used by the water restoration fund. As with much of the Bill, the Government intend to build on the work begun by the previous Conservative Government. The water restoration fund is one pillar of that record that the Government would do well to advance. I look forward to hearing from the Minister what they plan to do with that excellent fund, which needs to be reinstated and progressed.

I have personally championed the water restoration fund, not only in my present role as shadow DEFRA Minister, but before that as a member of the Conservative Environment Network. I pay tribute to that body for its successful campaigning, which in led no small part to the previous Conservative Government introducing the excellent water restoration fund. In 2022, I was proud to sign the Conservative Environment Network’s “Changing course: a manifesto for our rivers, seas and waterways”. That was its first public declaration, setting out the ambition to introduce this policy recommendation.

In addition to the Conservative Environment Network, I would like to namecheck and thank the good folk of Wildlife and Countryside Link for their support and campaigning for the fund and this proposed new clause. I also pay tribute to the Angling Trust for the discussion we had on this matter, and give a big shout-out to our former colleague Philip Dunne, who was respected across the House. The former MP for Ludlow and Chair of the Environmental Audit Committee made assiduous efforts to see this fund introduced, as well as wider measures to protect our precious waterways.

As we have discussed with the Minister, there is considerable consensus on what we can do collectively and on a cross-party basis to protect and nurture our watercourses and waterways. I hope the Government will take forward and continue the water restoration fund because it is pivotal to what we are trying to do.

[Jerome Mayhew]

I have a slightly cheeky intervention. Is the shadow Minister aware that there is a debate in Westminster Hall at 4 o’clock tomorrow led by yours truly on nature-based solutions for farmland flooding? The fund is central to improving the situation.

--- Later in debate ---

[Dr Hudson]

Can I just say that the previous Government went and looked for the problem, and found the scale of it? We all agree that it is a huge problem that needs to be addressed; we are not downplaying the scale of it. We collected data and were brave enough to say, “There is a problem.”

Labour Members threw a lot of things at us during the passage of the landmark Environment Act 2021. They have made misleading comments about Conservative Members of Parliament, but we were the party that grasped the nettle and said, “There is a problem, and we need to look at it.” A lot of the amendments that were tabled to try to scupper the Environment Act were completely uncosted and would have cost taxpayers lots and lots of money. We tried to introduce practical, cost-effective, reasonable measures to address the scale of the problem that we unearthed.

[Jerome Mayhew]

The shadow Minister is right that a lot of the supposed solutions were uncosted and had an impractical timeframe. One that springs to mind was the Liberal Democrat amendment that was costed: there was a tax that was supposed to pay for the improvements to water quality. Does he agree that, on a basic calculation, it would have taken more than 300 years to pay it back?

[Dr Hudson]

I agree. Amendments are easy to table with a view to obstruction and making political points, and those were not affordable and would not have been deliverable in any realistic timescale. Governments have to make realistic, cost-effective decisions that honour the taxpayer, and they have to be clear with the public about how such measures will be implemented and paid for.

If the Government do not support our amendment, I hope they will clarify what steps they are taking to protect customers from the knock-on impact of fines. Unfortunately, in many industries when costs are imposed, customers sometimes pay higher prices. With the new clause, we want to ensure that when we rightly impose financial penalties on water companies there are no unintended consequences for the consumers we aim to defend by imposing the financial penalties in the first place. With that in mind, and given the aim of accountability, we sincerely hope the Government will support the new clause. Ultimately, we aim to press it to a vote.

Ordered, That the debate be now adjourned.—(Jeff Smith.)

Water (Special Measures) Bill [ Lords ] (Fourth sitting)

Jerome Mayhew Excerpts

Committee stage
Tuesday 14th January 2025 Public Bill Committees

[Emma Hardy]

I hope that the hon. Gentleman has not misunderstood. There is certainly no desire from me to keep pedalling. Instead, what we want to do is look at the entire financial situation of companies—he knows that we have had that conversation outside this room. We need to look at some of the longer-term reform options for how companies are structured financially, which is why we have the deputy governor of the Bank of England leading our review, and using his knowledge and expertise to look at how companies are structured.

