Water (Special Measures) Bill [HL]

Lord Blencathra Excerpts

2nd reading
Wednesday 9th October 2024 Lords Chamber

[Lord Blencathra (Con)]

My Lords, I declare my interest as set out in the register.

This is an interesting little Bill. Among the first bits of advice I had from my illustrious predecessor, the great Willie Whitelaw, when I became an MP in his place, was, “Remember, David, in Parliament always distinguish between activity and achievement because there are those who run around being highly active but achieve nothing”.

I understand where the Government are coming from with this Bill. There are problems in the water industry—that is not the fault of privatisation, which has been successful, but of inadequate regulation by Ofwat. Those problems were addressed by the previous Government in the extensive Plan for Water, and the new Secretary of State, in his speech to the water industry on 5 September, seemed to repeat most of the items in that plan. He ruled out nationalisation and said that water companies need to attract private investment. He said he wanted to address catchment-level water solutions, and to that end intends to run a full review and seek a reset of the industry and a new partnership. He also wanted nine more reservoirs built, along with pipelines and peatlands, to help store water. These are very important issues. If that could be delivered then that would be a major reset and a real achievement. We all want to see that review conducted as speedily as possible, especially since the Plan for Water, published by the previous Government in 2023, set out most of what seems to be on the Secretary of State’s agenda.

Then we come to the Bill and what it will achieve. In launching the Bill and the proposal to double compensation for water cut-offs, the Secretary of State used phrases such as “crack down” and “toughen up” as he outlined measures to send executives to prison, automatic fines by the regulator, changing the burden of proof and a whole new range of unspecified powers for the Secretary of State and the Environment Agency. To me, it sounded very much like a remake of Tony Blair’s

“Tough on crime, tough on the causes of crime”—


which did not work then, despite the rhetoric. That is a lot of activity, but where is the impact assessment by the Government to show what it will achieve? The Government hope that automatic fines and the changed burden of proof will free up the Environment Agency to pursue the larger and more complex cases. If that is the case then we should see the calculations leading to that belief.

Will the measures in this Bill improve water quality? Charles Watson, the chair of River Action, said that while it was a “relief” to see the new Government acknowledge problems in the water sector, only a “comprehensive and holistic review” of regulation would fix matters. James Wallace, the chief executive, said:

“Talking about CEO bonuses is not going to sort things out. What we really need to see is a regulator, the Environment Agency, with its teeth given back and its funding given back”.


The Chartered Institution of Water and Environmental Management, while welcoming the review, said it is of paramount importance

“that this review cuts right across the activities of all government departments. From Defra, through housing, transport, energy, health and more. It mustn’t be kept in a Defra-sized box, or it will fail to match Reed’s ambitious pitch”.

I hope the Minister will confirm that the review will cut across all those different government departments and agencies.

Those I have just quoted welcome the Bill as a little step forward, but the real achievement would be if the Government could deliver on the Secretary of State’s vision in the review. That is why I conclude that the Bill is good political talking tough, but it might achieve little; it is possibly activity over achievement. However, we shall examine it fairly and seek to improve it, while asking some key questions.

First, I want to look at new Section 35B of the Water Industry Act 1991, which introduces the concept of “specified standards”. The existing Section 35A already deals with remuneration. The company has to base it on meeting “standards of performance,” in the wording of Section 35A of the 1991 Act. The water services regulation authority, Ofwat, will be given the power to draft rules on what these specified standards are, including whether someone is a fit and proper person to be a senior officer,

“or in respect of other matters”.

That is quite a wide-ranging power. How will it interface with the Company Directors Disqualification Act 1986, which provides extensive powers to disqualify a director? The Financial Conduct Authority also has rules on what is a fit and proper person.

In future, we could see water company executives who will have satisfied all the company law criteria to be a director, but their remuneration will be subject to new so-called “specified standards”. Those standards will include

“consumer matters, … the environment, … the financial resilience of undertakers, and … the criminal liability of undertakers”,

and

“any other matters that the Authority considers appropriate”.

Who on earth will ever want to be a director of any water company with those potentially onerous conditions? We have no idea yet what those conditions will be, and it is essential that we have some indication of that before we get to Report. The Secretary of State has to be consulted under new Section 35C. Since the Government have specifically made a big fuss about these new rules, the Government must have some idea of what they want in them and cannot say, “Oh it is not up to us; it is entirely up to the authority in due course to invent the rules”.

Punishing directors for carrying out the wishes of the shareholders is surely the wrong approach. When Macquarie had 48% of the shares in Thames Water, jacked up the debt by £2.8 billion and took out £1.1 billion in dividends, do we really think that the managing director and directors could have stopped that? The majority shareholder, I submit, was in the driving seat. Macquarie and other shareholders would have rapidly replaced those directors and executives if they tried to limit dividends and spend more of the profits on infra- structure. There is no question on these Benches of us seeking to let water companies off the hook. Where they have failed to deliver, they should suffer sanctions and penalties. However, penalising the management is targeting the wrong group; it is the shareholders who should lose out financially for company wrongdoing, however that may be defined. The description of a person in a “senior role” includes

“such other description of role with the undertaker as may be specified”.

