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

Neil Hudson Excerpts

Committee stage
Thursday 16th January 2025 Public Bill Committees

[Charlie Maynard]

I completely agree with the hon. Member. Using West Oxfordshire as an example again, we have installed Grampian conditions, which I encourage other Members to look into, where we have said, “You may not occupy this house.” We could not stop the houses being built by arguing that there was insufficient capacity, but we could put a Grampian condition in force that says, “Those houses may not be occupied. Any buyer knows this, so they will not buy them.” It is flagged to any buyer so that they do not buy a house they cannot occupy, which will continue until the capacity has been added. That puts some heat underneath the water companies to get on and increase their sewage treatment works capacity. I really encourage the Government to look into those. We have vast amounts of housing that will be built, and under the current law, they will be steamrolled through and the capacities will not keep up. That is a real problem for everybody, and it puts more pressure on our rivers.

[Dr Neil Hudson (Epping Forest) (Con)]

I am grateful to the hon. Member for giving way, and I have a lot of respect for the new clauses that he has tabled to put pressure on water companies to provide more information at critical stages. The Opposition have tabled amendments requiring water companies to publish data on their websites to enable citizen science, so I respect what he is saying. I guess some of the issue is in the detail of the wording of the new clause. I am sure we are all in agreement about water companies providing information, but proposed new section 37(1A) says that we want them to be “full and accurate” and “honest”. I guess the devil is in the detail. How will that be judged? If this new clause were to come into play, how will people judge that? Is an “honest assessment” whether something is not false, or whether something is complete or incomplete? There is an element of challenge that could be put in. I understand the sentiment, but the devil is in the detail of the wording as to how this could actually work.

[Charlie Maynard]

I thank the hon. Member for his kind words, and I look forward to his support in some of the votes at some point. In the meantime, if he has recommendations on the wording that he would like to put forward, I ask that he please do so. These new clauses are already in place, so maybe that is impossible, but let us by all means try to improve them.

--- Later in debate ---

[Charlie Maynard]

We will not press this new clause to a vote. I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

Question proposed, That the Chair do report the Bill, as amended, to the House.

[Dr Hudson]

It is a great pleasure to again serve under your chairship today, Dr Huq. May I first, on behalf of the Opposition and, I hope, colleagues from across the Committee, give a vote of thanks to everyone involved in this process? I have a list here, and please shout out if I miss anyone out.

First, I thank the Chairs—Dr Huq and Mr Vickers—for guiding us through the process. I thank all the Bill Committee staff—the Clerks and officials—for their assiduous, thorough work, which keeps us on message as Members of Parliament scrutinising this legislation. We thank them for that. Dr Huq, thank you—I will use the word “you” for you. I thank the DEFRA officials for all their hard work on this and for engaging with the Opposition as well. I very much appreciate the Minister allowing the officials to do that.

I thank the Doorkeepers and Hansard. I do not think I have missed anyone in the room except the public. This gives me the chance to thank the members of the public who have come in and watched our proceedings, as well as people who have watched online from afar. There are also, as the Minister said, the stakeholders: the environmental groups, the volunteers and the experts who have fed into this Bill and the water debate that we are having and who are helping legislators across the House to improve and refine legislation. We thank the public very much as well.

We have had a very interesting few days. It has shown us that there is a lot of cross-party consensus on what we are trying to do to improve our water quality. There is some disagreement about how best we do that, but this Committee has shown the House that, actually, there is a lot of agreement about the scale of the problem and the fact that we need to address it.

I respectfully say that I am disappointed with the comments from the third-party spokesperson, the hon. Member for Westmorland and Lonsdale, about the Bill Committee stage being a charade. I do not think that line-by-line scrutiny of Bills is a charade. Yes, there is a process as to how Committees are populated, but that is democracy. I would have thought that that particular party, given its title, would respect election results. That is how democracy works. We have seen that they have had some disagreement among themselves about some of their votes as well, but I will leave that point there.

We have had some interesting discussions, and it would be remiss of me not to talk about teeth. We have had dental analogies aplenty: we are wanting to give more teeth to the various regulators. Finally, I think I did detect—we will have to check Hansard—the Minister using the word “Ofwet”. When this matter goes to the commission, “Ofwet” might be an interesting term for a new body that might be set up, but I will leave that with the Minister.

[Tim Farron]

Thank you, Dr Huq, and Mr Vickers, in his absence, for brilliantly chairing our five Committee sittings. I will not list everyone that the hon. Member for Epping Forest just did, but I endorse what he said. I thank the Clerks, the DEFRA officials, the Minister’s team and colleagues on both sides of the House for their courtesy and the seriousness with which they have engaged with the Opposition, the members of the public who attended the Committee in person and those who have followed it from afar.

There is no doubt that the voluntary sector and the public have been ahead of politicians on this issue for many years. I would argue that the UK leaving the European Union was a key moment, because we had to go back and look under the bonnet to see what was already accepted and already permitted. We could argue about whether the previous Government gave us regulations and standards that were as good as what we had before we left the European Union. That might be an additional issue, but none the less, the likes of Surfers Against Sewage, Windrush Against Sewage Pollution, Save Windermere, the Clean River Kent Campaign and so many others in all our communities have led the debate on this and created great scrutiny. That is why we strongly approve of a significant part of the Government’s ethos in the Bill, which is to put an awful lot of power in the hands of those who care so much in our communities.

I do not mean to offend people by referring to this as a charade, but the reality is that we spent five years in Government, and I am pretty confident that the Government that I was part of never allowed a single Opposition amendment to pass in Committee. There is a little bit of pretence in this. All the same, it is an enjoyable pretence. Having gone through the Bill line by line, we all understand it better, which means that, on Report, a dozen and a half of us can speak about this Bill in the Commons with a greater awareness than beforehand.

We support the Bill. If anybody was to call a Division on it, we would go into the Aye Lobby. Our frustration is that we feel that the Government have missed an opportunity. Their answer is obviously, “Here comes the Cunliffe review, and we will see what happens next.” Are we going to get an undertaking that there will be another Bill in the next King’s Speech? If there is, that is exciting and interesting, and that could answer many of our concerns.

The Bill could have been much clearer about limiting bonuses and about recognising that a fundamental problem with the water industry is the fragmentation and the weakness of regulation. It could have recognised that the financials are clearly all wrong, unfair and wasteful. We are looking at duration, but not volume, content or impact, and we are not supporting the citizens behind the citizen science enough by giving them the information, the resource and the place on the water company boards that they need. There are many areas where we think the Bill could be so much better, and where we do not need to wait for Sir Jon to do those things.

Having said that, what is wrong with this Bill is what is not in it, not what is in it. We are therefore happy to support it and are very grateful for the constructive nature of the debate throughout.

Draft Free-Range Egg Marketing Standards (Amendment) (England) Regulations 2024

Neil Hudson Excerpts

Wednesday 15th January 2025 General Committees

[Dr Neil Hudson (Epping Forest) (Con)]

It is a pleasure to serve under your chairship, Mrs Harris. I thank the Minister for bringing the draft regulations to the Committee. I am pleased to say that we, His Majesty’s most loyal Opposition, are supportive of the statutory instrument and offer no objections. The initial consultation conducted by the previous Conservative Government in January 2024 demonstrated strong support for the proposals, leading to this statutory instrument.

Current marketing standards allow hens to be housed for 16 weeks before their eggs are required to be re-labelled as barn eggs. Recent avian influenza outbreaks have once again necessitated the introduction of mandatory housing measures for free-range poultry in certain areas, which can sometimes exceed the 16-week limit. Consequently, producers adhering to these essential measures have been penalised through the loss of their free-range status.

In the previous Parliament I served on the Environment, Food and Rural Affairs Committee, and we looked into this issue extremely closely and fed our work in to the Government. I am pleased that the previous Government responded positively, and that the new Government have picked up the baton. The changes in the statutory instrument will remove the 16-week derogation period, thereby protecting producers who are doing the right thing by responsibly housing their birds under the chief veterinary officer’s instructions during the imposition of avian influenza controls. I should declare an interest: I am a veterinary surgeon so I have a strong personal and professional interest in this subject.

The changes are made in the knowledge that once the restrictions are lifted, the birds will be back out and free-range. Furthermore, they will ensure that English free-range producers maintain parity with the EU, where the 16-week time limit was removed from egg marketing standards legislation in 2023, as the Minister articulated. This will create a level playing field for our producers and reduce the likelihood of English free-range eggs being substituted with imported eggs.

Although we support the statutory instrument, I do have some questions for the Minister. Before I ask them, I put on the record my thoughts and sympathy for farmers and bird keepers who have been affected by avian influenza outbreaks. The virus is still with us and there are still outbreaks. I also pay tribute to everyone at the Animal and Plant Health Agency. Vets, officials and scientists are working hard on the situation, as they are working on many different disease situations. Avian influenza is with us, bluetongue is still bubbling away, and we now have the real concern of foot and mouth disease having been confirmed in our near neighbour Germany.

As a veterinary surgeon, I am all too aware of the devastating impacts that animal disease outbreaks can have. Avian influenza outbreaks obviously affect not only reared domestic birds but wild birds, but there are also significant human impacts, not least on the mental health of those in the frontline. Given the ongoing avian influenza situation, will the Minister outline the additional measures the Government are taking on avian influenza to preserve our nation’s biosecurity? What is the current policy and status in terms of vaccine development and deployment?

In addition, will the Minister clarify what steps are being taken to co-ordinate the changes with Welsh authorities? We know they are introducing changes, but we must make sure that we have a consistent approach across the UK. We strongly support these crucial measures and I am grateful that the regulations have been brought to the Committee today.

Foot and Mouth Disease

Neil Hudson Excerpts

Wednesday 15th January 2025 Commons Chamber

[Dr Neil Hudson (Epping Forest) (Con)]

(Urgent Question): To ask the Secretary of State for Environment, Food and Rural Affairs if he will make a statement on the Government’s emergency contingency response to the recent confirmation of foot and mouth disease in Germany?

[The Minister for Food Security and Rural Affairs (Daniel Zeichner)]

The whole House will be aware of the concern across rural communities about the potential threat of foot and mouth disease. It is a severe, highly contagious viral disease of livestock that can have a significant economic impact, and a truly devastating effect on farming and rural communities when outbreaks occur, as we know from history.

I assure the House that the UK is currently free of foot and mouth disease, and has been since 2007. But following confirmation on 10 January, foot and mouth disease in the German state of Brandenburg, the Department for Environment, Food and Rural Affairs has taken rapid action to protect the UK, including suspending the commercial import of susceptible animals from Germany and restricting personal imports of animal products from across the European Union.

I assure the House that the Government will do whatever it takes to protect our nation’s farmers from the risk posed by foot and mouth. We have increased risk levels in the UK to medium. Last night, the chief veterinary officer and I spoke directly with the German Federal Minister and his officials. The Government have taken decisive and immediate action. The import of cattle, pigs and sheep from Germany has been stopped to protect farmers and their livelihoods. We will not hesitate to add additional countries to the list if the disease spreads. I can inform the House that this morning the chief veterinary officer has confirmed that while Germany’s surveillance continues to be ongoing, it has not as yet detected any further cases.

Foot and mouth disease guidance is available on gov.uk and livestock farmers are urged to be extra-vigilant and report any suspect disease to the Animal and Plant Health Agency immediately. The UK chief veterinary officer is also urging livestock keepers to remain vigilant to the clinical signs of FMD. I reiterate that there are no cases in the UK currently. I also reassure the House that FMD poses no risk to human or food safety but it is a highly contagious viral disease in cattle, sheep, pigs and other cloven-hoofed animals. Livestock keepers should therefore be absolutely rigorous about their biosecurity.

The Government are absolutely focused on responding to the animal disease threats we face, protecting animal health and welfare. Upholding high biosecurity standards is paramount for protecting and promoting food production and food safety, both animal and human, and supporting our economy and trade. That is why we have invested a further £200 million in the UK’s main research laboratory testing facilities at Weybridge to bolster protection against animal disease.