I do not think that the new clause is the appropriate place to pre-empt the outcome of the commission before it has had an opportunity to report, or even to listen to the hon. Member for Epping Forest through the call for evidence that is yet to be announced. I want to stress that I support sentiment of the hon. Member for Witney, but I express caution around the risks of putting through changes of this magnitude without giving full and proper consideration. We believe that the commission is the appropriate way to do that.

[Jerome Mayhew (Broadland and Fakenham) (Con)]

Okay, perhaps the Minister is right—perhaps the detail of what percentage of debt or what multiple of revenue is appropriate should be established by the commission and the wider review—but surely the principle can be established now. From any investigation in this area, we can say that the principle will be that debt will need to be capped or managed, or have some oversight, because we have seen what happens—particularly with Thames Water—when there is no cap or oversight. Does the Minister not agree that the new clause just sets out the principle, and the amount would be set out by an SI?

--- Later in debate ---

[Tim Farron]

I thank the hon. Member for her very reasonable intervention. In the extremely unlikely event that the Committee rejects my new clause today, we will of course submit our ideas to Sir Jon Cunliffe and take part in the review, which we welcome. Nevertheless, my point is that the division of responsibility and division of attention, particularly in the Environment Agency as a regulator dealing with flooding and so on, means that it does not have the resource; I know that we will talk about that later. Also, the fact that the regulatory set-up is so fragmented means that the water companies simply run rings around the various regulators.

One final point arising from new clause 20 is that we must outline a potential way forward. We are not convinced at this stage that renationalisation would be affordable or wise. I am not saying that I am opposed to it in principle; it just does not seem wise at this stage to do something that will cost the taxpayer a vast amount and put money in the hands of people who have fleeced us once already. Unless people can come up with a different model, that does not feel like the right way of doing it.

At the same time, the current model of ownership has clearly failed. We suggest a not-for-profit, a community benefit company model or looking at mutuals, but there may be a way of migrating the system towards that model of ownership via what happens at the end of the administration.

[Jerome Mayhew]

The hon. Member says that privatisation has demonstrably failed. I challenge him on that. There are elements of privatisation that have failed: the refinancing, the imposition of debt and the removal of money through dividends in the noughties and, I am sorry to say, between 2010 and 2015. That is a failure, but I hope that the hon. Member accepts that privatisation as a whole has delivered more than £160 billion of capex investment into the industry, which simply would not have happened if it had been up against schools, hospitals and the other calls on the public purse.

I know that I am straying too far, but subsection (1)(b) of the new clause refers to

“whether a public benefit company could better perform the role of current undertakers.”

As I am sure the hon. Member will know, we have an example of that: Welsh Water. Is he able to point to a single metric by which Welsh Water has outperformed its private sector comparators?

[Tim Farron]

I am not wedded to one model or another. Having said all that, water is blindingly obviously a natural monopoly and should not have been privatised in the first place. Can I give one metric? Yes. Of the 16 water companies, Welsh Water is among the minority that are financially sound. Performance is not necessarily and always a function of ownership absolutely: it is a combination of ownership, culture and regulation.

We are simply saying that we should look at migrating the system to this model. Let us bear in mind that for all the additional money we can say we leverage in through private investment, a vast amount of money leaks out of the system to shareholders, often through holding companies overseas and in bonuses, which could otherwise have been spent internally.

New clause 7 is an attempt to come up with a constructive alternative. We would abolish Ofwat, take the water regulatory powers off the Environment Agency, create a single regulator in the form of the clean water authority and seek to migrate ownership within the water industry towards a mutual and community benefit model. As I say, we will not push new clause 7 to a vote, but we will seek a vote on new clause 20.

--- Later in debate ---

[Tim Farron]

New clause 12 is a short, and I hope consensual, measure relating to chalk streams, which we have already discussed, and new clause 27 deals more widely with the powers of national parks.