We need to know a little more about who those people might be. That is something we shall need to explore in Committee.

I turn to Clause 4, which amends Section 110 of the Environment Act 1995 with a new imprisonment provision, of which the Government have made a big thing. Sections 110(1) and (2) of the Act sets out the offences of knowingly obstructing “an authorised person” from carrying out lawful duties, of failing

“to comply with any requirement”,

of preventing

“any other person from appearing before an authorised person”

or of failing to “provide facilities” for an investigation. That person shall be guilty of an offence. The penalty is a summary fine or imprisonment to the maximum of the magistrates’ court levels. On indictment, it could be a fine and/or up to two years in prison.

That is the current law, so how does Clause 4 change it? It makes not a single change to the offences in Sections 110(1) and (2). It makes not a single change to the fines and imprisonment. I am very happy to be corrected by the Minister, and I hear what she said about there being a difference. I am happy to be educated on that in Committee, but it seems that the Government here are dancing on the head of a pin—making a big thing about a tiny little change. I think these offences were included in the past. This clause seems to replicate existing provisions to let the Government boast that they are taking tough action against water undertakers, to make a political point.

I instinctively dislike civil penalties imposed by government or arm’s-length bodies or other organisations, whether it is the Inland Revenue or a parking fine company. It avoids due process. I leave it to the noble and learned Lords in this place to give their opinions on the dangers of changing the burden of proof from “beyond reasonable doubt” to just “the balance of probabilities”. I have no problems if a company has genuinely committed the offences and deserves the penalties, but changing the balance of proof could mean that some were unjustly penalised. That could result in large fines and damage to the company’s reputation.

I have similar concerns with Clause 6, on automatic penalties for specified offences that will be created by the Secretary of State. At least those have to be laid before Parliament under the affirmative procedure, and we will have a chance to debate them. As the noble Baroness pointed out on the delegated powers, the Bill gives enormous powers to government agencies. I look forward to reading the Delegated Powers Committee’s report to see what it says about the powers in the Bill and whether it agrees with the Government that the scrutiny they propose is adequate. I also want to see more of the Government’s thinking on the regulations they propose. They cannot say that it will be up to Ofwat and the Environment Agency to invent the rules, and that it is nothing to do with them. They have clear ideas about what they want in the regulations, and we need a steer.

We will also want to explore the Government’s thinking on the involvement of consumers in board decision-making. The Bill is exceptionally vague on that. Clause 1(3) requires a water company to involve consumers in any decisions

“likely to have a material impact”

on consumers. I suggest that any decision made is likely to have an impact on consumers, so what is the Government’s definition of “material”? Clause 1(3) also says that consumer views may be represented by someone being on a “board, committee or panel”. These are radically different concepts, from executive decision-making to an advisory panel. Again, we would like to hear more of the Government’s thinking.

The Secretary of State made a major speech to the water industry on 5 September, and committed the Government to building nine new reservoirs, multiple large-scale water transfer schemes and 8,000 kilometres of water mains pipes, and to upgrading 2,500 storm overflows. As the noble Baroness said, Ofwat costed that at £88 billion. The Secretary of State, in his interview last Sunday, was adamant that every penny of that money would be raised in the private sector and invested within the next five years. As the Secretary of State is clear that these things need to be done—a lot of them were set out in the Plan for Water of 2023 —and it would be a real achievement to do them, why are they being kicked into a long-term review? That is what we should be discussing in this House as soon as possible—the balance between investment and increasing water bills.

The Secretary of State’s endorsement of privatisation and bringing in private investment was interesting. He said that his plans would

“unlock the biggest ever investment in our water sector, and the second biggest private sector investment into any part of the economy for the entirety of this Parliament”.

In other words, he was saying that privatisation worked, but proper regulation was inadequate.

Those are the big issues that will actually deliver a better water industry, not the presentational matters in the Bill. Nevertheless, we will explore it constructively, support it where it is right, and seek to amend it where necessary to ensure due process and clarity. We look forward to addressing all that in Committee.

Water (Special Measures) Bill [HL]

Lord Blencathra Excerpts

Committee stage
Monday 28th October 2024 Lords Chamber

[Lord Cromwell (CB)]

My Lords, I also add my support for these amendments, and I agree with much of what has been said already. On the matter of water usage, I have lived in deserts and I find the idea of people power-washing their cars with pure drinking water in this country extraordinary. But that is where we are today, I guess.

Why do I support these amendments? It is simply because it is vital that this Bill is consistent with existing policy and legislation to which it naturally links. The only reservation I have, which may be something that comes out of the review, is that it brings us back to the question of whether Ofwat and the Environment Agency should be a single agency or two separate ones with a division of responsibilities.