While we stand ready to protect our livestock from the threat of foot and mouth and other exotic diseases, we also offer our support to our European neighbours as they face this threat to their livestock, farming and rural communities. I can assure the House that the Government will be decisive and take the necessary action to protect our farmers from foot and mouth disease.

[Dr Hudson]

Thank you for granting this urgent question, Mr Speaker. I declare a strong personal and professional interest. As a veterinary surgeon I supervised some of the animal culls in the 2001 outbreak, witnessing sights I never want to see again.

The confirmation on 10 January of foot and mouth disease in Germany, with subsequent slaughter and movement restrictions, is sending shockwaves around Europe and the UK. We have requested this urgent question as no statement was provided to the House on Monday or Tuesday. The shadow DEFRA Secretary, my right hon. Friend the Member for Louth and Horncastle (Victoria Atkins), is unable to be with us today as she is at the LAMMA show in Birmingham speaking to agricultural manufacturers and farmers.

In 2001, the foot and mouth outbreak resulted in more than 6 million animals being culled and cost £12.8 billion in today’s prices. It devastated the farming community, and farmers want reassurance that action is been taken to protect our borders, their livestock and their livelihoods.

The mental health impacts of foot and mouth cannot be overstated. Can the Minister reassure us that the announced movement restrictions are fully in place for animals and products coming to the UK from the affected area? Will the Government think about extending the ban to personal imports of meat and milk products unless accompanied by veterinary documentation? Can the Minister update us on the work tracing possible movements of products from Germany? What advice is there about movements of people and vehicles from the area in terms of fomite transmission of the virus? And, heaven forbid, if foot and mouth ever enters the United Kingdom, what is the situation regarding vaccine supply and potential deployment?

Finally, I pay tribute to the chief vets and the veterinary and animal officers and scientists and officials at the Animal and Plant Health Agency, who do so much to keep our country biosecure. This foot and mouth disease wake-up call is yet more evidence that the Government must now commit to fully fund the redevelopment of the APHA HQ in Weybridge. I urge the Government from the bottom of my heart to fully fund that redevelopment, to make sure that the burning pyres of slaughtered animals, as well as the economic and mental health devastation of foot and mouth disease, remain resolutely confined to the history books.

[Daniel Zeichner]

I fully appreciate the expertise and passion the hon. Gentleman brings to this subject; he knows of what he speaks. I hope I made it clear in my initial reply just how seriously the Government take these issues. I spoke to him earlier this morning ahead of a Delegated Legislation Committee to make it clear that we would work on a cross-party basis to tackle this, should it come to our shores.

I will try to address the hon. Member’s questions, particularly those around vaccination, because that is always raised and is always of concern.

We are absolutely ready in case that is a control that we need to implement. According to the general advice with regard to control measures, if an outbreak were to occur in the UK, vaccination is a control option that would be considered by DEFRA and devolved Administrations at the outset, in addition to culling and immediate movement controls. I can assure the shadow Minister that the UK vaccine bank holds vaccines for a range of foot and mouth disease serotypes. I can also assure him that there is good, close working with the devolved Administrations on this matter and that we are working in harmony.

On the movement of personally carried goods, I remind the shadow Minister that this Government strengthened those controls at the borders. I am confident that we are doing everything possible at the moment to ensure that we are following the right procedures, given the risk assessments that have been carried out. Our sincere hope is obviously that this does not extend beyond the Brandenburg area, but we are absolutely ready to deal with those issues.

On the investment at Weybridge, as I have said, we have committed an initial £200 million. This is a debate we have been having for some time, and I am afraid that we are working with the resources we have now. However, I am confident that we have a very good set of procedures in place to tackle any potential incursion.

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

Neil Hudson Excerpts

Committee stage
Tuesday 14th January 2025 Public Bill Committees

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

I thank the hon. Member for Epping Forest for tabling new clause 3, which would require a water company to reduce customer bills by an equivalent amount to the total monetary penalties paid in the previous year by that company. I will start by clarifying that we expect the cost of the penalties to be borne by the companies, not by the customers. However, I would also like to reassure the hon. Member that there are existing procedures in place to ensure that customers are reimbursed for a water company’s poor performance.

As the independent economic regulator of the water industry, Ofwat is best placed to ensure that customers are reimbursed appropriately if water companies perform poorly. Ofwat already sets specific performance targets for water companies in the five-yearly price review. Those performance commitments hold water companies to account for the outcomes that customers pay for. Where they are not met, companies must reimburse customers through lower water bills in the next financial year.

Those performance targets take a holistic view of water company performance and consider wider factors beyond companies receiving penalties. Performance targets include customer-facing commitments, such as water supply interruptions; environmental commitments, such as pollution incidents, storm overflows and bathing water quality; and commitments related to asset health, such as repairs to burst mains. As a result of underperformance in the last financial year, Ofwat is currently requiring 13 companies to return £157 million to customers.

The hon. Member’s new clause is therefore not appropriate for this Bill, given that it would overlap with existing procedures. However, there is simply not enough improvement in performance across the water industry. That is why we have launched the independent commission, which will look at issues, including performance, and make recommendations on how to transform the water sector.

I hope that the hon. Member for Epping Forest is reassured about how customers will be reimbursed for poor performance, and about the steps that we are taking to improve performance. On that basis, I ask him to withdraw his new clause.

[Dr Neil Hudson (Epping Forest) (Con)]

I thank the Minister for her comments. I am afraid that I am not fully reassured, and we would like to see provision in the Bill for any fines imposed on water companies to have a concomitant effect—a direct effect—on customer bills. This well-intended measure has been tabled to create a link between the two, so although I hear the Minister’s comments, we would still like to press new clause 3 to a vote.

Question put, That the clause be read a Second time.

--- Later in debate ---

[Dr Hudson]

I beg to move, That the clause be read a Second time.

New clause 4 amends the Water Industry Act 1991 to insert new rules regarding the limits to the amount of money that can be borrowed by a water company, which the Secretary of State for the Department for Environment, Food and Rural Affairs would be able to enact by means of statutory instrument. Although we have discussed statutory instruments in Committee, the Opposition hope that the Government will recognise that this proposed statutory instrument power needs to be made.

New clause 4 ensures that water companies are not excessively borrowing money, as that is ultimately bad for bill payers. At the heart of our concern about financial resilience is the borrowing in the industry and the over-leveraging because of that borrowing. It is clear that there is a direct link between financial resilience, problems connected to borrowing and the very survivability of the water firms. That should be of huge concern to all of us.

Consumers are concerned that the provision of their water is at risk, and we as legislators must work out how to deal with the issues, including the financial implications, relating to the risk of nationalising the water companies that have no other way of providing services. That can reverberate back to the consumers again, who may face increased costs because of the financial support that the Government have to provide to keep water companies afloat. In other words, tackling the choices that water companies may have made, and will make in the future, including borrowing choices, is an issue that we are required to correct for the very future of our water industry.

I reiterate my profound respect for the way that both the Minister and Baroness Hayman have conducted themselves in this debate. I note that Baroness Hayman expressed concern in the other place that putting a fixed percentage limit on borrowing could be a risk to investment at a crucial time for financial resilience and investment in the water industry. That is why my Conservative colleague, Lord Roborough, revised his amendment on that in the other place to give the Secretary of State the power to set limits by means of a statutory instrument. I pay tribute to my colleague and friend Lord Roborough for working so hard to raise the issue of financial resilience in the other place through this amendment.

We are not saying that a hard limit has to be set on borrowing levels, but merely giving the Secretary of State the option to do so if they feel it necessary to protect consumers from the negative effects of the water industry. I come back to the point I made in previous sittings: giving the powers to the Secretary of State, a democratically elected Minister in His Majesty’s Government, through statutory instrument, improves democracy and accountability for the water companies. I do not think the Labour Government need to shy away from this constructive amendment, which gives the Secretary of State the ability to hold the water companies to account, as we all want to do.

If the Minister does not see the need for the amendment —I am not pre-empting her, but I imagine that is how her response will go—can she clarify how much borrowing the Government consider acceptable for a water company, and what they will do to reduce the impact on the consumer of excessive borrowing and spending? The new clause also limits the amount of dividends that can be paid out to shareholders if the water company has exceeded the borrowing limit. Should a limit be set, it would therefore make water companies fairer in their practices to bill payers, as when a company borrows it will have less of an impact on consumer bills.

While in government, the Conservatives gave Ofwat the powers to link performance to payouts to shareholders and water company management. New clause 4 further aims to protect consumers from companies that are failing to prioritise their customers. Considering those points, the Opposition believe that the Government could move a bit on this, and enact democratic accountability with the statutory instrument. We hope that they will look on new clause 4 favourably.

[Emma Hardy]

I thank the hon. Member for Epping Forest for tabling the new clause, which would implement a limit on borrowing by water companies. I note that Baroness Hayman had multiple discussions with Lord Roborough on the similar amendment that he put forward in the House of Lords, and that Lord Roborough was satisfied with our reasoning for not introducing restrictions on borrowing in the Bill.

Debt has been rising in companies since privatisation, and it of course accelerated under the previous Administration. In some instances, levels of debt have reached a point at which the financial resilience of companies could be threatened. We have been clear that Ofwat must continue to have a strong focus on company financial resilience to secure efficient long-term investment and deliver long-term value for money for customers and the environment.

I assure the Committee that Ofwat is already taking steps to closely monitor debt levels as part of its annual monitoring financial resilience report, and it will take action where the financial resilience of a company is threatened. Ofwat published its final determinations for the 2024 price review in December, which included a confirmed £104 billion upgrade for the water sector. Investment in the water sector is financed up front by investors, and repaid by customers over time to smooth the impact on bills. Borrowing is therefore a key part of the process.

--- Later in debate ---

[Dr Hudson]

I thank the Minister for the constructive tone with which she has engaged in this whole debate, but I think we are going round in circles. We are trying to hold the water companies to account, and the Government are saying, “It is okay, Ofwat can do that,” but we have heard contributions saying that Ofwat is not using its powers and we need to give it more powers.

All we are doing, with this new clause, is putting in place the principle that the Secretary of State has the capability to oversee that. If the Secretary of State and the Government felt that Ofwat was doing what the legislation intended, they would not need to activate the new clause’s provisions. If, however, they did not feel that Ofwat was doing that, the new clause would give them that particular power. We are again talking about—I know the Government Back Benchers are going to wince—teeth. In this case, regarding Ofwat’s and the Environment Agency’s capabilities, we are saying to the democratically elected Government of the day that there is an extra tooth to hold over Ofwat, and that if Ofwat is not doing its job then the Government can, potentially, step in.

I take on board the comments about the commission but, to echo some of the comments of the hon. Member for Witney about being impatient for change, if this issue is going to the commission, and the can is being kicked down the track, that is disappointing. With this new clause, we are trying, constructively, to give the Government and the Secretary of State of the day the capability to act if they feel that the processes set up under the previous Administration and the new Administration are not working well. I urge the Minister to think again on this matter, and we will press the clause to a vote.

Question put, That the clause be read a Second time.

--- Later in debate ---

Brought up, and read the First time.

[Dr Hudson]

I beg to move, That the clause be read a Second time.

New clause 6 is a fair and reasonable request to strengthen the Bill. Quite simply, it would do what it says on the tin by requiring the Government to report on the impact that they expect the Bill to have on water pollution and on the actual and verifiable effects that the Bill, when it becomes an Act, will have on our water quality.

It is completely agreed that accountability for addressing the quality of our water system should be at the heart of how we tackle water pollution and related issues. That should be true of every actor involved: not just the water companies, but the Government whose regulation they are expected to abide by. We cannot rightly say on the one hand that water companies should be expected to meet criteria to restore public trust, while suggesting on the other hand that the Government should not likewise work to be accountable and to uphold public trust on the issue.

Furthermore, the new clause feeds into the basic fact that ensuring that our water systems are being improved is not a one-time event that can be magically resolved with a single piece of legislation every now and then. It must be a consistent focus for the Department for Environment, Food and Rural Affairs and for all the agencies under whose remit the issue falls.

