Water Bill

Jerome Mayhew Excerpts

2nd reading
Friday 28th March 2025 Commons Chamber

[Amanda Hack (North West Leicestershire) (Lab)]

I thank my hon. Friend the Member for Norwich South (Clive Lewis) for bringing forward this important Bill. I enjoyed his passionate—although a little loud—speech. He is right that the public want better, and I think the actions that we have taken in government show that we want better too.

In recent months there have been so many discussions in the Chamber, Westminster Hall and the other place on how we can fix the broken water industry that the Tories left behind. We have passed a Bill and set up a commission—clear action from this Government. These crucial debates together are ensuring that my constituents get the justice and representation they deserve after the Tories failed communities like mine for 14 years, and not just in the water sector but in so many public services. Sadly, they turned a blind eye to record levels of illegal sewage dumping, cut the Environment Agency budget in half since 2010, and allowed customer money to be spent irresponsibly on director bonuses and shareholder payouts.

The Conservatives avoided so many opportunities to hold the water companies to account, and they failed to regulate to protect our waterways, even after a shocking incident in September 2022 in my constituency. On 12 September, the Environment Agency received reports of a sewage discharge. Contractors arrived at Brooks Lane pumping station the same day to stop the problem, but officers discovered that 1 km of West Meadow Brook near Whitwick had been polluted. The investigation found the sewage discharge had been going on for weeks completely unchecked. There was an overwhelming odour, with a thick coating of sewage fungus covering the riverbed. Human faecal matter was also visible.

Severn Trent Water admitted that its teams had failed to see that the pumps had latched out and were not activated. It also accepted that it had failed to monitor effectively. The damage was so severe that the company took the offer of an enforcement undertaking, giving Trent Rivers Trust £600,000 to support the restoration of the habitat and environmental improvements.

In the same year, 2022, Sir Chris Whitty, the chief medical officer, outlined the serious health risks that sewage spills can pose for those using the country’s waterways. The Tories did not heed his warnings and nothing was ever done. Even after this disgusting incident, sewage still poured into waterways in North West Leicestershire: 15,000 hours in 2023—15,000 hours!—and close along to the pumping station there are a number of storm outflows, which continue to release untreated effluent whenever they fancy. I have visited residents and walked with them across several sections where spills take place. It is disgusting, because even when the sewage is no longer being spilled the residual smell lingers and the visible debris continues. Severn Trent does clearance work, but never enough.

As a Leicestershire MP, I also have to mention flooding. We have had so many residents who have been impacted by flooding in our county, not just once, but many, many times, and, sadly, now are never going to be able to return to their homes, such is the impact of flooding in my community. There is no doubt in my mind that if the Tories were still in government, we still would have had no action to address these issues. They would still be taking none of the action needed to clean up our rivers and seas, and there would be no cracking down on the water executives.

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

I have not intervened on other speeches, but on that one comment that the hon. Lady has made, has she read the plan for water that was published by the previous Government and is she aware of its contents, which include £56 billion of investment to deal with exactly this issue?

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[Jerome Mayhew]

I would like to give the hon. Gentleman the opportunity to correct the record: the official Opposition did not oppose that Act.

[Mark Ferguson]

I will happily correct the record. Let me say instead, then, that the Conservatives failed to give the Act their full support, which I am sure all our constituents would have liked to see. I am afraid I have seen similar carping recently—over whether the Opposition opposed the Planning and Infrastructure Bill only earlier this week, for instance. As we say in the north-east—I hope, Madam Deputy Speaker, that this is parliamentary language—if you sit on the fence, you tend to get spelks in your bottom. I would advise that abstaining can also have such spelky consequences.

The Water (Special Measures) Act—which, as the shadow Minister notes, the Conservatives did not entirely support or, perhaps, entirely oppose—introduces a number of important changes, including criminal liabilities for water executives and new, tougher penalties, including imprisonment when companies fail to co-operate or obstruct investigations, which used to result only in a fine. If companies fail to comply, the executives will end up in the dock and face up to two years of jail time—a meaningful disincentive. Further changes in the Act include a ban on bonuses for CEOs and those in senior leadership unless high standards are met on protecting the environment, their consumers and financial resilience. I am aware there has already been some discussion about star ratings, and I am sure the Minister will be coming back to that later.