[Lord Blencathra (Con)]

My Lords, I declare my interests as on the register. I thank the noble Baroness, Lady Willis of Summertown, for moving the amendment and for the interesting points she makes regarding the importance of clarifying the intention of this Bill. As we said at Second Reading, we are committed to cracking down on pollution by water companies and we support the Government’s intention to deliver effective measures that bring polluters to justice. While government can always do better, we are proud of our record in the past: we increased the number of storm overflows monitored across the network from 7% in 2010 to 100% today; and the Thames Tideway Tunnel is now complete.

So we on these Benches share the Government’s concerns about the many instances of water and sewerage companies discharging pollution in recent years. This poses a risk to those who use and enjoy our waterways and is causing serious damage to the environment. It is imperative that the Government continue to build on the progress the previous Conservative Government made on improvement, monitoring and tougher action to tackle sewage overflow incidents.

The Government are right to prioritise this issue, but we have serious concerns about the impact of this Bill on the water industry that we expect to explore as we go through Committee. I reiterate my thanks to the Minister, who has continued to engage constructively with us. I am grateful for the time she has given us in the lead-up to Committee. I hope we will continue to make constructive progress and improve this Bill for the benefit of all stakeholders—cost-effective water for consumers and security for the 100,000 employed in the water industry—while protecting the Government from financial risk and restoring our natural environment and incentivising investment.

Amendment 1 would make the purpose of the Bill clear and place a duty on the Secretary of State to have regard to that purpose, as well as the need to meet certain biodiversity targets and the current unpredicted impacts of climate change. The noble Baroness, Lady Willis, is right that we should take every opportunity to improve biodiversity, and there is an opportunity in the Bill to deliver transformative change for our rivers. We have amendments coming up in later groups that would help to incentivise the industry to invest in catchment restoration. That would not only improve water quality and flood management but contribute to nature restoration, biodiversity protection and, more importantly, the recovery of our biodiversity.

The Government want to keep the Bill narrowly focused on the regulation of water companies and their manifesto commitments on penalties for water companies, with the promise of further reform soon. We on these Benches are disappointed that the Government have not brought forward more comprehensive reforms in the Bill. If the promised water Bill does not materialise next year, it would not be the first time that a Government had delivered just partial reform.

We want to see a more ambitious approach from the Government, focused on the whole water sector and not just penalties for water companies—or for executives of water companies. For that reason, we believe there are areas beyond the Government’s fairly narrow focus in the Bill that ought to be included and should not be put at risk by the unclear timing of the future water Bill. The Minister has previously spoken about the need for incentives to attract talent to the sector, as well as an effective penalties regime. We need whole-sector reform if we are to deliver the clean rivers and healthy environment that people across the country are calling for. We support the spirit of the amendment by the noble Baroness, Lady Willis. We on these Benches agree that the Government must go further than the measures included in the Bill, and must do so urgently.

Amendment 91 similarly seeks to place duties on the Secretary of State to take reasonable steps to contribute to the achievement of our biodiversity targets and our climate change targets and to adapting to the impacts of climate change. The Minister will know that, in 2023, the last Government published the first ever comprehensive Environmental Improvement Plan, setting out targets and indicators for water-quality improvement.

Over 25 pages of the plan are devoted to water and targets. There were targets to reduce nitrogen, phosphorus and sediments; a target to halve the length of rivers polluted by abandoned mines; an interim target to construct eight water treatment works; targets on reducing water waste, reducing leakage by a further 20% by 2027; a target to restore 75% of our water bodies to good ecological status; a target to require water companies to have eliminated all adverse ecological impact from sewage discharges at all sensitive sites by 2035 and all other overflows by 2050; a target to create a level of resistance to drought so that emergency measures are needed only once in every 500 years; a target to direct water companies’ fines relating to environmental breaches to improving the water environment; a target to crack down on sewage pollution by holding water companies to account for delivering the targets set out in the Storm Overflows Discharge Reduction Plan; a target to require water companies to upgrade 160 of the wastewater treatment works to meet the strictest phosphorus limits by 2028, with a further upgrade of 400 of them by 2038, which would reduce nutrient pollution from treated wastewater; and—of great concern to me—a target to protect our chalk streams by supporting the chalk stream strategy. Lastly, there was a target to make sustainable drainage systems mandatory in new developments, subject to final decisions following consultation on scope, threshold and process.

I mention those targets to show that the Opposition are not coming here to say that we have just discovered some good ideas and actions for the future. We have a track record of setting tough targets, and they are in the EIP. These targets are specific to water quality and will greatly increase biodiversity. They are not just reasonable steps but specific, measurable targets.

The Government have said that they are urgently reviewing the latest EIP, which is about to be published. I do not expect the Minister to say what the tweaks will be, but can we expect any changes to the water EIP targets when the Government publish them? We share the ambition of the noble Baroness, Lady Willis, for water sector reform, and we hope that the Government will listen to the concerns of noble Lords, who are calling from all sides of the Committee for a more ambitious approach.