The work of agencies such as the Environment Agency is vital. I pay tribute to its hard work, not least when flooding hits, as we have discussed. We should not underestimate those on the frontline who do so much to keep people safe, to make sure that the environment is protected and to ensure that the quality of people’s water is safe and suitable.

To improve our water systems, however, the buck must stop not with the EA, but higher up: with DEFRA and the Government. The new clause would help to provide that accountability. As in our earlier discussions regarding the online publication of implementation reports, if the measures set out in the Government’s approach do not meet their targets, for legitimate reasons, the Government would have a chance to lay out exactly why not and to give a justification for their findings on the Act’s impact. Our new clause would provide a natural mechanism to ensure that long-term planning and reviews of the Act are taking place and that the Government are looking at water pollution and the actions that the water industry has taken or needs to take to further improve the situation.

We should not shy away from the fact that the new clause would build on the previous Government’s efforts to look at that point. Our plan for water set out a 25-year plan to ensure that our water companies were investing in our water system for the long term, not just while the issue was in the headlines. Again, that is why our new clause matters: because it would ensure the continued focus of Governments of all parties on the protection of our waters. That matters all the time, not just when it becomes a political or media issue.

We must also consider the evolving factors that affect the water industry and its ability to reduce water pollution. The flooding that we have seen in the past weeks has highlighted once again that our country is facing more regular extreme flooding events. In simple terms, more flooding means more excess groundwater and surface water that can enter the network, which creates more of a risk that sewerage overflows will be required to maintain our water systems.

With such events becoming more unpredictable in their timing and yet more commonplace because of extreme weather events and the effects of climate change, looking at the evolution of issues such as this will be crucial to ensuring that any measures to improve overflows and water quality are successful in the long term. We need to make decisions now that have an impact in the future, because in the long term we all want water quality to improve and to be protected for future generations. To achieve that, we need long-term and consistent attention and reflection on the policies being enacted and their effects. The new clause would help to facilitate that.

Once again, transparency is not a hindrance; it helps everybody involved in managing the quality of our water system. Trust can be maintained only if everyone tries to do what is right and the Government, of whichever political party, are no exception. We need to be trying to do the right thing. Given that, His Majesty’s Opposition believe the new clause to be a highly reasonable and fair amendment to the Bill, and we hope that the Minister might support it.

[Emma Hardy]

I will quickly note the constructive and nice way in which the hon. Member for Epping Forest is taking part in these debates. I also want to come up with more dentistry analogies, so I will be thinking of those as we keep going.

The Bill will drive meaningful improvements in the performance and culture of the water industry. In line with that, it will introduce many measures to disincentivise pollution. For example, it will provide Ofwat with legal powers to ban bonuses where companies fail to meet standards on environmental performance, financial resilience, customer outcomes or criminal liability. The Bill will also enable automatic and severe fines, allowing regulators to take swift action. It will enable the public to hold companies to account through a new requirement for water companies to produce annual reports on pollution incident reduction. Collectively, these measures will strengthen enforcement, improve transparency and disincentivise water company pollution.

The Committee and the wider public are able to see a more detailed assessment of the expected impact of the Bill via the published impact assessment. I reassure the Committee that my Department is committed to post-legislative scrutiny of primary legislation. The Department for Environment, Food and Rural Affairs will work with the cross-party Select Committee on Environment, Food and Rural Affairs to assess the impacts of the Act three to five years after Royal Assent as part of the standard practice for all new legislation. I welcome that scrutiny.

The Government therefore cannot accept new clause 6. Although we agree on the importance of understanding the impact of the Bill on environmental pollution, adding further reporting requirements to the Bill would be duplicative and unnecessary.

[Dr Hudson]

I thank the Minister for her constructive response, but the Opposition still feel that this is an important new clause in relation to the impact on water pollution, so we would like to proceed again to a formal vote.

[The Chair]

It is votes à gogo this afternoon.

Question put, That the clause be read a Second time.

--- Later in debate ---

[Dr Hudson]

As we have gone through the Bill, there has been a lot of cross-party consensus on trying to get measures in place. I respect the efforts of the hon. Member for Westmorland and Lonsdale and the third party in trying to improve the situation, not least in such matters as nature-based solutions. From the official Opposition’s perspective, however, the hon. Member’s new clause 7 is perhaps an overly eager response. Throwing out Ofwat completely at this juncture when we want it to do its regulatory job would create more problems than he wants, whatever the intention of the new clause.

I know that the Liberal Democrats have argued that steps should be taken to set up a new regulator in some way. New clause 7 does not really introduce a specific requirement or measures to enable a transition from Ofwat to the purported new regulator. If we were to proceed with the new clause, we would simply be left in limbo and in the lurch with regard to regulation of the industry. It is not that we believe that the situation is perfect: we have debated the powers of the Environment Agency and Ofwat, and we have agreed that things are not perfect with the water industry and regulators. We have all heard at first hand about issues that we are not happy with, such as executives moving into higher-paid roles within water regulators, of which we heard evidence in the EFRA Committee in the last Parliament.

The hon. Member for Westmorland and Lonsdale generously shouted out the people who work in Ofwat and the Environment Agency, but although he will not push new clause 7 to a vote, he still talks about abolishing Ofwat. In doing that, we would be left with a vacuum while a new regulator was set up—something we can ill afford when we all agree that there is so much work to be done. A new regulator could not be established overnight; it could take months or even years while structures were being established, the personnel needed to do its everyday work were appointed and the like. Let us be honest that making such a move would not come without financial cost.

Even if that money could be raised through Government resources—ultimately, that means taxpayers’ money—we would be using it to establish a completely new infrastructure for the water regulator, rather than trying to enhance and give more power to the regulator we already have. In addition, we have to remember that its role as a regulator affects consumer bills, too. While none of us wants to see water bills rise for any of our constituents, particularly in difficult economic times, bills would have only been higher if a regulator had not been there at all. If we are left with a vacuum until a replacement mechanism is put in place, and if that takes a lot of time, do we really want to run the risk of unregulated companies raising prices even further in the meantime?

We are in agreement that the status quo has not been good enough when it comes to water companies, but progress has been made and continues to be made in that seismic task. Water companies are starting to face the financial penalties for their failures to both people and our precious environment. For example, back in November, Wessex Water was ordered to pay £500,000 for the loss of thousands of fish because of a sewage pumping failure. That very same month, Thames Water was fined over £18 million for its failure to obey rules introduced on the spending of dividends. Those incidents are not good news stories, and we should never say that they are, but they are signs that the mechanism is working. Ofwat is holding the companies to account and trying to act—it is trying to use the teeth that are there.

There are early signs that giving the regulator those teeth—which we have heard a lot about in this Committee —means that there are clear consequences for the water companies that break the rules that have been implemented. That is not the end of the story, but it is the start of the journey, as we try to hold those water companies to account. As I have also mentioned, the pathway for inspections into water company activity is increasing. It is the whole approach—from incident, to investigation, to penalty—that needs to be examined and reviewed in order to drive change, and that is what has been done and what this legislation is trying to take forward.

Although things are not perfect, we need to allow the existing legislation, as well as this new legislation, to take effect so that the regulator can get on and do its job. We should not put things in jeopardy by completely abolishing things. I note that the Liberal Democrats have tabled this new clause, and they are not pushing it to a vote, but I want to put on record the Opposition’s reservations about what they are suggesting.

[Emma Hardy]

I thank the hon. Member for Westmorland and Lonsdale once again for his thorough consideration of the Bill. I will turn first to new clause 7, which was tabled in his name and which proposes the abolition of Ofwat. As the hon. Member will be aware, and as he already mentioned in October ’24, the UK and Welsh Governments launched the independent commission to fundamentally transform how our water system works. The commission, led by Sir Jon Cunliffe, will be broad-ranging and will make recommendations in line with eight objectives, which include specific objectives considering the role, structures, responsibilities and powers of the regulator.

It is right that the commission, rather than this Water (Special Measures) Bill, is the vehicle for considering the water regulator’s roles and responsibilities. This Bill focuses on strengthening the powers of the regulators to drive improvements in performance. The Bill will not, and cannot, fix all the sector’s problems. The commission is the right place to consider the long-term future of the regulatory system and the role of the regulator. Indeed, I would argue that the Labour Government want to move away from sticking-plaster politics to fundamentally reset and transform the problems facing our country for good. I hope therefore that the hon. Member for Westmorland and Lonsdale is content that this new clause is unnecessary.

New clause 20 was also tabled by the hon. Member for Westmorland and Lonsdale. It sets out requirements for a water review that is undertaken by the Secretary of State. I think we are all agreed that we have seen years of water company underperformance, and we all agree that there is a clear need to fundamentally reset the water sector. Although I understand that the hon. Member is seeking to ensure that any review of the water sector is sufficiently thorough, the Government are confident that the commission’s scope is broad and comprehensive. Sir Jon will be supported by a range of experts from the regulatory, environment, health, engineering, customer, investor and economic sectors to effectively examine this sector as a whole, including the regulatory framework.

By setting out considerations for a water review in primary legislation, we risk prejudicing or pre-empting the outcome of the current commission, as well as its independence. The sector is facing complex challenges that require the support of customers, environment groups, investors and companies alike to address. An independent review is best placed to find solutions to those challenges, and it is critical that its independence is preserved. The commission will report its findings in summer 2025, and the Government will consider them in full before outlining the next steps. I therefore hope that the hon. Member for Westmorland and Lonsdale understands that to avoid duplication and, importantly, maintain the independence of the commission, the Government will not accept the new clause.

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

Neil Hudson Excerpts

Committee stage
Tuesday 14th January 2025 Public Bill Committees

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

It is lovely to see everybody again and it is a pleasure to serve under your chairwomanship, Dr Huq.

Clause 7 will give the environmental regulators new powers to impose automatic penalties for specified offences. The current process for imposing fixed monetary penalties for minor to moderate offending can be time and cost-intensive. To impose a penalty, the regulators must evidence beyond reasonable doubt—the criminal standard of proof—that an offence has been committed. In addition, the fixed monetary penalty amount that regulators can currently impose for certain water industry offences to that standard of proof is set at just £300. That means it is generally not cost-effective for the regulators to impose financial penalties for frequent minor to moderate offending. Clause 7 introduces automatic penalties for specified offences, which will enable the regulators to impose penalties more quickly without having to direct significant resources to lengthy investigations.

I reassure hon. Members that we will consult on the specific offences that will be in scope for the new automatic penalties and on the value of the penalties. The proposed offences will cover information requests and reporting offences, pollution offences and water resource offences. The House will also have the opportunity to debate and vote on secondary legislation before any changes are made. I hope the Committee agrees that this measure is essential for improving compliance across the water sector.

[Dr Neil Hudson (Epping Forest) (Con)]

It is a privilege to serve under your chairship today, Dr Huq. We have no formal objection to clause 7, which imposes a duty on environmental regulators to impose penalties for offences by water company that the clause specifies. Offences have of course increased, and water bosses have been banned from receiving bonuses if a company has committed serious criminal breaches. Regulators have more powers than they used to in being able to impose larger fines for polluters without needing to go to court. The clause focuses on exactly the same principle and we therefore have no formal objections.

I raised in an earlier Bill Committee sitting—this is relevant here—that there has been an increase in the number of inspections that water companies can expect, from 4,000 a year by April this year to 10,000 a year by April of next year. In other words, what has been addressed in the past is not just regulation, but the whole pathway of the enforcement of regulations, so that regulations are not merely blunt instruments but active ones that water companies can expect to have to deal with if they do not act responsibly to their customers, the environment and the wider public.

On that last point, will the Minister clarify and ensure that these offences are and will be enforced and commit to making further amendments to the law, not only regarding the offences themselves, but also on their enforcement, if the Government believe that things need to be tightened up moving forward? Aside from those clarifications, we have no formal objections to the clause.