Some 85% of all the chalk streams on planet Earth are in the south of England. The impact that that has on the biodiversity of this part of the world—and more broadly—is hugely significant, creating pure, clean water from underground chalk aquifers and springs, which is ideal for wildlife to breed and thrive. They make a vital contribution to global biodiversity, providing natural habitats for many plants and animals. They will exist in many Members’ constituencies—not in mine, but, as a resident of planet Earth, I still reckon they are very important. I therefore think that they are worthy of specific attention and regulation in this Bill, so I commend new clause 12 to the Committee.

New clause 27 makes specific reference to powers regarding—and the importance of—national parks. It is my great privilege to represent a constituency with two of them: the dales and the lakes. We recognise the importance of natural national landscapes, which, of course, include areas of outstanding natural beauty, as they were known until relatively recently. We recognise many of the worthy inclusions and mentions in the Glover review for reform within our national parks—I remember meeting Julian Glover as he began that review. I agreed with much that he recommended, and was disappointed that the previous Government did so little with his recommendations.

[Jerome Mayhew]

To save everyone’s time, I will not make a speech on this, but I am concerned about new clause 12 because it confers an absolute duty regarding chalk streams. I represent a constituency with several chalk streams, including the Stiffkey, which goes through Walsingham. The new clause says:

“Where a relevant undertaker operates, or has any effect on chalk streams, that undertaker must—”

so it is a direction—

“secure and maintain high ecological status of such chalk streams”.

We all want that outcome, but the problem is that water undertakers are not the only ones with negative impacts on chalk streams, yet the new clause gives them the requirement, which is absolute in its terms. We know that farming, and increasingly road detritus, also affects chalk streams, so how does the hon. Member square that circle?

[Tim Farron]

The hon. Member makes a very good point, and we will later come to a new clause that we tabled about planning, because undoubtedly development and industrial activity also have an impact. However, this goes back to my original comment about the importance of singularity in regulation; while we recognise that the water companies may not be entirely responsible, we think that the regulator should have a responsibility across the piece.

However, the hon. Member makes a good point. We are not planning to push new clause 12 to a vote, but we are keen for the Minister to look at what we have said—and indeed what the hon. Member and his colleagues have said previously in Committee—about the importance of chalk streams, and for them to be included on the face of the Bill.

New clause 27 relates particularly to national parks. Every single lake, river and stream in England’s national parks—every single one—is polluted in one way or another. There has been no regard by water companies for national park status in this process. It is not that the lakes, rivers and waterways outside national parks do not matter—they absolutely do, and a vast part of my constituency is not in either of the national parks—but nevertheless, the lack of a higher bar for those in our national parks demands the question: what is the point in the national parks? We need to make sure that that stipulation is included. New clause 27 would therefore force water companies to specifically reduce pollution in those precious places.

To talk about my own community, United Utilities’ negligent treatment of Lake Windermere has been a standout example. Over the two years between 2021 and 2023, 165 hours of illegal sewage was pumped into Windermere, England’s largest lake and the centre of our hospitality and tourism economy, with 7 million visitors every year to that part of the Lake district alone, out of the 20 million who visit the lakes overall.

For the record, I should say that I still swim in Windermere and I do not think I am a complete lunatic, so it is not an open sewer by any means. Nevertheless, for many people, the reality is that so many of the 14—I think—assets that United Utilities owns on or around the tributaries of Windermere, or its connecting lakes, are not fit for purpose. I am thinking about the pumping station at Sawrey, for example, or the water treatment works at Ambleside. It is unconscionable that we have these assets, many of which are ageing and under-invested in, and the water company, United Utilities, failing to take action. Windermere is known globally and is part of Britain’s national brand. If its reputation becomes unfairly sullied, it will hit my constituents’ revenues.

[Jerome Mayhew]

I am afraid I have to make the same point about new clause 27. Proposed new section 4A(1)(a) contains an absolute duty on the undertaker, which “must”—so this is a direction—secure and maintain high ecological status, and that has to be achieved within three years. I question the practicality of that.