--- Later in debate ---

[Lord Cromwell (CB)]

My Lords, I support the amendments, but I want to make one comment on the discussion, which has possibly strayed a little from the Bill. Dealing with surface run-off and, in particular, developers’ right to connect are outdated. I hope that the Minister will urge those involved with the review to have a serious look at this, because it is completely outdated, and with increasing development, not to mention climate change, it will only get worse. It needs tackling properly.

[Lord Blencathra (Con)]

My Lords, I thank my noble friend Lady McIntosh of Pickering for moving this important amendment, which has caused a little bit of welcome excitement in the Committee. Both Amendments 7 and 8 seek to ensure that senior executives do not receive a financial penalty for failures that were not their fault or within their control, and we on these Benches feel that the noble Baroness’s amendments merit consideration by Ministers. The intervention by the noble Lord, Lord Cromwell, at the end also merits some consideration.

It is right that the Government should take steps to ensure that, when a water company fails to meet the standards set by Ofwat, the responsible executive is held to account. While it is right that company directors take responsibility for the successes and failures of a business, under the Bill, other senior officers, who may not be members of the board of directors, could be penalised under these rules. The argument that the relevant senior executive is held responsible, rather than an officer of the company who was not responsible for the decision, is a simple one. Rather than applying financial penalties to all senior executives, including those below board level, these rules should penalise only those who are responsible for the company’s conduct.

It is quite a long time since I last worked in industry, but I do not think that much has changed to this day. Who is responsible depends on the level of direct supervision by a more senior officer. At lower levels of a company, it is quite straightforward: the supervisor or the foreman has minute-by-minute relationships with the team under him or her, so they could be held responsible for faulty work or bad behaviour by their workers. But that is at the lower level. As you get higher up a company, the whole ethos changes. Executives are supposed to set objectives and delegate to their other officers how it is done. The CEO, or directors, tell officers under their command, “Here are your legal duties and these are the company objectives. Here are your own personal targets and objectives—report to me weekly, monthly or whatever on how you are progressing. Now, just get on with it”.

There is no direct day-to-day supervision, and the CEO has to trust that the senior officers below him or her obey the law, behave properly and do not cause the breaches that we are concerned about. It would be wrong to blame and reduce the pay of CEOs or directors based on a mistake by a person under him or her where they have no direct control. Of course, the exception would be in the extraordinary circumstances in which the CEO or executive director gave instructions to the worker to break the law or not to care about the rules. That would be a different matter.

Without these amendments, we are concerned that it may prove difficult to find professionals willing to take on senior roles at water companies if there is a risk they will suffer an unfair loss of performance-related earnings through no fault of their own. It is a basic principle of performance-based pay for employees below board level that it should be tied to their performance as an employee within a team. It would not be an effective incentive scheme if one individual or team were deprived of their performance-related benefits because of the behaviours of failures of another individual below board level. As we discussed at Second Reading, arbitrary punishment will not improve performance; it will only encourage people to seek employment outside the water sector.

If we are to deliver the improvements to the water sector that the British people rightly expect, we must attract more talent to the sector through a fair incentives and penalties regime. The Bill is a bit too broad and could permit rules to be applied to the sector by Ofwat that are unfair and ineffective. Furthermore, when a current bonus scheme, or contractual bonus, provides for the bonus to be payable on the achievement of certain performance conditions, and the performance conditions have been met, an employer is, in effect, obliged to award the bonus. In cases where an employer may grant discretionary bonuses, employers are required to exercise this discretion honestly and in good faith, not to exercise it in an arbitrary, capricious or irrational way, and not to breach the implied term of trust and confidence.

It concerns me that, should the Government choose not to include these amendments in the Bill, and individuals’ performance-related pay was docked for actions or responsibilities beyond their control or remit, it would put the employer in a position of complying with the requirements of rules created by Ofwat under this Bill but then acting contrary to these common-law and contractual requirements. That leads to a concern that this scenario could result in costly and time-consuming litigation, thus diverting funds which would otherwise be better spent improving our water and sewage systems. Therefore, I encourage the Government to accept these amendments so that, should a water company fail to meet the standards set by Ofwat, only the relevant executives are held responsible. However, if the Government are unwilling to put this on a statutory footing, we hope that Ofwat would be willing to enact these principles under its rules, which could be overseen by the House under Amendment 27 as an affirmative instrument.

I want to comment on the points made by my noble friend Lady McIntosh of Pickering on surface water. I put it this way: if we were starting again from scratch a couple of hundred years ago, we would have designed a system whereby we never had rainwater from gutters or car parks running off into Mr Bazalgette’s sewage system—but we are where we are now. In an ideal world, two pipes would come into every house and, as the noble Lord suggested earlier, one would have clean water for drinking and the other water for flushing the toilet or for hose pipes. We cannot go back and do that now—but what we can do is look at new developments, and I hope that the Government will consider the suggestion from the noble Lord, Lord Cromwell, in that regard.