[Tim Farron (Westmorland and Lonsdale) (LD)]

It is a great privilege to serve under your guidance this morning, Dr Huq. We also have no objection to the clause and, in fact, we consider automatic penalties to be a positive move.

My concern is that we see water companies not paying the fines that are levied against them. We talk about minor to moderate offences, but water companies wriggle out of paying fines for much larger offences, too. I just want to probe the extent to which the automatic penalties might stretch to what are considered more serious breaches.

I mentioned an example last week in Committee. In November 2021, Ofwat launched an inquiry into sewage discharges and how water companies manage their treatment centres and networks. It found three water companies in particular to be in breach: Thames, Northumbrian and Yorkshire. It imposed fines on those three companies—a £17 million fine against Northumbrian Water, a £47.15 million fine against Yorkshire Water and a £104.5 million fine against Thames Water—but as of autumn last year, not a single penny of that has been collected. It is understood that Ofwat allocated a grand total of eight and a half people to pursuing that particular line of inquiry.

Large fines, which there is no doubt that these companies rightly face, make no difference if they are never collected. That underpins the failure of our regulatory framework—water companies clearly feel they can just run rings around Ofwat and the other regulators. We very much welcome the automatic penalties, but we remain a bit concerned and would like the Minister to clarify whether those automatic penalties would have covered fines of that size as well. Otherwise, we are very supportive of the clause.

[Emma Hardy]

Clause 8 grants the Secretary of State and Welsh Ministers the power to introduce conditions or general rules subject to which water industry abstraction and impounding licences will have effect. This provision is needed to ensure that automatic penalties under clause 7 can be applied to abstraction and impounding offences under the Water Resources Act 1991. Existing licences have been issued since the 1960s and have inconsistent conditions, making the use of automatic penalties nearly impossible.

More broadly, clause 8 allows for the harmonisation of requirements in relation to abstraction and impounding activities so that the sector operates under consistent and modern standards. A delegated power to introduce conditions or general rules through regulations is crucial in this context, because water resource management is dynamic and must be responsive to emerging challenges. I hope that hon. Members will agree that this power is needed to improve the water industry’s regulatory framework.

[Dr Hudson]

Clause 8 seeks to grant the Secretary of State and Welsh Ministers additional powers to impose conditions or general rules on water industry licences relating to abstraction and impoundment activity. His Majesty’s loyal Opposition do not have any formal objections to the clause, but I would suggest that it reinforces some of my comments on clause 6 about the need to make the Government have the powers they need to regulate as necessary a more consistent principle across the Bill.

[Emma Hardy]

I thank the hon. Gentleman for his comments. Modifying the licences individually is both expensive and time consuming, which is why we are hoping to modernise and harmonise the process under this clause. It is crucial that automatic penalties under clause 7 can be applied to abstraction and impounding offences, so this power is needed to improve the water industry’s regulatory framework. For that reason, I commend the clause to the Committee.

Question put and agreed to.

Clause 8 accordingly ordered to stand part of the Bill.

Clause 9

Requirement for Ofwat to have regard to climate change etc

--- Later in debate ---

[Dr Hudson]

Clause 9 would introduce a new requirement for Ofwat to consider, as part of its regulatory decision making and the exercise of its powers and duties as given by the Water Industry Act 1991, the section 1 duty confirmed the Climate Change Act and section 5 of the Environment Act 2021. We have no formal objections to raise to that basic principle and no amendments that we wish to make to clause 9.

Can the Minister provide some clarity on the line that amendment 27 from the Liberal Democrats seeks to remove from the Bill? It states that Ofwat’s duty to have regard to the Secretary of State’s duty to meet environmental targets applies

“where the Authority considers that exercise or performance to be relevant to the making of such a contribution.”

Will the Minister assure the Committee that she and the Government will work with Ofwat so that it has clear guidance on when these environmental targets would be relevant, so that there are no grey areas in Ofwat’s work as it looks to enforce those targets? Can she assure the Committee that the Government will also work with Ofwat to ensure that with regard to its powers and duties in the spirit of clause 9, consumers are protected should there be any subsequent financial costs to water companies, so that we get both environmental protection and the value for money that the tax-paying consumer deserves?

I would be grateful if the Minister provided clarification on some of those questions. However, his Majesty’s loyal Opposition have no formal objections to clause 9.

[Emma Hardy]

As I am sure the hon. Member for Westmorland and Lonsdale will agree, the Government heard the strong support in the other place for adding a further environmental duty to Ofwat’s core duties to support the Government in making progress against our environmental targets. I pay tribute to Baroness Hayman for her work on this.

We understand that there are concerns around the current core environmental performance of the water industry and around the role and responsibilities of the water industry regulators. It is for this reason that the Government tabled an amendment in the other place that will require Ofwat to have regard to the need to contribute to achieving targets set under the Environment Act 2021 and Climate Change Act 2008 when carrying out its functions.

This amendment will further ensure that Ofwat’s work to contribute to the achievement of environmental targets complements the work of Government, who are ultimately responsible for the 2021 Act and the 2008 Act targets. It is important to note that the independent commission announced by the Government will take a full view of the roles and responsibilities of the water industry regulators. Any changes made now to Ofwat’s duties may therefore be superseded by the outcomes of the commission. I hope the Committee agrees that this power is needed to ensure that the environment is considered in regulatory decision making.

Amendment 27 seeks to remove Ofwat’s discretion to exercise its duty to have regard to environmental targets where it feels this as relevant. It will be for Ofwat as the independent regulator to determine how it applies the Government’s new obligation to its regulatory decision making, and how this new duty will not take precedence over other duties. It is for this reason that flexibility has been built into the drafting of this duty, ensuring that Ofwat has discretion to exercise the duty where it feels it is relevant.

Mechanically applying a duty in circumstances where it is not relevant to a particular matter would be a waste of resource. That discretion is in line with similar duties for other regulators. For example, the Financial Services and Markets Act 2000 was recently amended to provide an environmental duty for the financial regulators. It is right that as the independent regulator, Ofwat has the discretion to balance its duties and determine when it is appropriate that they are applied. The new duty introduced by the Government can be only a stopgap before more fundamental reforms are brought forward. For those reasons, we will not accept the amendment from the hon. Member for Westmorland and Lonsdale, and I hope he feels able to withdraw it.

--- Later in debate ---

[Dr Hudson]

Clause 10 amends the Environment Act 1995 to allow the Environment Agency and Natural Resources Wales the power to make charging schemes to recover costs from water companies. While the Opposition wish to raise no formal objections to the clause, we would be grateful for clarification on a couple of points from the Minister.

First, can the Minister explain whether the changes in this clause to the Environment Act 1995 that allow costs to be recovered from water companies could impact consumers in any way? Although it is already possible, we must be mindful that consumers may face extra costs, which I will discuss later regarding issues with the special administration orders that the Government have laid out in clauses 12 and 13, to be debated shortly. Consumers have already been informed by Ofwat that they should expect to see bills rise—the complete opposite of what the Government had said they intended to deliver. Therefore, do the Government feel confident that they can avoid contributing to the problem of a rising trajectory of bills, at a time when trust in the industry, as we have been debating in Committee, remains low due to financial mismanagement from some water companies and, too often, consumers receive poor quality from these services?

A further question, which I would be grateful if the Minister could clarify, is what modelling have the Government done to ensure that all the costs recovered will always be to the benefit of the taxpayer and the consumer? While we all share the desire that water companies that do the wrong thing must pay to put it right, we must ensure that, when we punish those water companies, we do not hurt the end consumer, who very much deserves to be protected. I would be grateful for the Minister’s thoughts on this, but again, we have no formal, explicit objections to the clause.

[Emma Hardy]

Clause 10 requires payment by water companies. It is fair and reasonable that the regulator should recover costs associated with its regulatory functions. Ofwat will consider the regulator’s proposals to determine which costs are appropriate to be passed on. The impact assessment, which I have mentioned in previous debates, details exactly how much all of the Bill will cost the customer. All the details are in there, and I refer the hon. Member for Epping Forest to look at that if he wants the specifics on the exact numbers that each measure will take.

I thank all hon. Members who have contributed their views on clause 10. I remain of the view that clause 10 will empower environmental regulators to become self-sufficient, reducing the burden on the taxpayer to fund water industry enforcement activities. Therefore, I commend the clause to the Committee.

Question put and agreed to.

Clause 10 accordingly ordered to stand part of the Bill.

Clause 11

Drinking Water Inspectorate: functions and fees

Question proposed, That the clause stand part of the Bill.

[Emma Hardy]

We are making excellent progress on the Bill this morning. I am grateful for the opportunity to speak on the importance of clause 11. I would like to mention the unsung hero of water regulation: the Drinking Water Inspectorate.

The clause enables the Drinking Water Inspectorate to fully recover the costs for the security and emergency regulatory work that it provides to companies. I think one of the reasons that it is an unsung hero is because it does its job so well; that is why not many people have heard of it. The responsibility for security and emergencies was delegated to the Drinking Water Inspectorate in 2022, but since then it has been unable to fully recharge for that work. This clause, subject to amendments to the Water Quality and Supply (Fees) Order 2016, will ensure that the inspectorate can fully recover all costs related to security and emergencies, enabling it to scale up its enforcement activities and enhance its capacity to conduct security and emergencies checks with water suppliers.

The clause will give the DWI greater flexibility in how it structures the fees it charges water companies. It will allow the DWI to introduce new charging models that more equitably share the financial burden of regulation in the water sector. I hope the Committee agrees that the clause rightly remunerates the DWI for its security and emergencies work and allows it to design a more equitable fee structure.

[Dr Hudson]

Clause 11 extends the purposes for which water quality inspectors may be appointed to include functions relating to national security directions under section 208 of the Water Industry Act 1991, and it provides flexibility for the charging of fees for regulatory work. This is a straightforward clause to which we raise no formal objection, but once again we would be grateful for a couple of clarification points from the Minister. How will the Government increase the Drinking Water Inspectorate’s ability to monitor and audit water supplies? Does the Minister feel that the clause will improve the inspectorate’s functions? Will the Minister please explain how the Government intend to support the powers of the Drinking Water Inspectorate, beyond this clause? She praised the inspectorate, and I echo that praise, but how do the Government intend to support its capabilities?

Once again, we wish to raise no formal objections to the clause. I would be grateful for clarity on the points I have highlighted.

[Tim Farron]

We also have no objections to the clause, but I want to probe it a bit. The Minister rightly praised the Drinking Water Inspectorate. I think most of us would say that its performance as a regulator is significantly better than Ofwat’s, but one of the biggest problems that we face within regulation is the fragmented regulatory framework. We have the DWI, Ofwat, the Environment Agency and others too. What consideration has the Minister given to the efficacy of continuing that fragmentation?

The Minister may argue, in relation to the DWI, that if it ain’t broke, don’t fix it. I take that point, but regulation of the water industry is absolutely broke. It is very clear, particularly when it comes to the Environment Agency and Ofwat, that large water companies run rings around the regulators because of their heft, their weight, their capability and the volume of their staffing, which is larger than that of the regulators. The culture of the regulators is sometimes not aimed at pursuing those they are meant to regulate.

Although the DWI is broadly a successful regulator, do we not face the ongoing problem that having so many regulators gives water companies the ability to avoid their responsibilities? Will the Minister give that some further consideration?

--- Later in debate ---

[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.

[Dr Hudson]

On clauses 12 and 13, the Opposition tabled amendments 7 and 8 to remove them. They provide the Government with the power to issue special administration orders to water companies that face financial difficulties.

I put on record my thanks to my Conservative colleagues in the other place for sounding the alarm on this issue when the Bill came forward. They made the case that the measures in clauses 12 and 13 could put the very people we want to protect in such legislation, namely the consumers, at risk. The moral hazard has been explicitly set out by my colleagues in the other place, but I will attempt to summarise it so that we are clear what the problem is. As it stands, the clauses will give the Government the power to recover any losses they make through placing a company in special administration by raising consumer bills.