I am also keen to highlight the fact that proposed new section 4A(7) includes the broads, which I am lucky enough to represent. The broads are affected by all sorts of factors: we have a high degree of recreational use, with boating as well as angling, and it is a farming environment, with grazing in the marshes, particularly down in the Halvergate marshes. Yes, Anglian Water has affected water quality negatively—as well as in some positive ways, to give it credit—but it would be a travesty to place an absolute duty on Anglian Water when it has only partial control of the answer, and over a three- year timeframe. Does the hon. Gentleman agree that that is unrealistic?

[Tim Farron]

I do not think it is unrealistic—we need to be ambitious—but I absolutely accept that there are multiple sources of pollution.

I promise to be brief in talking about my patch, which is not of interest to everybody. It is key to point out that pollution in Windermere generally comes from three sources. It is true that agricultural run-off is an issue but, sadly, the policies of this Government and the previous one, over a period of time, have effectively destocked the fells, meaning run-off has a massively reducing impact on Windermere and the broader catchment.

The bigger two problems are the 14 assets that United Utilities has either on or around the lake or its tributaries. There is also the best part of 2,000 septic tanks around the lake or its tributaries. Unlike septic tanks and, indeed, package treatment works in many rural communities, these are not scattered all over in the middle of nowhere; they are in a ring around the lake, most of them within yards of a mainline sewer. It is, then, entirely possible for the water companies, while gaining significant income benefit as a consequence, to mainline a massive proportion of the sources of sewage spillage into the lake, via the septic tanks and the package treatment works being brought into the system.

The new clause is of course slightly selfish, but it is really important that we seek to maintain national parks right across the country at the highest possible bar, and therefore make sure they set an example for others to follow. We will seek to press new clause 27 to a vote.

--- Later in debate ---

Like new clause 12, new clause 27 requires sites to maintain “high ecological status”. I have already spoken about the high standard that “good ecological status” represents, but I will touch on it further. Surface waters with good ecological status support a diverse group of aquatic invertebrates, fish, mammals and birds, and therefore I want to reassure the Committee that “good ecological status” is in fact a very high standard to achieve.

[Jerome Mayhew]

I would like the Minister’s comments on the issue that we have, and I am focusing primarily on the Norfolk broads, of which I represent a good chunk. There is the requirement to make a mandatory obligation on the water undertaker to ensure “high ecological status”, which is above “good ecological status”—that is the point the Minister is making. Does she agree that, while they are a primary input into the quality of the water in the Norfolk broads, they are not the only influencer? While the intention to create and encourage high ecological status in the broads is a very good one, and it is one that I share, does the Minister agree that the drafting of this new clause is not appropriate?

[Emma Hardy]

The hon. Gentleman is right to highlight that the pollution caused in the Norfolk broads and in many other areas does not come from water companies alone. As has been discussed, it comes from the environment, road run-off and various other places. “High ecological status”, as we have stated, could involve not being able to fish in those waters at all, which I know is a recreational activity in his area. It may also restrict planning for housing developments with any minor effects on the water quality of water bodies in national parks. The Government therefore cannot accept either new clause, although I recognise the intention behind them. I hope that the hon. Gentleman feels able not to press both.

--- Later in debate ---

I am really keen to highlight another thing. Again, I feel a little sorry to bring this on the Minister, but I am going to do it. If we look at the asset depreciation rates of these water companies, they are the biggest I have ever seen in 25 years in finance. Let us say that someone has a waste water network asset—people might immediately think of Bazalgette’s great big pipe, which he built 150 years ago. They might think, “Well, that is pretty good for purpose,” and perhaps they do not need to depreciate it over more than 150 years. But let us think about places in my patch, such as Aston and Standlake, where pipes were put in 30, 50 or 70 years ago and are leaking hand over fist. We have half a million hours of sewage dumping, but do you know what the depreciation rate on that asset is, Dr Huq? It is not 20 years, 30 years, 40 years or 50 years. It is 150 years.