I understood that it is possible if one is building a car park, before one puts in the hardcore, to lay a whole series of ooze pipes and then collect all the rainwater run-off, so it replenishes the underground stream by putting the water back into the subsoil. That should be possible. Whatever it is, we need to look at new developments to ensure that surface water is not unnecessarily going into our sewage system. I hope that the Minister will carefully consider what my noble friend Lady McIntosh of Pickering has said.

[Baroness Hayman of Ullock (Lab)]

My Lords, through provisions introduced by Clause 1, Ofwat will be able to issue new rules on remuneration and governance to ensure that companies and executives are subject to robust oversight and held accountable for failure. Among other things, these rules will ensure that executives will no longer be able to take bonuses where companies fail to meet standards on environmental performance, financial resilience, customer outcomes or criminal liability.

Amendments 7 and 8, introduced by the noble Baroness, Lady McIntosh of Pickering, seek to ensure that these rules apply only in instances where the failure to meet the required standards is due to a failing by that individual and not another person. I start by reassuring the noble Baroness that, should companies meet their performance expectations, executives will rightly be rewarded. However, the changes proposed through Amendment 7, in particular, would make it more difficult for Ofwat to implement the rules on remuneration and governance in a meaningful way. This is because it would introduce an additional test to be met before the bonus ban could be applied, where a link between the specific actions of an individual senior leader and the performance failings of a company as a whole might be difficult to demonstrate.

Senior executives are also collectively responsible for the actions of the company and therefore should be held responsible for poor performance. However, having said that, Ofwat has stated, in the policy consultation it published last week, that, while it intends for the rules to apply to most performance-related pay decisions by water companies,

“there may be … exceptional circumstances where a payment should not be prohibited”.

For example, if an incident leading to a rule breach was clearly and demonstrably beyond the control of the company, this could be grounds for an exemption from the ban.

Considering the changes proposed by Amendment 8, we also consider it unlikely that individuals in senior roles will fail to meet Ofwat’s future standards of “fitness and propriety” due to a failing on the part of another person. The potential criteria proposed by Ofwat in its consultation to measure “fitness and propriety” include character, previous conduct, and knowledge. These criteria are specific to the individual, rather than the performance of the company, and do not obviously relate to acts by other persons.

I just want to mention an issue that the debate moved on to, around drainage and SUDS. We are going to be discussing SUDS further in group 8, so we shall talk about that then, but I want to assure the noble Baroness that we are engaging with officials in MHCLG, because it is really important that we have a proper discussion around planning and drainage as we move forward with development. I am very aware of the problems that surface water can cause in new development if it is not thought through properly.

The noble Lord, Lord Cromwell, drew the Committee’s notice to the commission and asked whether it would be discussed there. I will draw the Committee’s attention, for interest, to part of the scope of the commission:

“Where housing, planning, agriculture and drainage interlink with strategic planning for the water system, these are in scope. ... The commission should have regard to how the water sector regulatory system provides the certainty around the provision of water infrastructure needed to underpin development plans, housing growth and sustainable development, while strategically protecting and enhancing the environment. This should include how regulation and planning for water infrastructure and for residential and commercial development can work together more effectively to anticipate and invest to provide for future growth, to quickly resolve and prevent issues where water and wastewater capacity constraints may otherwise inhibit necessary development (such as through their impact on requirements for water and nutrient neutrality)”.


So, although it is not entirely dealing with the issue around SUDS, I think it is something we need to explore further with the housing department, for example, and with local government. There is an opportunity to look at development and water within the scope of the commission. I hope that is helpful for noble Lords to understand.

I hope I have reassured the noble Baroness that the rules will be applied to individuals in a proportionate manner, and made clear why the Government consider these amendments to be unnecessary.

Water (Special Measures) Bill [HL]

Lord Blencathra Excerpts

Committee stage
Monday 28th October 2024 Lords Chamber

[Baroness Pinnock (LD)]

My Lords, I do not know whether the noble Baroness, Lady McIntosh, is right to try to urge the adoption of Schedule 3 to the Flood and Water Management Act through this Bill, but she is right that there was an expectation that it would be implemented this year. Given the new Government’s determination to expand the construction of housing as quickly as possible across the country, this schedule is pertinent and relates to the water services Act. We ought to try to address it, through this Act or not. The Minister’s heart is in the right place on this one, so now she has the levers of power I am sure that she will pull the right one.

[Lord Blencathra (Con)]

My Lords, I thank my noble friend Lady McIntosh of Pickering for tabling these amendments, which rightly seek to tackle the issues of flooding and drainage. The Flood and Water Management Act 2010 set out standards for water companies regarding the reduction of flood risks and created more power for local authorities to be able to take action to protect their local areas.

When in government, we tightened restrictions on water companies to protect our countryside, and we are pleased that this work is being continued. Since 2010, under the Conservatives, government investment has better protected more than 600,000 properties from flooding and coastal erosion. Since 2015, Conservative investment has protected over 900,000 acres of farmland, rightly putting the needs of rural communities first.