The problem seems self-evident. If water companies, through their own failure, require the Government to place them under special administration, why should consumers be expected to foot the bill for those failures when they had no particular responsibility for them? It runs contrary to the nature of all the action that has been taken in recent years to try to improve our water quality, and companies that have failed to get their affairs in order must take responsibility.

I was on the Environment, Food and Rural Affairs Committee in the last Parliament, and we spent a lot of time looking at the financial resilience and behaviour of the water sector in close detail. I know that the current iteration is continuing that work. It was concerning to hear about the financial resilience of the sector at first hand in our hearings and meetings. As I said in a sitting of this Committee last week, the financial resilience of the water industry is not a hypothetical issue, but one of paramount concern right now.

We are all starkly aware of concerns surrounding the financial resilience of companies such as Thames Water. We heard about that in detail on the Environment, Food and Rural Affairs Committee in the last Parliament. In November, Ofwat’s “Monitoring Financial Resilience” report identified 10 companies that needed an increased level of monitoring and/or engagement concerning financial resilience. Three were placed in the highest category of “action required”, which means that action must be taken or is being taken to strengthen a company’s financial resilience challenges and that there is a requirement to publish additional information and reporting on improvements at a more senior level with Ofwat.

As well as sending out the opposite message to the companies that Ofwat is working so hard to scrutinise and regulate to protect consumers, clauses 12 and 13 send out the wrong message to consumers themselves. Consumers were recently told that they can expect their average bills to rise by a minimum of about £86, at a time when no doubt some of them have concerns about how to afford their existing bills, along with wider cost concerns. I say gently to the Government that the recent Budget did not help the situation for people’s household budgets. How can it be fair that as a result of these clauses the Government may lead consumers to pay more at a time when many are finding it difficult to pay their bills and do not feel that they are getting the clean water that they deserve? It will potentially add insult to injury when many people are all too aware that they could face higher prices on their water bills because of the Government’s moves.

Shareholders and water company bosses used to be able to receive dividends and bonuses despite polluting our rivers and seas and failing to do the right thing to tackle it. Although reforms have been made to ensure that water company bosses who are not doing their duty with regard to our waterways are forbidden from claiming excessive bonuses, the sting will remain for many people when they keep in mind the prospect of paying higher bills to bail out companies for their poor financial performance.

To water companies, these clauses will send out a signal that they do not have to worry about incurring the consequences of financial irresponsibility, as the Government will have a mechanism to bail them out and consumers may indirectly have to fork out the costs. Nobody is being required to take accountability or face the consequences of the decisions that have caused the failure, but those who have no responsibility or influence are being forced to pay an unfair price increase.

Worse still, the clauses fail completely to specify how much they can require companies to raise from consumers or how much consumers could have to pay in increased costs as a result of the Government’s imposition of these conditions on water companies. That means that any announcements of price changes to water bills, such as those announced by Ofwat, could give no indication at all of how much consumers could end up paying on their water bills. To compound the higher prices even further, consumers may end up facing higher bills to solve special administration financial issues for companies by which they are not even served.

Under clause 12, proposed new section 12J(4) of the Water Industry Act states that “relevant financial assistance” in subsection (3) can include

“any other company which holds or held an appointment under this Chapter and whose area is or was wholly or mainly in England.”

Companies that do the right thing could be forced to pay up, or make their consumers pay up, for the mistakes of those who have failed to do the right thing. As my noble Friend Lord Remnant put it:

“It is the debt and equity investors”

in a company that has failed to do the right thing

“who should pay for these losses in the form of lower proceeds from any eventual sale. Why should a retired police officer in Yorkshire or a hard-working nurse in Cornwall lose out to a hedge fund owner in New York trying to make a quick return?”—[Official Report, House of Lords, 20 November 2024; Vol. 841, c. 293.]

Although in the other place the Government attempted to explain away concerns by suggesting that they do not think that they will have to use the power except as a last resort, and that the bar for special administration would be extremely high, the fact that on more than one occasion the Government could have accepted amendments to remove proposed new subsection (4) must mean that they expect that on at least some occasions they will require its use. The time taken to defend the measure and oppose reforms suggests that this is no mere formality in the wording of the Bill, but something that the Government may put in place.

The Minister in the other place said that the Government would seek to exercise the power in proposed new subsection (4) only if Government bail-outs to water companies could not be financed for the duration for which a company is in special administration—that is, during the shortfall. If that is the condition the Government are setting for the measure—if we have to have the measure at all—could they not have set it out explicitly within the Bill? At the very least, that would have provided clarity about how far the power should be permitted to go.

Clause 13 will provide the Welsh Government with the same powers as those in clause 12. Although the powers in clause 13 are independent of who occupies the offices of the Welsh Government, it should be noted that the Welsh Government who would currently be expected to exercise the powers do not have the most brilliant track record on the water industry, to say the least. Under the Welsh Labour Administration, the average number of spills from storm overflows in 2022 was two thirds higher than in England. That record suggests that the Government in Wales leave much to be desired when it comes to the competence of the water industry, and there is evidence for concern when it comes to exercising the clause’s powers.

Regardless of the specifics of the subsections and of who holds the powers contained in clauses 12 and 13, they are, as they stand, completely against the principles of improving the water industry. I urge the Minister to consider those points and to remove the clauses. Accordingly, we will seek a vote to remove clauses 12 and 13 from the Bill.

[Tim Farron]

I back my hon. Friend the Member for Witney, who has made an excellent case for our amendment to clauses 12 and 13. We are deeply concerned about the issue. There are two aspects to the public’s reaction to the scandal in our water industry. First, there is revulsion about sewage being dumped in our lakes, rivers, streams and coastal areas, which is obviously appalling. Secondly, there is a deep sense of injustice that people are making vast amounts of money while not providing basic services.

For a day or two last week, the coldest place in the country was Shap, in my constituency. I had the pleasure of being there over the weekend. All water was frozen. However, that is not always the case. Last year alone, at Shap pumping station, 1,000 hours’ worth of sewage was pumped into Docker beck. Just along the way at Askham waste water treatment works, 414 hours’ worth of sewage were dumped into the beautiful River Lowther just last year. I make that point because the water bill payers who have to deal with that know that of every £9 they spend on their water bills, £1 is going to serve United Utilities’ debt. That is at the low end of the scale: until the change announced just before Christmas, 46% from Thames Water’s bills was used to service debt.

Over the lifetime of our privatised system in this country, the water companies have collectively racked up £70 billion of debt. That means that all bill payers are paying between 11% and 46% of their bills simply to service those companies’ debt. Our amendment would simply tackle the fact that if investors choose to take risks, hoping to make gains, but fail, they should accept the consequences of those risks, which they chose to take, rather than passing on the cost to my constituents and everybody else’s. It is not for the public to carry the can for corporate failure.

--- Later in debate ---

[Emma Hardy]

I hope this clause will be a little less fractious than the last one—it is pretty straightforward. If a water or waste water company is about to go insolvent, it can make a winding-up petition to court, as may its creditors. If the court is satisfied that the company is insolvent, it must make a special administration order, triggering a water industry special administration regime, or SAR.

Unlike in normal administration, in a SAR the administrator must prioritise the public interest ahead of creditors. In this case, that means ensuring that water and waste water services continue. However, there is no statutory requirement for creditors or the court to notify the Government or Ofwat that a winding-up petition has been made. In addition, neither the Government nor Ofwat have guaranteed rights to be heard at the subsequent court hearings. This creates the risk that a SAR could be triggered without Government involvement. Given the essential nature of water and waste water services, a SAR presents significant risk to public safety if it is not conducted appropriately. It would be vital, in the event of an imminent SAR, for the Government to be quickly made aware of important developments and to be involved in the arrangements for how the SAR is run. Creditors are unlikely to protect the public interest as comprehensively as a Government and may exercise undue influence over a SAR if a Government are unable to make their views heard.

This clause prohibits a court from making an SAO without the Government and Ofwat being notified, and it gives both parties guaranteed rights to be heard at the subsequent court hearings. That provides a vital safeguard against the risks of a SAR being triggered without Government involvement and the potential dilution of the public interests that that could entail. This also updates the water industry’s SAR to bring it into line with more recently introduced regimes, such as energy, where these rights are standard practice. I hope the Committee agrees that these rights are essential to safeguard the public interest and modernise the water industry’s special administration regime. I commend the clause to the Committee.

[Dr Hudson]

The Opposition note that clause 14 attempts to make amendments to previous legislation so that a court may not exercise powers that it currently has with regard to an application for winding up an undertaker without providing advance notice of the petition to the Secretary of State, Welsh Ministers—as appropriate—and Ofwat, and without a period of 14 days having elapsed, as outlined in subsection (2). We also note that the clause likewise grants a further power for the Secretary of State, Welsh Ministers and Ofwat to be entitled to be heard at a winding-up petition’s hearing and any other hearing that relates to part 4 of the Insolvency Act 1986.

Again, we do not wish to raise any formal objections to this particular clause, but we ask for a couple of clarifications from the Minister, if she will indulge us. First, we would like to hear the Minister articulate what benefits this particular clause brings to the Bill. I was not fully clear from her introductory remarks about the actual benefits. Secondly, does she believe that this change to winding up a water company or any other relevant undertaker will provide a fairer winding-up process?

While we are focusing on water companies and the processes for them, we all want to ensure that the clause provides, again, protection for the consumers, who, as we agree across the Committee, have for too long faced unsatisfactory levels of service from the water industry and the practices of some water companies, so could the Minister please explain whether consumers were considered when this clause was drafted? I and others have outlined in Committee that the performance of water companies in financial resilience, as well as many other matters, has not been satisfactory and has been very upsetting for the British public. Therefore could the Minister please respond and assure the Committee that there can be no unforeseen repercussions for consumers from this clause? That is a recurrent theme as we go through line-by-line scrutiny of the Bill: are there any unintended consequences whereby the taxpayer and the end point consumer will be unfairly penalised by the legislative changes? With that in mind, we have no formal objections to this clause but again we seek clarification that the end point consumer will not inadvertently suffer detriment from this legislation.

[Emma Hardy]

To be clear, this is literally just a point of process. The provision, which is not currently available in law, says that in the event of an application to the court for a SAR, the Government will be notified at the same time. The reason, as I outlined in my opening remarks, is that we do not believe that creditors are likely to protect the public interest as comprehensively as the Government. It is a mere process clause that provides that in the event of an application to the court for special administration, the Government and Ofwat need to be informed at the same time. The Government maintain the importance of ensuring that the Government and Ofwat are notified in the event of a winding-up petition. For that reason, I urge that the clause stand part of the Bill.

Question put and agreed to.

Clause 14 accordingly ordered to stand part of the Bill.

Clause 15

Extent, commencement, transitional provision and short title

--- Later in debate ---

[Tim Farron]

We recognise and, indeed, strongly believe that patience is a virtue, but on these Benches we are also a bit impatient. Our concern regarding this clause is simply about implementation. There are two categories of things to be delivered. Some are to be done straightaway, and with others it looks like we are preparing to drag our heels. Therefore our amendment seeks to simplify implementation with one clear and immediate deadline for all provisions of the Bill.

Clause 15 provides that issues to do with remuneration and governance, pollution incident reduction plans, emergency overflows and nature-based solutions, for example, will come into force

“on such day as the Secretary of State may by regulations appoint”—

in other words, not right now. That troubles us, given that there is this great sense that there has been a lot of talk about reform of the water industry and we run the risk, at least when it comes to those provisions, of getting just more talk. Making things subject to consultation, further navel contemplation, does not feel like the way to radically reform our industry. Our single deadline would cut through all that and bring the urgent change that the water industry desperately needs, so we commend amendment 20 to the Committee.

[Dr Hudson]

I support Government amendment 5, as it is a privilege amendment in accordance with the procedure for the passage of Bills between the other place and this place. We wish to raise no formal objections to this and we have no opposition to the amendment.