Our plan for change to clean up our rivers, lakes and seas for good is supported by our Independent Water Commission. When it launched last October, it held a huge call for evidence, urging people to provide feedback on what needs to change to clean up our waterways and rebuild our broken water infrastructure. The call for evidence, by the way, closes at midnight on 23 April, so there is still time for people to make their submissions.

That is why the new Labour Government and the Environment Agency have announced these changes. In January, the water sector made record commitments to clean up the environment and invest in new infrastructure, representing a £22.1 billion investment in the environment. I am also particularly pleased at the changes in the Water (Special Measures) Act around the ringfencing of money for investment, so that there is a real focus on investment rather than money slipping away to other places.

I want briefly to come back to citizens’ assemblies, because I would hate for my position on this to be misrepresented. I do have concerns as to how national citizens’ assemblies can work with a geographically disparate nation. I am constantly concerned that the voices of the people of my region—and, within my region, the people of my constituency—are not always heard in the national conversation. If sometimes I am a little loud, it is because I am trying to make up for that.

It is a shame that the hon. Member for North Herefordshire (Ellie Chowns) is no longer in her place, because I would have said to her that there is no lack of reading on my part. In fact, Stephen Elstub has written very compellingly on citizens’ assemblies. While I do not agree with all his writing, and cannot claim to have read it all, I think he has certainly made some compelling points. I am not inherently opposed to citizens’ assemblies —I believe there are circumstances in which they could work—but I find the idea of having a national citizens’ assembly on something as specific as this challenging, and I would like more information on that as conversations in this area progress.

I sense that my hon. and gallant Friend the Member for Norwich South is not as reassured as I am by the Water (Special Measures) Act, but having done a little reading over the past few days, I do feel that a lot of the calls made in this Bill have been addressed by the Government’s plan for change: ensuring cleaner rivers, lakes and coastal waters through pollution prevention and restoration; strengthening climate resilience by repairing leaks, reducing emissions and integrating renewable energy into water operations; making water more affordable and preventing companies from prioritising shareholder profits over public services; establishing a commission on water; and holding water companies accountable with stricter enforcement measures. This is a pragmatic, reasonable approach.

I thank my hon. and gallant Friend for bringing forward his Bill today. It is welcome that additional time has been given to this important discussion, and I look forward to hearing what the Minister has to say in response.

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

It has been an absolute delight to listen to the debate. There were times when I thought that having an official Opposition was unnecessary because of the amount of opposition from Government Members. I congratulate my Norfolk neighbour, the hon. and gallant Member for Norwich South (Clive Lewis). I am delighted to have a return of these rather archaic honorifics, because next time he refers to me, he will have to call me honourable and learned, which I know will stick in his craw. I congratulate him on introducing a groundbreaking Bill to the House. It would have a huge impact on the water industry, for good or ill, as I will discuss in the coming minutes.

It is surprising to me, and perhaps to other hon. Members who were in this place before the last general election, to see the total absence of any Liberal Democrat Members in the Chamber. Not even their official spokesperson is here. I remember the amount of noise they made before the election about their views on water. It is telling that when it comes to a groundbreaking piece of legislation that could really make a change, according to the hon. Member for Norwich South, they could not even be bothered to attend. [Hon. Members: “Hear, hear!”] I have unified the House. We all agree on one thing, and we know what that is.

The hon. Member for Norwich South made not just a critique of the water companies, but of private ownership in general. I want to address that very briefly, in a single sentence: capitalism has lifted more people in the world out of poverty and despair than any other economic system in history. However, I recognise that there are many forms of ownership in a capitalist system, including national and public ownership, mutualisation and private ownership.