In 2020, we built on this further and announced a doubling of capital funding into flood defences in England, to a record £5.6 billion from 2021 to 2027. As the Committee will understand from these steps, we had a strong record of investment in flood defences and water management. It would be helpful to hear from the Minister what plans the Government have to improve on those Conservative measures to protect communities across the UK from the harms of flooding.

Much of our debate on the Bill has so far focused on the corporate structures and financial management of companies in our water industry. It is right that we consider these issues in depth and seek to put the right incentives in place to deliver better outcomes for the key groups and interests that we should be aiming to protect under the Bill; namely, consumers, employees of water companies and the protection of our environment.

While the majority of the public debate around our water sector focuses on the damage that sewage overflows do to our waterways, my noble friend Lady McIntosh is absolutely right to take this opportunity to consider the dangers of flooding and to seek to ensure that water companies put this issue front and centre. We on these Benches certainly understand the issues of sewage contamination in our rivers across the country and would like to solve this issue to preserve the nature and wildlife that this has serious impacts on. We also recognise the horrendous impact that floods have on many communities because those water companies have not done enough in terms of flood management.

The first impact most people experience when water management is poor is flooding on roads and on other key transport links. However, in serious cases—such as the 2007 summer floods and the floods of 2015-16—this can result in threats to lives and livelihoods, enormous costs to the economy and massive devastation for the people affected. I am not sure if the Minister is politically old enough to remember the terrible Carlisle floods a few years ago, but it was horrendous to drive through Carlisle and see thousands of homes with abandoned furniture outside, which was soaked through. In my own constituency, just south of Penrith, at Eamont Bridge, houses had been flooded to a depth of about three inches, but with osmosis, the water had been sucked right up the walls and everything had been destroyed. So, flooding seriously impacts people’s lives.

Reporting on those two exceptional examples together, the Office for Budget Responsibility estimated that the 2007 summer floods cost the UK economy £3.2 billion, while the 2015-16 winter floods cost the economy roughly half of that, at £1.6 billion. These examples alone demonstrate the importance of improving water management to protect our communities from flooding.

That said, it is not only the extreme examples that demonstrate the importance of managing flood risks. As anyone who is involved in farming or other rural affairs will tell you, 2024 has been a very wet year, with many communities facing difficult challenges with flooding. In April 2024, England as a whole received 150% of the long-term average rainfall for the time of year and the north-west was particularly wet—as the noble Baroness and I will testify—with, as my notes say, the wettest April since records began in 1871. I can also tell noble Lords that it was also the wettest August, with one dry day this year.

This is a good opportunity to remind ourselves that it is not just people’s homes that rely on a good water system but our food supply—people’s livelihoods rely on it too. That is why my noble friend Lady McIntosh of Pickering is right to bring this point forward for debate as the Bill makes progress.

When flooding and poor water management affect our rural communities, invariably this has a knock-on effect on agriculture and, in turn, consumer costs. Earlier this month, the Guardian reported that fresh food inflation increased to 1.5% from 1% just in August as the wet weather affected British production of salads and soft fruits, while storms in the Atlantic delayed imports of more exotic fruits, driving up prices.

No Government can control the weather—thank goodness; farmers would like to control it of course, but each would want to control it differently—and no water company can entirely mitigate the impacts of wet periods on our agricultural output. However, good water management is very important when we are faced with unusually poor conditions.

I am grateful to my noble friend Lady McIntosh of Pickering for tabling these amendments to the Bill. I know many farmers will be pleased to hear their concerns about the impacts of poor water management are being discussed in your Lordships’ House tonight. While the Government may not be inclined to accept these amendments, we on this side of the House see this as an important opportunity to ask the Government to please keep the issue of flooding and water management high on the agenda, in light of the very serious impacts it has on people across the country, in both direct damage to their homes and communities and the secondary impact it can have on food prices for all of us.

I would therefore be interested to hear whether the Minister might consider bringing tougher flood mitigation duties for water companies into the Bill. As we have heard constantly, the Government intend to bring forward much wider reforms in the coming year, but, as we approach winter, many families up and down the country will have concerns in the backs of their minds about the risks of flood, in light of the continued failures in our water sector.

Will the Minister take this forward and look at possible improvements that can be made to the Bill now? I hope the Government will listen to the important points raised by my noble friend tonight and consider these carefully before Report.

Water (Special Measures) Bill [HL]

Lord Blencathra Excerpts

Committee stage
Wednesday 30th October 2024 Lords Chamber

[Baroness Browning (Con)]

My Lords, I am very pleased to have added my name to the amendment that the noble Baroness, Lady Boycott, has just spoken to, and the amendment in this group tabled by the noble Baroness, Lady McIntosh of Pickering, both of whom have outlined very clearly their concerns.