[Emma Hardy]

I thank all hon. Members for their contributions. Amendment 20, tabled by the hon. Member for Westmorland and Lonsdale, seeks to make all provisions in the Bill come into force on the day it receives Royal Assent. I share his urge to get on with things, which is why I am a little confused by the desire elsewhere for another water review, but we will get to that when we get to it. First and foremost, I would like to reassure the hon. Member that the Government have carefully considered the appropriate method and timing for the commencement of each clause and have made provision accordingly in clause 15. A one-size-fits-all approach cannot be justified.

For example, the emergency overflows provision will be implemented over the course of two price review periods to protect bill payers from sudden cost increases. Therefore, the commencement provision for clause 3 has been designed to allow for a staged implementation where it is needed. The Government have already committed in clause 15 to the immediate commencement of the civil penalties provisions on Royal Assent. I assure the Committee that the Government and the water industry regulators are dedicated to ensuring that all measures in the Bill are commenced and implemented as soon as possible and appropriate, to drive rapid improvements in the performance and culture of the water industry.

The hon. Member for Westmorland and Lonsdale tempts me to read through a list of every provision and when they will be enacted, but I am going to save that treat for another time and instead list the clauses, rather than going through them in detail. The provisions in clauses 5 to 8, and in 10 to 15, will all come into force automatically either on Royal Assent or two months later. Clauses 1 to 4 and clause 9 will not commence immediately after Royal Assent and will require secondary legislation to come into force, which is due to the need for regulations required to commence the powers. I am sure that the hon. Member will have thoughts to share on those provisions involving statutory instruments after Royal Assent.

I trust that the hon. Member for Westmorland and Lonsdale is reassured by the Government’s careful consideration of the commencement of each clause, which has the best interests of bill payers in mind and recognises the need to debate and discuss some of the exact details under secondary legislation. I therefore ask the hon. Member to withdraw his amendment.

Government amendment 5 removes the privilege amendment made in the other place. I like this amendment, because one of the quirks of how British politics has evolved is that we have the amendment in the Bill—I found it quite amusing. The privilege amendment is a declaration from the other place that nothing in the Bill involves a charge on the people or on public funds. It is because the Bill started in the Lords that we have to have the amendment to remove that. It recognises the primacy of the Commons, and I think it is quite fun. It is standard process for that text to be removed from the Bill through an amendment at Committee Stage.

Clause 15 sets out the extent of the Bill, when and how its provisions are to be commenced and its short title. The Bill extends to England and Wales only. As set out in the clause, the provisions of the Bill will variously come into force on Royal Assent, two months following Royal Assent, or in accordance with regulations made by the Secretary of State or Welsh Ministers. The clause makes specific provisions, such as that the commencement of clause 3 may make reference to matters to be determined by the environmental regulators.

--- Later in debate ---

[Adrian Ramsay]

I thank the Minister for her response. I appreciate that special administration would only happen in extreme cases. We have, however, repeated failures and neglect, including on environmental performance, from a number of water companies. That is why I wanted to make the provision explicit in the Bill that environmental neglect could be a reason for special administration. I take her point that there are reviews and wider plans underway. Although I am happy not to push this to a vote at this stage, I will take a close interest in how the situation progresses. I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 2

Establishment of Water Restoration Fund

(1) The Secretary of State must, within 60 days of the passing of this Act, make provision for the establishment, operation and management of a Water Restoration Fund.

(2) A Water Restoration Fund is a fund—

(a) into which any monetary penalties imposed on water companies for specified offences must be paid, and

(b) out of which payments must be made for expenditure on measures—

(i) to help water bodies, including chalk streams, achieve good ecological status, and improve ecological potential and chemical status;

(ii) to prevent further deterioration of the ecological status, ecological potential or chemical status of water bodies, including chalk streams;

(iii) to enable water-dependent habitats to return to, or remain at, favourable condition;

(iv) to restore other water-dependent habitats and species, especially where action supports restoration of associated protected sites or water bodies.

(3) The Secretary of State must, by regulations, list the specified offences for the purposes of this section, which must include—

(a) any relevant provisions of the Water Resources Act 1991, including—

(i) section 24(4) (unlicensed abstraction or related works or contravening abstraction licence);

(ii) section 25(2) (unlicensed impounding works or contravening impounding licence);

(iii) section 25C(1) (contravening abstraction or impounding enforcement notice);

(iv) section 80 (contravening drought order or permit);

(v) section 201(3) (contravening water resources information notice);

(b) any relevant regulations under section 2 of the Pollution Prevention and Control Act 1999 (regulation of polluting activities etc) related to water pollution;

(c) regulations under section 61 of the Water Act 2014 (regulation of water resources etc).

(4) A statutory instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.

(5) The provisions in this section replace any existing provision for the sums received for specified offences, including in section 22A(9) of the Water Industry Act 1991 (penalties).—(Dr Hudson.)

Brought up, and read the First time.

[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.

[Dr Hudson]

Yes, I was aware of that. I am acutely aware of it now and congratulate my hon. Friend on securing it. It highlights the fact that there is a lot of agreement. I am sure that his debate will demonstrate cross-party consensus on the use of nature-based solutions. We debated flood mitigation in Committee last week, but the water restoration fund is pivotal to trying to improve the situation at the local level and at the local catchment level as well.

Since being introduced by the previous Government, the water restoration fund has provided £11 million for communities to repair their local waterways and restore them to the quality that they should be at—the quality to which local communities should be entitled. At the heart of the proposal is simply this: those who are at fault for the damage done to our waterways must make restoration for it. Given the facts, I find it disappointing that, despite the cross-party efforts in the other place to enact such measures, they were not listened to by the Government. I hope that in a spirit of consensus the Government will look at that in this Session.

The arguments made by the Government in the other place were not satisfactory. They objected to the principle of ringfencing the funding and to the need for the Treasury to have flexibility in how it spends the money, but in this specific case the argument does not quite stack up. Where money comes from taxation, ringfencing is not always the most reliable way to ensure the Treasury has the spending power it needs to deliver public spending, but we are talking about something completely different. Fines are much more uncertain and provide less guarantee regarding the amount of money that they will bring in. To rely on funds such as these for day-to-day broad Treasury spending simply does not make sense.

Ringfencing penalties for the water restoration fund is a much more sensible measure that allows Governments to guarantee that they can meet a specific need. In other words, those who are at fault for harming the quality of our rivers, seas, coasts and lakes make restoration for the damage caused by their action—or inaction. Given all that we have outlined, there cannot be a more justified way of directly making restoration for damage to our previous water system than the mechanism laid out by the water restoration fund. Water companies pay the fines for the damage that they have done, and local communities that are affected are empowered to restore the precious waterways that they live near.

A finer detail of the amendment that should not be ignored is the fact that we will improve chalk streams. It is unfortunately clear that, despite the Government’s pitch to the British public that they would do better than the previous Government in protecting our waterways, their actions on chalk streams do not bear that out. It was very disappointing that over the Christmas period it was revealed that plans from the Conservatives to recover our chalk streams have been laid to one side by the Government. Given that England is home to over 80% of the world’s chalk streams, the failure to act on this issue is neglect of a vital duty to protect a not only a key part of the UK’s environment, but a feature in the environment of the world. They are a precious resource that very few countries are lucky to have access to. Members across this House represent areas with chalk streams. It is a dereliction of duty to ignore that category in the UK environment.

The plans that the previous Government proposed would have given chalk streams a new status of protection. Special consideration would have been given to watercourses in road guidance, and supporting the physical restoration of the streams as key pillars of our plan would have put chalk streams back on the road to the recovery that is needed. As the deviser of the plans has said publicly, although the Government may want to focus on chalk streams in national parks and landscapes, they risk ignoring chalk streams in most need of recovery across the country. Can the Minister explain why this vital plan of action, which was ready to go, has not been fulfilled? I hope that this decision was not based on politics. We need to look at this in terms of evidence and what is best for our environment.

[Emma Hardy]

I wonder whether there has been some confusion, given that the debate on chalk streams comes later on.

[Dr Hudson]

It is actually part of our amendment.

[Emma Hardy]

Well, have a go again then.

[Dr Hudson]

Good. We are all for talking about and raising the issue of chalk streams, but it is clear that we wanted to include that in our amendment. Our amendment will therefore be a chance to give chalk streams the attention they need from this Government. The previous Government were ready to deliver that and hand the baton over to the new Government, so that they could follow through on the explicit requirement that chalk streams be considered.

The amendment is a chance for the Government to reconsider their stance on the water restoration fund. I would be grateful for clarity from the Minister about what they are planning to do. If they are serious about improving our waterways and if the money from penalised water companies is allowed to go back into the local area to improve those waterways, we could agree about that. If the Government do not face up to this, that might be a negation of the various promises they made to the electorate when in opposition and send a message that their words are merely soundbites. I hope that the Minister will consider the points I have made and support this amendment to restore the water restoration fund—for the sake of not only our waters, but the democratic and local accountability on which they rely. We will seek to push new clause 2 to a vote.

[Tim Farron]

I rise briefly to support the new clause. Among many other reasons, it bears great similarity to one proposed by my noble Friend Baroness Bakewell. We consider everything in it to be right. As the hon. Member for Epping Forest has said, we should be deeply concerned about the Treasury seeking to hang on to money that, if there is any justice, ought to be invested back into the waterways that have been polluted by those who have been fined for that very offence.

I talked earlier about the deep sense of injustice felt across the country about those who pollute, who are getting away with polluting and who even—far from being found guilty—are getting benefits from that pollution. The measure would simply codify a move towards the establishment of a water restoration fund, supported, at least in part, by the fines gathered from those guilty in the first place. There would be a great sense of justice being done for folks concerned about how Windermere is cleaned up, how we make sure that Coniston’s bathing water standards remain high and how we deal with some of the issues I mentioned earlier on the River Lowther, River Eden and River Kent.

The water restoration fund should in part be supported by funds gained from those who are guilty: that is basic justice. We strongly support the new clause and will be voting for it if it is put to a vote.

--- Later in debate ---

[Dr Hudson]

I am not reassured by those comments. The Minister says that the water restoration fund does not need new legislation, but we are concerned that the fact that the fund is not in the Bill shows that the Government are not doing anything with it. They are completely silent about it. I fear that they are going to drop the baton they are being handed and let it pass away. The fund needs to be in the Bill. I am not reassured by the Minister, so we will press a vote on the establishment of a water restoration fund in the Bill.

Question put, That the clause be read a Second time.

--- Later in debate ---

Brought up, and read the First time.

[Dr Hudson]

I beg to move, That the clause be read a Second time.

New clause 3, which His Majesty’s Opposition will again push to a vote, has at its heart the people we want to protect—the very individuals who this Committee has acknowledged are most affected: the consumers and bill payers. They are the pivotal reason why we have tabled the clause.

The clause would require the Secretary of State to make provision so that where a water company has faced financial penalties for failure to comply with the law, a financial amount equal to those penalties must be removed from the bills of that water company’s consumers. Of course, one might suppose that it is difficult to make an equivalence between the amount of a financial penalty and the amount to be reduced on the bills, but subsection (2) sets out that it must be calculated by dividing the total financial penalty by the water company’s number of customers. We have laid out a formula that the Secretary of State could follow in fulfilling the duties under the clause.

The Government might object that the clause would create additional duties for the Secretary of State on top of their existing ones, but the Opposition believe that the measure is relatively simple, can be calculated and is worth adopting for the very principle of accountability for which all of us across this House are striving.

I have already mentioned that, when the Conservatives were in government, we took action to set out that water bosses would be banned from receiving bonuses if a company had committed serious criminal breaches. The Bill copies that and takes it forwards, but the new clause takes the principle of accountability, which has been raised in the Committee’s last couple of sittings, even further.

