Water Industry (Specified Infrastructure Projects) (English Undertakers) (Amendment) Regulations 2020

Lord Moynihan Excerpts

Monday 8th June 2020 Lords Chamber

[Lord Moynihan (Con)]

My Lords, I also welcome the Minister to this hybrid House, and I welcome these regulations. I had the good fortune to be one of the Ministers responsible for water privatisation in the Department of the Environment, working with my noble friend Lord Howard of Lympne, back in the late 1980s when the water authorities finally concluded their annual struggles to make forlorn cases in Whitehall for much-needed capital investment for large infrastructure projects. After privatisation, they moved into a world where they could access market-driven capital investment regimes. That long-term access to capital markets was critical to funding the much-needed investment programmes that have subsequently served the country well.

In answer to the noble Baroness, Lady Scott of Needham Market, I recall that, prior to privatisation, the annual battles in Whitehall were depressing times, as Ministers and officials from the Department of the Environment sought to make the case to the Treasury to fund water and sewerage treatment works in the face of competing cases being made to the Chancellor for better roads, hospitals and politically popular priorities. It was a very difficult task.

The 2013 regulations, which the Government are rightly seeking to extend through a release of the sunset clause, relate back to those days and the implementation of Part 2A of the Water Industry Act 1991 in relation to water and sewerage undertakers in England. Now, with the water industry in the private sector, it is right that the Secretary of State should seek and gain support from Parliament to continue the 2013 regulations, ensuring that infrastructure providers work within the proven framework that now exists. The delivery of large, complex projects under the current arrangements needs to work well, and it does. The infrastructure provider is well regulated by Ofwat to finance and deliver such contracts.

In the case of London, we have the first: we have the pioneering and far-sighted genius of Sir Joseph Bazalgette back in the 19th century to thank. His foresight enabled London, with a population confronted by reeking, unhealthy open sewers, to be transformed by a remarkable civil engineering project which projected scale into his design work on the diameter of the sewers. He worked on the basis of the densest population and what has best been described as,

“the most generous allowance of per capita sewage production”,

before coming up with the diameter of pipe needed. Apocryphally, and probably literally, he added:

“Well, we are only going to do this once and there is always the unforeseen”—


and he doubled the diameter to be used. His genius allowed London to cater for the subsequent increase in population density, with the introduction of office tower blocks, when with the original, smaller pipe diameter would have overflowed in the 1960s, rather than coping until the present day.

However, investment is now needed and has come in the form of the only project currently to meet the criteria of the 2013 regulations: the Thames tideway tunnel. My noble friend the Minister has made it clear that the regulations have created a parallel regulatory regime to help financially de-risk the Thames tideway tunnel project. This is a project of which Bazalgette would have been proud. It will capture, store and convey almost all the raw sewage and rainwater that currently overflow into the River Thames. The Thames and London will be the cleaner for it. Bazalgette Tunnel Limited, which carries his name, is the infrastructure provider. On completion, there will be a 16-mile long tunnel running mostly under the tidal section of the River Thames.

Does my noble friend the Minister know what effect the Covid-19 pandemic has had on the project’s timing and construction costs, which were nearly £5 billion? In recognising that this is the only project which is covered by the regulations, I congratulate Defra officials on delivering a framework which has kept the cost of procuring the tunnel as low as possible, with remarkably little evidence to date of the cost escalation so common in other infrastructure projects. In doing so, the department has also provided a dispute resolution framework and shown a sensitivity to community disturbance in a usually overcrowded city which to date has been commendable.