Amendment 89, in my name, is really about abstraction. I mentioned the over-abstraction in chalk streams, which is genuinely a real problem. It is claimed that the Environment Agency rarely inspects water company abstraction monitoring records.

There is also no requirement for continuous volumetric monitoring and publication of real-time or up-to-date data. It is not surprising, therefore, that there has been no effective enforcement where there have been breaches of abstraction licences. Spot-check results indicate neither the duration of the breach nor the seriousness of such breaches, either as against the licence condition or for the rivers or groundwaters from which the abstraction has occurred unlawfully.

Therefore, this amendment proposes that the Water Resources Act 1991 be amended so that all licences for abstraction held by water undertakers should include a condition that real-time abstraction volumetric data is recorded and made publicly available in as close to real time as is practicable. This is very straightforward. The Minister must have a view as to whether she thinks the Environment Agency carries out rigorous checks, and if it does not, I believe my amendment is the answer to it.

[Lord Blencathra (Con)]

My Lords, I first declare my interest as on the register. Since it seems to be de rigueur in the Committee tonight, I declare my wholehearted support for the controlled reintroduction of beavers into appropriate locations.

I thank the noble Earl, Lord Russell, for leading this group of amendments on improved monitoring and publication of data and I rise to speak to Amendment 48 in my name. First, I was rather impressed by the points on telemetry made by the noble Lord, Lord Cameron of Dillington. We find in Natural England that the use of modern technology can replace hundreds of people on the ground trying to carry out inspections, and this sort of technology has to be the way to proceed.

It is important that the nature of emergency discharges is collected by water companies and is made available to the public and Parliament in an easily accessible format and location, as has been said by every noble Lord tonight. The damage of pollution caused by emergency overflows has become an issue of increasing concern to the public in recent years, and they deserve more information on how water companies are performing. It is sensible to require water companies to publish the extent of emergency discharges, as this data is indicative of the strain on our water sector and will provide valuable information as to what kind of infrastructure development is necessary to prevent overflows in the future.

We support the Government’s intention in this part of the Bill, but we feel the Government can go slightly further to ensure that the monitoring data is available to the public on the water company’s website. My Amendment 48 is a modest little amendment that would deliver that change. We on these Benches feel that this relatively small amendment would do a great deal of good in ensuring that consumers can access this information easily on the website of their own provider.

A number of noble Lords have moved amendments on monitoring and reporting. We are broadly satisfied with the Government’s measures to improve monitoring and reporting in the Bill, but we are also keen to see some movement from the Government in the direction of making this information more readily accessible to the public and have taken on board many of the points raised by other noble Lords tonight.

[Baroness Hayman of Ullock (Lab)]

My Lords, I thank all noble Lords for the interest they have taken in this debate. I turn first to Amendment 43, tabled by the noble Earl, Lord Russell, Amendments 44 and 46, tabled by the noble Lord, Lord Cromwell, and Amendment 59, tabled by the noble Lord, Lord Cameron of Dillington. The Government agree that it is vital to understand the causes and impact of sewage discharges, and agree with the noble Lord, Lord Cromwell, that this needs to be timely and accessible.

Clause 3 requires water companies to provide information on the frequency and duration of discharges from emergency overflows. This information will enable regulators and the public to see, in near real time, when a discharge from an emergency overflow has occurred, and how long it lasted for. This will enable resource to be directed to investigate the cause as well as the impact of a discharge, with a view to resolving any issues.

While the Government agree with the intention behind the amendments seeking to require companies to specify the volume of discharges in their publications, we do not see the value in doing so, as this would not provide the meaningful insights that we need about the actual impact a discharge has had. Monitors required to measure volume as well as concentration are also very costly to install and could delay the rollout of other monitors.

The volume from sewage discharges is measured through flow monitoring, and the installation of flow monitors would likely require construction projects to install them at the majority of emergency overflows, hence the large cost. This is because the pipework in emergency overflows would require modification for flow monitors to be able to record accurate measures of volume. Therefore, the Government do not believe the expected high costs are proportionate to the information we would get. With respect to the cause of discharges, it is not possible for companies to provide this information in near real time. This is because an investigation and site visit are often required to validate the cause.

Water (Special Measures) Bill [HL]

Lord Blencathra Excerpts

Committee stage
Wednesday 30th October 2024 Lords Chamber

Moved by

[Lord Blencathra]

52: Clause 3, page 8, line 6, at end insert—
“141H Monitoring of river health after emergency overflows(1) Where there is a discharge from an emergency overflow of a sewerage undertaker into inland waters, the undertaker must regularly assess the environmental health of that inland water within 500 metres downstream of the overflow.(2) The methods used to make assessments under subsection (1) must include the use of fish counters or other methods of accurately monitoring the fish population.(3) The undertaker must prepare a report on the results of these assessments on a quarterly basis and submit this report to the Authority.(4) The undertaker must publish this report within 30 days after it has submitted it to the Authority.(5) The information must—(a) be in a form which allows the public to readily understand it,(b) be published in a way which makes it readily accessible to the public, and(c) be published on the undertaker’s website.”