[Helena Dollimore (Hastings and Rye) (Lab/Co-op)]

It is a pleasure to serve under your chairship, Dr Huq. The hon. Member referred to the record of his party while in government for the last 14 years, and said that it set the threshold for a water boss being denied a bonus at the level of criminal activity. Does he agree that many of our constituents would find it strange to set a bar for not having a bonus at the level of committing criminal activity, given that in many workplaces up and down the country a bonus is based on good performance and on serving customers? The last Government set the bar for banning bonuses far too high, and that is why, despite repeated failure, the boss of Southern Water still received a bonus, as the boss of Ofwat confirmed to the Select Committee.

[Dr Hudson]

The Conservative Government were the first Government to start addressing this issue by actually evaluating the data, monitoring overflows and monitoring outflows. I gently remind the hon. Member that when her party left power, only 7% of storm overflows were measured; when the Conservatives left power, 100% were measured. We were the first party to find that there was a problem.

To return to the dental analogy, in the last parliamentary Session we tried to give the regulators more powers—more teeth—to go after the water bosses. We need to firm up how the regulator has been using those powers, so that we can hold the water companies to account. I agree that there is outrage across the House about how water companies have breached their terms of reference and broken the law. We have tried to hold them accountable. The Bill will try to take things further, but I gently say to the Government that we were the party that started collecting the data, which allowed us to realise the scale of the situation and try to introduce measures to sort it.

The new clause ensures fairness for customers and ensures that fines on water companies will not impact customers, who are not at fault for the water companies’ mistakes or the bad practices that led to the fines. We believe that customers should not be impacted by fines imposed on water companies. The clause attempts to remedy that. In the name of accountability and trust between the public and Governments—of all colours—that seek to address this issue, subsection (3) states that the reductions to customer bills imposed under the clause will be indicated on the statement of account for each consumer who has received the reduction. We believe that that is important.

For too long, a toxic cocktail of water companies’ poor behaviour and rising bills has led too many people to feel that they are getting poor value for money, and that they are not getting the quality water services they deserve for the price they are paying—hard-working people, up and down the country, who work consistently to pay their bills and do the right thing, while the water industry’s negative practices continue. Given the amount of time we have spent talking about this issue, they may also feel that the new Government are not willing to act to protect the consumer in this area.

Subsection (3) seeks to break that cycle and send a signal to bill payers that actions to regulate water companies have a real, tangible effect. Showing the reduction in consumer bills directly on the statement of account will provide a real, tangible sign that the poor behaviour has been looked at, people are going after the water companies and consumers will benefit from that. It also serves as compensation for those who have been directly affected and as an example of justice in action—the principle being that those who harm pay a penalty, and those who are harmed receive restitution.

I return to my comments about the water restoration fund. Fines being re-circulated into the local area will be good for local accountability.

[Dan Aldridge (Weston-super-Mare) (Lab)]

It is a pleasure to serve under your chairmanship, Dr Huq. The hon. Gentleman talks about the outrage across the House, and I also feel outraged as a member of the public. The vast majority of my constituents are incredibly outraged at the situation they find themselves in. One of the things I am told when I knock on doors in my constituency is, “The previous Government have shown no contrition about their role in the degradation of our waterways.” The Opposition have a revisionist attitude that is incredibly perplexing to me and angering to my constituents, so I would just like to see a bit of contrition from them.

--- 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 ] (Second sitting)

Neil Hudson Excerpts

Committee stage
Thursday 9th January 2025 Public Bill Committees

[Tim Farron (Westmorland and Lonsdale) (LD)]

There are no further comments from us, and we do not seek to press to a vote any of the amendments that we have tabled. We are concerned that there is not enough detail in the Bill about the impact of pollution incidents on the wider environment, much as I am grateful to the Minister for many of the comments she has made. All the same, we will not seek to trouble the Committee with a vote at this stage, and I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Dr Neil Hudson (Epping Forest) (Con)]

In the interests of promoting transparency and clarity, we would still like to press our amendment 6 to a vote. To bolster, support and protect the precious integrity of our national parks, we would like to do the same with amendment 9.

Amendment proposed: 9, in clause 2, page 5, line 10, at end insert—

“(2A) A pollution incident reduction plan must, in particular, state how the undertaker intends to reduce the occurrence of pollution incidents in national parks that are attributable to its system.”— (Dr Hudson.)

Question put, That the amendment be made.

--- Later in debate ---

[Dr Hudson]

It is a great pleasure to speak to amendment 3, in the name of my hon. Friend the Member for Beaconsfield (Joy Morrissey). Today, there is a recurrent theme—transparency and clarity. We want cleaner waters and we want the data collection to be transparent and available to people so that they can actually monitor and analyse. The spirit of this amendment is, again, transparency and clarity.

Amendment 3 would, as the text suggests, make it a statutory requirement for water companies to publish the information that they have on discharges from emergency overflows on the home page of their website. Some water companies already go some way to discussing overflows of different kinds, including what they are and why they occur, but this amendment from my hon. Friend would go further by setting a clearer guideline for how transparent water companies must expect to be for every specific incidence of an emergency overflow that may occur.

We of course know that emergency overflows are those that occur particularly when technical faults or blockages in the water system arise and require overflows to help with their resolution, as opposed to storm overflows, where the system is overwhelmed by excess surface water or groundwater entering the network. The work of the previous Conservative Government tackled the issue of storm overflows—unlike any Government who had preceded them—including by, as I have said, getting 100% of reporting and monitoring of storm overflows, which was at 7% back in 2010. That was in addition to fast-tracking £180 million of investment from water companies to prevent 8,000 sewage spills in 2024, and introducing requirements for further investment, over 25 years, of upwards of £60 billion.

Moving forward, however, we need to ensure that emergency overflows are treated with a similar parity of attention. We do not want the hypothetical situation to arise whereby the problem of storm overflows, which have had so much attention in recent years, is simply shifted to emergency overflows, and technical fault is used as an unnecessary justification for emergency overflows to occur. By requiring emergency overflow information to be published on the home page of each and every water company’s website, this risk is potentially alleviated.

Although the Government may argue that the risk is alleviated by clause 3 in and of itself, this amendment goes further in its specificity about the publication of data relating to emergency overflows. By requiring the home page to be used for publication of emergency overflow data, the requirement in clause 3 that the information be published in a way that makes it readily accessible to the public would be given a definition that the Bill in its current form lacks. In other words, amendment 3 would provide explicit clarity in the Bill for water companies about the requirements for publication of emergency overflow information, without the risk of dispute down the line about whether an individual company has complied with the measure’s requirements.

On that basis, I encourage the Government to support the amendment, as it clearly does not seek to frustrate their intentions to be stringent with the water companies about duties on emergency overflows. The amendment merely strengthens the existing conditions in the clause by providing further clarity and specificity. We urge the Government to consider it.

--- Later in debate ---

[Tim Farron]

I beg to move amendment 17, in clause 3, page 9, line 1, leave out from start to “in” and insert—

“a Minister with specific responsibility for issues relating to the coast,”.

I have made my argument in favour of amendment 17, probably at the wrong time. I do not seek to press it to a vote. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Dr Hudson]

I beg to move amendment 4, in clause 3, page 9, line 38, at end insert—

“141H Failure to report discharge from emergency overflows

(1) If a relevant undertaker fails to comply with its duties under section 141F—

(a) the undertaker commits an offence, and

(b) the chief executive of the undertaker commits an offence, subject to subsection (2).

(2) It is a defence for the chief executive to prove that they took all reasonable steps to avoid the failure.

(3) A person who commits an offence under this section is liable, on summary conviction or conviction on indictment, to imprisonment for a term not exceeding 5 years or an unlimited fine, or both.”.

This amendment would make it an offence for an undertaker to fail to comply with its duty to report discharges from emergency overflows.

In my remarks on amendment 3, I highlighted the fact that parity of attention between storm overflows and emergency flows is critical to action in regulating the water industry. With that point in mind, I move amendment 4, in the name of my hon. Friend the Member for Beaconsfield, which would make it a criminal offence for water companies and their chief executives to fail to comply with their duty to report on discharges from emergency overflows.

As I stated earlier, much was done to tackle the issue of storm overflows by the previous Conservative Government, including the passing of the Environment Act 2021, which we have spoken a lot about today. That introduced the statutory duty for water companies to publish storm overflow data in England every year and a storm overflow discharge reduction plan that created strict targets for sewage pollution and demanded water company investment in the necessary infrastructure to resolve issues.

Amendment 4 would address the need to ensure that emergency overflows are subject to the strict enforcement that we have seen exercised towards storm overflows in recent years. We have seen that an emphasis on strict enforcement can work in getting the reform that we all want to see the industry practise, and indeed in improving water quality. I note and welcome the comments from the hon. Member for Witney who welcomed the progress that we have made in that area on monitoring and trying to address these issues.

The Government have set out in the Bill plans to put in place a criminal offence for failing to co-operate with or obstructing regulatory investigations. The amendment seeks to address a gap in those plans in a key area of public concern—a duty to report discharges from emergency overflows.

Despite significant steps, some water companies are not taking their responsibilities to protect our waterways seriously enough. This is a sector where the rewards for success have historically been high for shareholders and, as we have heard a lot about, for executives. It is time now for serious consequences for failure to protect our waterways and the public to sit alongside those rewards for success.

The duty to report discharges from emergency overflows is basic, reasonable and vital to public transparency. I come back to our points about transparency. There can be no defence from any water company that it does not understand that duty or why that duty matters. Given the Bill already puts in place the principle of a criminal offence for failure to fulfil a reasonable duty and establishes a criminal offence for failure to co-operate or to obstruct a regulatory investigation, the amendment would strengthen the Bill’s intent that water companies’ conduct must be subject to criminal sanction and unlimited fines.

Of course, at the same time, however, as human error and technical fault can plague many walks of life and water companies are no exception, there must be a fair and reasonable opportunity for water companies and chief executives accused of violating their duties to show that they have genuinely tried to comply with the duties of reporting emergency overflows. Therefore, subsection (2) of amendment 4 provides explicit criteria that failure to meet the duties of publication for storm overflows does not result in a criminal offence when the company has done all it reasonably could to prevent the incident from occurring.

--- Later in debate ---

[Emma Hardy]

I thank the hon. Member for Beaconsfield for tabling amendment 4, which seeks to make a failure to publish discharge data from emergency overflows in near-real time a criminal offence.

I wholeheartedly agree that it is vital that regulators have a clear means of ensuring that water companies comply with this duty. However, clause 3 already ensures that the duty is enforceable by Ofwat under section 18 of the Water Industry Act 1991, which provides a range of tools—including significant fines—for Ofwat to bring companies into compliance. Changing the provision to a criminal offence might slow down enforcement, because criminal prosecution is typically slower than enforcement by section 18 of the 1991 Act.

In addition, we do not believe that in this case it would be proportionate to create direct criminal liability for a chief executive, particularly the potential sanction of imprisonment, because the large number of emergency overflows operated by companies, with each company operating in a different situational context, means that it is unreasonable to hold a single person to account for full compliance with the duty. By making changes such as introducing bonus bans and provisions to support prosecuting executives for obstructing the regulator, the Bill already strengthens provisions to hold executives to account for wrongdoing.

[Dr Hudson]

I thank the Minister for her comments. I can confirm that we will not push the amendment to a vote. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Dr Hudson]

I beg to move amendment 10, in clause 3, page 9, line 38, at end insert—

“141H Restriction on the use of emergency overflows in areas used for aquatic sports

(1) A sewerage undertaker must not permit a discharge from an emergency overflow in an area used for aquatic sports.

(2) In this section, an ‘area used for aquatic sports’ is a section of any body of water connected to and within a one mile radius of—

(a) the clubhouse of a rowing club affiliated with British Rowing,

(b) a Royal Yacht association training centre or the clubhouse of an affiliate member, and

(c) the properties or facilities used by any organisation that the Secretary of State deems to provides water-based sporting activities for the purpose of teaching, training or leisure.

(3) If a relevant undertaker fails to comply with its duties under section (1)—

(a) the undertaker commits an offence, and

(b) the chief executive of the undertaker commits an offence, subject to subsection (5).

(4) It is a defence for the chief executive to prove that they took all reasonable steps to avoid the failure.