[Jerome Mayhew]

This is a genuinely interesting point. I know it is late, but I would be grateful if the hon. Member could expand in further detail. While he is referencing regulated capital value and the difference between what is on the sheet and what is reality, could he explain in a bit more detail, for the benefit of the Committee, what that means in reality? If there were to be a rebase of regulated capital value, what would be the practical impact of that?

[Charlie Maynard]

I question what value regulated capital value, given how completely out of whack it is with reality, is bringing to the table. I do not have all the answers, but I question whether this has any utility to the conversation. What is happening here is that a business is generating £1.2 billion of cash flows, and it has this enormous balance sheet and this enormous regulated capital value. Because of those essentially false premises—I believe that we do not actually have assets of that value—regulated capital value is essentially a figment. We are grappling with things that have no basis, and we would do well to reconcile and to look at the facts—at what these assets are actually worth—and then to build out from there.

[Jerome Mayhew]

One possible reason why regulated capital value is important is that the assessment of whether bills are reasonable or not relates—in part, at least—to what is considered to be a reasonable return on capital. Does the hon. Member agree that if one’s regulated capital value has depreciated to zero, there might be an adverse knock-on impact on what is considered a reasonable bill, to take account of the debt and the capital investment? Does he think that that might be something to do with it?

[Charlie Maynard]

The whole thing is reverse engineered—I am completely in agreement on that—and that is not necessary or useful in terms of where we are getting to, and that is causing a lot of the trouble. I would like to find a way out of that, and I would really recommend that the water commission digs into this to find a way out. I am on the Business and Trade Committee and I will be asking the Financial Reporting Council, which oversees the accounting body, to ask these accounting firms whether they actually think those numbers—those incredibly slow depreciation periods of 150 years—are valid and, if so, why.

[Jerome Mayhew]

I am grateful to the hon. Member for allowing me another intervention, this time on proposed new subsection (2DZB)(a), which refers to

“a prohibition on water or sewerage undertakers having offshore holding companies”.

He referenced some of the international investors who have holdings in Thames Water, and perhaps in the majority of the other water companies. Access to international markets is very important for raising investment into our water utilities. Does he accept that using offshore holding companies might be a mechanism that allows for easier transfer of funds, easier investment and easier access to international finance, and may therefore have a benign rationale? We always assume that offshore holding companies are somehow suspicious, or that their motivation is tax avoidance, and I believe that the hon. Member referenced that earlier. That might be the case—in which case, they should not be encouraged—but with his 25 years’ experience in finance, which he referenced, does he think that there is an argument for saying that offshore holding companies make it easier to access international investment?

[Charlie Maynard]

I have the name of one here: Thames Water Utilities Cayman Finance Holdings Ltd. Why Cayman? If I say “Cayman”, people say “tax haven”. That is why it is there. We should be doing our best to stop that. Last I looked, London was still a financial capital, and equity and debt could still be raised in this country, and I sincerely hope that remains the case. So I do not see a good reason to have holding companies offshore. Hon. Members might be happy to hear that that was all I wanted to say on new clause 19.

New clause 23 is also being considered in this tranche, and I will highlight proposed new subsection (2DZB)(b), which refers to

“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”.

We have to spend a huge amount of money on our water utility companies, because they have not been spending enough over the last decade or two. When a special administrator is appointed in such instances, the goal is to ensure that the special administrator takes that future spend into account in considering how much debt needs to be cut. We do not want to come out of special administration with debt that is still high, which will prevent the investments from being made that will be required over the next. That is the goal of the new clause.

Water (Special Measures) Bill [ Lords ] (Fifth sitting)

Jerome Mayhew Excerpts

Committee stage
Thursday 16th January 2025 Public Bill Committees

[Jerome Mayhew (Broadland and Fakenham) (Con)]

I am sympathetic to quite a lot of the intention behind the new clause, but as ever, the devil is in the detail. Proposed new section 272B(2)(d)(ii)(a) contains a duty to publish the start time, end time and duration of all sewage spill events. Does the hon. Gentleman accept that there has already been a duty to publish that information for some time? All undertakers have a duty to publish information from event duration monitors within—from memory—60 minutes of an event being triggered. Will the hon. Gentleman give a bit more detail on what he has in mind for the authority to publish? Proposed new subsection (2)(c) says that the database must

“contain such data or information as the Authority thinks is necessary”.