[Lord Blencathra (Con)]

My Lords, on behalf of my noble friend Lord Bethell, I am pleased to move Amendment 52 in his place. This amendment seeks to increase and improve the monitoring undertaken by water companies after an emergency overflow.

The amendment is quite straightforward. It makes the case that, where there is a discharge from an emergency overflow, the undertaker must regularly assess the environmental health of that inland water within 500 metres downstream of the overflow. My noble friend then suggests that the methods used to make assessments under that subsection must include the use of fish counters or other methods of accurately monitoring the fish population. I accept that there may be a weakness here because, unless one knows what the fish count was before the overflow happened, it may be difficult to come to a conclusion as to the number of fish which should be in the river after the overflow has taken place. The undertaker must also prepare a report on the results of these assessments on a quarterly basis and submit it to the authority, and, after having done so, the undertaker must publish the report within 30 days. In addition, in accordance with everything else which has been said in debates tonight, the information must be in a form which helps the public to readily understand it, be published in a way which makes it readily accessible to the public, and be published in the undertaker’s name.

For those reasons, we on these Benches want to protect our rivers and restore the health of those rivers that have been seriously affected by pollution. Thanks to our efforts in government to drive up monitoring, 100% of emergency overflows are now monitored, and as such, we are able to access information about all emergency overflows that occur. This was a seriously transformative step forward compared with the situation we inherited in 2010 but we accept the need to go further, and we support better monitoring of both overflows and of the overall health of rivers themselves.

With the level of monitoring achieved under the Conservatives, it is now possible to learn far more about these incidents and therefore to take action to prevent them happening again. However, this does not mean that water companies are now taking enough responsibility to publish the results of this monitoring and to report their findings so that they can be held to account.

This amendment focuses on an area that the Bill does not address and ensures that the health of our rivers, not just the extent of pollution incidents, is a central component of the Bill. The inclusion of monitoring 500 metres down the river will give a real insight into the impact that an overflow is having on the overall health of a river over time. This monitoring will ensure that water companies cannot downplay the damage and leave the natural area to be ruined; instead, they will have to take a responsibility for a wider area that these emergency overflows can impact.

We on these Benches support this amendment in its intention to ensure that regular reporting is done so that the public are able to access up-to-date information on the overall health of our rivers beyond the immediate aftermath of any emergency overflow.

I know that many amendments in the previous group were related to monitoring of emergency overflows, and, although this amendment specifically relates to river health, I am sure there will be cross-party support for much of the previous group and for this amendment to ensure that water companies can be held publicly accountable for their action after emergency overflows.

I hope the Minister will take the concerns of my noble friend Lord Bethell as expressed in this amendment seriously and will consider it. Once again, we feel this is a timely opportunity to deliver a positive reform in the Bill today rather than waiting for the wider reform which the Government have proposed. I beg to move.

[The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Baroness Hayman of Ullock) (Lab)]

My Lords, I thank the noble Lord, Lord Bethell, for raising this important issue and tabling Amendment 52, and the noble Lord, Lord Blencathra, for moving it in his absence. I start by reassuring him that I always take the concerns expressed in this House very seriously. I think that we agree that understanding the impact of sewage discharges on the environmental health of rivers is vital.

Clause 3 requires water companies to provide information on the frequency and duration of discharges from emergency overflows. These measurements will enable regulators and the public to see, in near real time, when a discharge from an emergency overflow has occurred, and how long it lasted for. This will, in turn, enable resource to be directed to investigate the cause as well as the impact of a discharge, and will enable the regulators to take enforcement action if it is required.

However, this is just one measure that the Government will use to better understand the impact of sewage entering our waterways. New continuous water quality monitors will be installed at storm overflows from 2025 to continuously measure the impact of sewage discharges on the receiving watercourse. The information gathered from these monitors will be key in supporting fish populations. Requiring the installation of additional fish counters downstream of emergency overflows may require additional structures in the watercourse and may impose additional costs on water companies and their customers.

This does not appear to be proportionate, given that emergency overflows should be used on only very limited occasions. The Government will therefore not accept this amendment. However, I hope that I have been able to reassure the noble Lord that the Government are using this Bill to enable quicker action to be taken to investigate discharges from emergency overflows.

[Lord Blencathra (Con)]

I thank the Minister for that response. I regret that she is not accepting the amendment but, if we accept her assurances that the monitoring of overflows will be thorough, that may negate the need for further monitoring downstream. I like to think that we will check the water further downstream than just within a short distance of the storm overflows, because what happens downstream is terribly important. I recall when the creamery at Appleby burst and flooded the River Eden. The damage was considerable for a couple of miles downstream. Checking what happens right beside the factory or the storm overflow is one thing, but it is important that we check downstream when the money allows. I beg leave to withdraw the amendment.

Amendment 52 withdrawn.