Before throwing the metaphorical baby out with the almost uniquely clean bathwater that we enjoy in this country, let us take a moment to look back at private sector water company performance, in a way that would have been impossible for me to do prior to the general election, because the campaigning noise was so deafening that rational debate was too often brushed aside. I am taking a risk, but I hope that today, in this Chamber, we can have a more rational and careful debate, and look at the data. Let us look at the private performance, both good and ill. This is not a defence of the status quo, but it is a challenge to the assumption that public ownership is necessarily the solution. I will go back and look at elements of the performance of the private sector over the past 30 years. The first duty of a water company is to provide safe, clean drinking water for its customers. As we heard from the hon. Member for Bermondsey and Old Southwark (Neil Coyle), our water industry passes that test with flying colours. It is not just clean water but the cleanest water in the entire world, jointly with one other country—and I hope no one intervenes to ask me which country that is, because I simply do not know. Let us not forget, as we bash the water companies, that they have provided the cleanest drinking water in the world.

The next thing water companies have to do is to make sure that the supply is uninterrupted. We had an experiment with nationalisation of our water industry up until about 30 years ago. During that period, interruptions in the water supply were five times as likely as they are today. To put it another way, privatisation has reduced the interruption of the water supply fivefold. We can argue about why that is, but that is a fact. There are examples of disruption such as the one the hon. Member for Beckenham and Penge (Liam Conlon) referred to, and they are terrible, but in aggregate, the number of disruptions has reduced fivefold. We then turn to leakage. As my neighbour, the hon. Member for Norwich South, says, water is a scarce and valuable public resource, so leakage is very important. Since privatisation, the amount of leakage has reduced by a third.

How has all this been achieved? The answer is that £236 billion has been invested by the private sector in our water infrastructure since 1991. How has it been able to do that? The answer, in my submission, is that it has not been competing with the provision of new hospitals or new schools, and—perhaps Government Members will feel this more closely to their hearts—it has not been competing with personal independence payments for the disabled, the disability element of universal credit or carer’s allowance. Try asking the Chancellor of the Exchequer now for £236 billion to be spent from the public funds on water. We know from the debates we have had last week and this week that that is almost impossible.

I turn to performance. There are various ways of measuring performance, but the headline is serious sewage incidents. In the 1990s, the average number of serious sewage incidents was 500 a year. Now it is well below 100. The last year for which I could find data was 2021, and in that year the number was 62. There are other elements of performance. There are the chemicals being leached into our waterways through treated sewage. The most damaging for biodiversity is phosphorus. Since 1990, because of the investment, the amount of phosphorus entering our waterways through the water treatment system has not increased; it has reduced by 80%. This is at a time when our economy has grown and our population has increased significantly.

The next most damaging chemical is ammonia. Again, since 1990, the amount of ammonia going into the waterways because of treated water has not increased along with population growth or economic growth; it has in fact declined by 85%. The next most damaging chemicals are cadmium and mercury. Since 2008—a slightly different starting point, I accept—the amount of cadmium and mercury has reduced by 50%.

If we take away the emotion and start looking at some of the core data, we can see that there have been very real elements of progress—not universal progress, but real elements of progress because of a huge amount of private investment in our water industry.

[Clive Lewis]

If I could sum up the hon. and learned Member’s argument, he seems to be telling the public, “You’ve never had it so good.” I think many members of the public would disagree with that. I would also make the point that all the investment that has gone into our water since privatisation has come from our bills. Private companies have paid dividends and left themselves £60 billion in debt. That is money that otherwise would have been invested into the public water system.

[Jerome Mayhew]

I am absolutely not saying, “You’ve never had it so good,” but I am drawing attention to the actual data, so that we can make a balanced judgment. I will come to some of the disadvantages of the last 30 years later on in my speech, so I hope I will give a balanced judgment.

We have dealt with the rivers and serious sewage incidents—[Interruption.] Hon. Members should wait and not be hasty. Sewage discharges from storm overflows have been, without doubt, the greatest area of failure for decades, in both public and private ownership. Why? It is because the problem was hidden for decades. It was not reported, and it was not measured. Back in 2010, the Labour Government monitored only 7% of storm overflows. As a result, we had no idea how frequently storm overflows were being activated, or for how long. Worse, Labour changed the law in 2008—I think one Labour Member present was in Parliament at that time—to allow the water companies to self-monitor their environmental performance.

The Liberal Democrats do not come out of this very well, either. [Interruption.] We can all agree on that. During the coalition, there was a Liberal Democrat Water Minister from 2013 to 2015. What action did they take when they held the levers of power? Absolutely none.