Such a bland statement will be open to challenge and interpretation, with all sorts of committed parties deciding that their “independently collected and analysed information” should be in the database, and other people saying it should not. Is this not just a charter for judicial review of the authority?

[Tim Farron]

I will not rehash the debates we have had in Committee already, but we are talking about more than just event duration monitoring, as set out in proposed new section 27ZB(2)(d)(ii)(a); we are talking about flow and volume, and it is right to specify those things.

[Jerome Mayhew]

That may be the hon. Member’s intention, but the drafting does not say that. Part of the problem is that (ii)(a) deals the with start time, end time and duration, not flow. Does that particular sub-paragraph not duplicate the existing legal requirements for publication within 60 minutes?

[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.

--- Later in debate ---

[Charlie Maynard]

I thank the hon. Member for that intervention. I do not know when that changed. [Interruption] In 2015, was it? There we are: maybe it was changed in 2015. Perhaps all of us, or most of us, recognise that is not a good situation. Time and again—I have seen this in Witney, Ducklington, Bampton, Aston and Carterton—this is just waved through. When I quiz people from Thames Water about why they have waved it through, they say, “We have a duty to connect.” They do have a legal duty to connect, which they take seriously, but they take their duty to add capacity to match that increase much less seriously.

[Jerome Mayhew]

This is a request for information on my part. In my conversations with Anglian Water, one of its key asks relates to the imbalance in which the company has a legal duty to connect any planning application that is passed, yet it is not a statutory consultee. It is therefore not required—not able, in fact—to take part in the planning process. Until the companies are made statutory consultees, all this is irrelevant, so should not the new clause focus on their becoming statutory consultees?

While I am on my feet, I have a query about the drafting. The hon. Gentleman defined a “relevant time”, but I do not see that definition in the new clause. Is it contained somewhere in the draft legislation? If it is not, what might the effective definition be?

[Charlie Maynard]

The point about “relevant time” is fair and deserves to be clarified. I completely agree on the issue of statutory consultees and have no issue with that either—that would make much more sense, because there is a real failure in that regard.

I will go a step further—I have lived experience in this regard—and give a special shout-out to Thames Water employee Richard Aylard, who for two years dutifully showed up every six weeks with West Oxfordshire district council to hash through these issues. I learned a lot from him and am grateful to him, as well as to Jake Morley, Lidia Arciszewska, Phil Martin, Laurence King, Alaric Smith and Alistair Wray. They sat through all that, and we all learned together. It is important that everybody knows what came out of those meetings. When sewage treatment works’ capacity is calculated—they are very much under-capacity in my patch and, I am sure, in those of other hon. Members—there are four criteria. The first is the population or population equivalent, which is normally optimistically understated. The second is per capita consumption. Thames Water has a high per capita consumption when it suits the company and a low per capita consumption when it suits the company, so again that is understated.

The third is the Environment Agency multiplier, which is typically 3.0, and is discounted far too often. When there is a known record of spills, Thames Water is still allowed to discount the EA multiplier, often from 3.0 down to 2.4; that is a 20% cut, which means that the capacity can be 20% less. That is a real problem, and it is being done repeatedly on sewage treatment works that have dumped sewage left, right and centre for years.

The fourth criterion is infiltration. Some 47% of the capacity of west Oxfordshire’s big nine sewage treatment works comes from infiltration. That means that our pipes are leaking. There is not enough science on this matter. If we were to put in flow meters, we would have the information, but it seems that we Lib Dems are the only team in the room, alongside the hon. Member for Waveney Valley, that advocates flow meters. If we want to solve these problems, we have to get serious about the information.