It was the Conservatives who forced transparency on the water industry by requiring 100% of storm overflow data to be monitored and then published within 15 minutes. That exposed the problem, and we then took action through the £56 billion storm overflows discharge reduction plan to fix the problem over 25 years. We all want to go faster, but it is about the balance between costs, the industry’s ability to react, and the time a responsible Government have to take these decisions.

We also had a plan to improve the water quality of chalk streams, which is an issue close to your heart, Madam Deputy Speaker. I believe you have the Test in your constituency, and I can beat that with the Stiffkey, the Wensum, the Bure and a couple of others.

Despite the unacceptable storm overflows, the question we need to ask is whether river water quality has got better or worse under privatisation. The difficulty is the lack of comparative data, because as we have monitored more, we have more data points identifying more discharges that were previously unrecorded. One of the best datasets to look at is invertebrate biodiversity, on which there has been a comprehensive study by the UK Centre for Ecology & Hydrology, analysing 223,000 samples taken between 1989 and 2018. It looks for biodiversity gain or loss, especially in species that are particularly sensitive to clean water—the mayfly and the caddisfly. You will be pleased to know, Madam Deputy Speaker, that invertebrate biodiversity has tripled in our rivers over the last 30 years, during the period of privatisation.

I am not defending the water companies’ lack of inquisitiveness about the number of storm overflow discharges. This terrible problem has to be addressed, and it was being addressed by the last Conservative Government, but it prompts the question: has our water got better or worse, in aggregate, over the last 30 years? The data suggests that it has got considerably better.

I will talk about the pros and cons of privatisation in terms of funding. In my view, there are definite cons to the private ownership model we have had over the past 30 years. I concede that some water companies have exploited weak regulation to take advantage of their monopolistic position. True competition cannot exist because we have monopoly providers. The role of competition is meant to be provided by regulation and, too often, the regulation has been found wanting, particularly on the financial engineering of the leverage that water companies undertook in the noughties, peaking in about 2015.

Again, I accept that that is a problem that should have been prevented, but all the major parties are guilty and played their part. It started under Labour and continued under the coalition—I am afraid that both the Liberal Democrats and the Conservatives have their fingerprints on this—before stopping in about 2015, when Ofwat belatedly tightened up its provision. Members will have noticed that the latest return on capital allowed by Ofwat is, from memory, 3.4%, which I submit is a reasonable return on capital and one that individuals might get from a high-interest account.

I hope that I have given a balanced assessment of the good and bad of privatisation over the past 30 years. We need to do that, because it is the basis on which we address the next question about the Bill: what is the right mechanism of ownership? In my view, privatisation has, on balance, been a success, because it has managed to lever in investment to improve our water quality overall, to reduce leakage and outages in the way that I have described, and to provide us with the safest water in the world.

[Clive Lewis]

I thank the hon. and learned Member for his contribution to the debate. Private water companies have invested less than nothing of their private equity in our water system since privatisation—in fact, we have £60 billion-worth of debt. I reiterate that taxpayers’ and bill payers’ money has gone into the investments in the water system. The private sector has paid less than nothing, so how we can say that a privatised water system—a natural monopoly, for which there is no perfect competition, or no competition at all—is generating innovation or investment? I fail to see that.

[Jerome Mayhew]

The profit motive does promote efficiency in innovation, because companies want to minimise their costs and therefore maximise their profits. It also provides access to capital in the manner that I have described, because there are rights issues as well as the recirculation of water bills. It is right that that is the foundation of the business, but it is not the only access to capital, whereas with public ownership, as we are very aware this week, there are limited funds. We cannot borrow forever. We have what I think are described as iron-clad fiscal rules, which we have heard a bit about recently. We know that this Government, and all Governments, are constrained in their ability to borrow and spend, and that they have other priorities, so we will never get a big budget for water if it is in public ownership.

The Bill has generated a huge amount of interest. I thoroughly agree with elements of it, particularly on nature-based solutions, which build on the “Plan for Water” published by the last Government in 2022. If the Bill proceeds, there are areas that I would like to discuss and develop in Committee, but I will not detain the House any further on them now. I look forward to the progress of the Bill.