(5) A person who commits an offence under this section is liable, on summary conviction or conviction on indictment, to imprisonment for a term not exceeding 5 years or an unlimited fine, or both.”

This amendment creates an offence for a sewerage undertaker to use an emergency overflow in an area used for aquatic sports.

I will try not to mention teeth in this part of our proceedings, but I cannot promise. It is with great pleasure that I rise to speak in favour of amendment 10, on behalf of my hon. Friend the Member for Beaconsfield —this is sounding like “Groundhog Day”, isn’t it? The amendment has a simple principle: that waters used for aquatic sports should be subject to the same protections as those used for bathing. It establishes that there should be clear consequences for water companies and their chief executives when they fail to comply with a clear duty to protect the waters in which people practise aquatic sports.

Aquatic sports are an important part of our sporting heritage in this country, but the impact of overflow discharges into our waterways and rivers is potentially creating an existential risk to some sports clubs up and down the country. We have heard reports of increased incidences of illness among participants as a direct and indirect consequence of exposure to pathogens and bacteria from sewage outflows in the waterways where they practise their water sports. That is a significant cause for concern for our rowing, sailing, canoeing and other aquatic sports clubs.

Many clubs take their duty of care very seriously indeed. They are having to put in place their own monitoring systems to protect their participating members. Training sessions, competitions and regattas are all facing potential cancellation, and participation in those sports risks becoming less attractive and less available to people. We can all agree that actively participating in sport and physical exercise is so good for not only our physical health, but our mental health. Any deterrents discouraging people from being involved in some sports are deeply regrettable.

The amendment is trying to put the safety of the waters used for aquatic sports on the same basis as those where people bathe. It is time for water companies to take responsibility for ensuring that those waters are safe to use. The amendment sets out a reasonable expectation that a water company must not discharge from an emergency overflow within a one-mile radius of an area used for aquatic sports. The definition of such an area is clearly outlined, and further discretion is provided for the Secretary of State to determine such areas where needed. The consequences for water companies and their chief executives for failure to comply with this duty are set out clearly and are consistent with amendment 4, also tabled by my hon. Friend the Member for Beaconsfield.

[Emma Hardy]

I thank the hon. Member for Beaconsfield for proposing amendment 10, which seeks to make it an offence for sewage undertakers to use an emergency overflow in areas used for aquatic sports. I will mention how much I enjoyed meeting the Clean Water Sports Alliance just last week to hear about its fantastic work to get us all up, out and active, although I have so far resisted the temptation to don a wetsuit and join in.

I agree that it is vital for us to reduce the impact of sewage pollution, so that our children and their children can make the memories that we did enjoying our waterways. However, we do not believe that the amendment is necessary. It risks duplicating existing requirements to limit pollution for emergency overflows, as well as protections for bathers that are already in place. Emergency overflow discharges are permitted only in very strict circumstances and as a last resort, such as in the event of mechanical breakdown or a downstream blockage. That factsheet on the different circumstances might help.

Should an emergency overflow discharge occur outside permit conditions, the Environment Agency is able to take robust enforcement action, including fines and criminal prosecution. The measures in the Bill will increase transparency around emergency overflow discharges, shining a light on where they should not be happening.

--- Later in debate ---

[Emma Hardy]

As I say, I wholeheartedly agree with the intention behind the amendment, but I note that later on we will be discussing the importance of chalk streams as well. The amendment would create a hierarchy between what is important and what is not. My argument is that emergency overflows are a problem wherever they are, and they should not be used unless it is, as the Bill says, an absolute emergency.

Measures in the Bill will increase transparency around emergency overflow discharges, shining a light on where they are happening. Although emergency overflow discharge should occur only very rarely—when it says on the tin; it should be an emergency—it is not possible to eliminate them altogether, as they are important safety valves to protect businesses and home in time of emergency. Removing or blocking emergency overflow outlets could lead to excess effluent waste water being released elsewhere, including through manholes. That would have significant safety implications.

Significant protections are in place for designated bathing waters both inland and on the coast. The Government consult on and designate our bathing waters. The Environment Agency monitors them to ensure that the health of bathers is protected, and to assess what action is needed to improve water quality. Once designated, water companies are required to investigate and improve bathing water sites, including with upgrades and improvements to overflows where needed. As part of the storm overflow discharge plan—those are obviously different from emergency overflows—by 2035 water companies will have improved all storm overflows that are discharging near every designated bathing water. We have also recently consulted on reforms to the Bathing Water Regulations 2013, including expanding the definition of “bathers” to include other water users.

A Government response to the consultation will be issued in due course, and if reforms are taken forward in future, that could mean that more bathing sites, including those used by aquatic sport users, will be subject to improvements. As such, we do not believe that the amendment is required.

[Dr Hudson]

I thank the Minister for her comments and for acknowledging the importance of the safety of the waters in which people practise water sports. I also thank the hon. Member for Westmorland and Lonsdale for supporting that concept—we must try to keep these waters safe. I confirm, happily, that we will not be pushing the amendment to a vote.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

[The Chair]

With this it will be convenient to consider new clause 25— Duty on sewerage undertakers to monitor overflows at sewage treatment works, pumping stations and on the sewer network—

‘(1) The Water Industry Act 1991 is amended as follows.

(2) In section 94—

(a) after subsection (1)(b) insert—

“(c) to make provision for the accurate collection of data relating to its performance in fulfilling its duties under paragraphs (a) and (b).”

(b) after subsection (2) insert—

“(2A) In performing its duties under subsection (1)(c), a sewerage undertaker must—

(a) install volume flow meters in all locations where sewage overflows occur, including sewage treatment works, pumping stations and on the sewer network for which it is responsible;

(b) establish appropriate required capacities for each sewage treatment works and pumping station;

(c) publish information on the data and calculations used to establish such required capacities; and

(d) install all required monitoring tools within 12 months of the passing of this Act.”’

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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.

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[Emma Hardy]

Individuals can already be prosecuted, under section 110 of the Environment Act 1995, for obstructing Environment Agency investigations. However, that legislation does not allow executives to be prosecuted where obstruction has occurred with their consent or connivance or is attributable to their neglect. The Bill will remedy that omission by adding a consent, connivance or neglect provision to the Act, meaning that executives or other relevant officers may face imprisonment if obstruction occurs as a consequence of their actions.

[Dr Hudson]

The Opposition have no formal objections to the clause, but I do have a couple of clarifying questions. I realise I am getting into territory with which I have no familiarity. I am not a lawyer; I am a veterinary surgeon. When we are changing offences to make them more criminal, there are implications for the courts and for individuals. Although expanding the options available to the court when sentencing offenders who have not followed the rules is welcome, how have the Government ensured that the offences are clear, so that those who commit them face the full punishment if and when required?

In terms of modelling the potential impact downstream, what work have the Government done to look at the situation retrospectively? If this provision had been law over the last few years, how many offenders would have been caught by it and potentially imprisoned? I realise that that is quite a technical question, but I wonder if the Government have looked at that at all. When we bring in laws, we need to ensure that we are aware of their implications and know how the legal and judicial system can exercise them. However, we have no formal opposition to the clause.

[Tim Farron]

Likewise, the Liberal Democrats have no objection at all to this clause. I cite from memory that in 2021-22, there were just under half a million spillage incidents in this country: a total of 16 were prosecuted, eight with a fine of more than £50,000. I think what the Minister was getting at before was that very often, it is worth taking the hit. First, organisations get away with it, but even if they do not, they pay a pittance compared to the cost had they invested properly in the infrastructure. It is right to take these things seriously. However, prosecutions with potential imprisonment and loss of liberty may be as few and far between as prosecutions relating to fines, unless we make sure that the whole process is more rigorous than it has been so far.

We are supportive of the clause and I need say nothing further.

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[Emma Hardy]

Regulators can currently impose civil penalties where they are satisfied beyond reasonable doubt that an offence has been committed. The civil penalties are imposed by the regulators, rather than through the courts. The criminal standard of proof is appropriate for severe offences—for example, where there is a major impact on human health, on quality of life or on the environment. A high investigatory burden is not proportionate for minor to moderate offences that have a lower impact. Clause 6 will allow these offences to be enforced more quickly, cost-effectively and proportionately by enabling penalties to be imposed using the civil standard of proof, which is

“on the balance of probabilities”.

The penalties will be in addition to existing enforcement options that can be imposed only using the criminal standard of proof, including prosecution and unlimited variable monetary penalties, which will remain unchanged. Of course, the most serious cases will still require criminal proceedings. The Government will consult on the specific offences for which the civil standard of proof may be used and on the cap for the new lower standard of proof for variable monetary penalties. There are no plans to remove unlimited penalties for severe offences. Parliament will then debate and vote on secondary legislation before any changes are made.

The clause will strengthen the power of the water industry regulators, driving improved performance in the sector, and I commend it to the Committee.

[Dr Hudson]

I note that clause 6 would grant the Secretary of State and Welsh Ministers the power to introduce secondary legislation concerning fixed and variable monetary penalties, as confirmed by the Regulatory Enforcement and Sanctions Act 2008. It would likewise change the condition of imposing these penalties from “beyond reasonable doubt” to

“on the balance of probabilities”.

Although His Majesty’s Opposition have no problems with the clause, we believe it would be beneficial for the Minister to make some clarifications to aid the reading of the clause in the future. First, how often does the Minister think that secondary legislation may be required for the fixed monetary penalties? During the last Government’s period in office, we knew that sometimes penalties needed to be adapted to get regulation of our water industries right. As I discussed in previous debates, the Conservative Government saw fit to amend the amount that water companies could be fined for violating the water quality rules.

As was also mentioned earlier, Baroness Hayman in the other place highlighted the importance of flexibility in changing rules on the water industry. The Opposition agree that flexibility is important, but for there to be flexibility, there also needs to be consistency, and awareness and monitoring of the issue so that we know exactly what flexibility is needed. Could the Minister therefore comment, now or in due course, on whether the Government will be continuously updating and monitoring to ensure that monetary penalties are having the desired outcome, that they remain aware of any potential issues and that they can determine whether they need to modulate and change things?

Does the Minister support the use of secondary legislation to increase scrutiny? As we have already discussed, the Government have sought to avoid the responsibility of accountability at ministerial and Government level by using statutory instruments for things like Ofwat’s remuneration and governance guidance. Can they not see that a bit of a discrepancy remains? If they are willing to use available powers to make change but not enhance powers, they might need to do that on other issues that we have discussed. Barring those comments and clarifying questions, we have no formal objections that we wish to raise.

[Emma Hardy]

I thank the hon. Member for Epping Forest for his contribution to the debate. I think the point my hon. Friend, and friend, Baroness Hayman made in the Lords is that we do need some flexibility, and that it would be inappropriate to set out the details of implementing these powers in the Bill, because that would result in a fixed power that would not be adaptable to the industry’s circumstances. We would like to be able to continue to adapt it.

I think the shadow Minister is trying to make sure that we set things in the right way and at the right level. That is why Ofwat will be doing a consultation. We want the level to be a deterrent rather than something that water companies can easily dismiss, but it needs to be set at the right level. It is important that that is done properly and through consultation.

I am grateful that everybody supports the clause. By strengthening the powers of the water industry regulators, we will drive improved performance in the sector.

Question put and agreed to.

Clause 6 accordingly ordered to stand part of the Bill.

Ordered, That further consideration be now adjourned. —(Jeff Smith.)

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

Neil Hudson Excerpts

Committee stage
Thursday 9th January 2025 Public Bill Committees

[Charlie Maynard (Witney) (LD)]

I rise to explain amendment 22. On 11 July, the Environment Secretary issued a press release on the reform of the water industry that stated:

“Water companies will place customers and the environment at the heart of their objectives. Companies have agreed to change their ‘Articles of Association’—the rules governing each company—to make the interests of customers and the environment a primary objective.”

However, that commitment is not currently in the Bill. The amendment simply seeks to bring that commitment into this legislation.

[Dr Neil Hudson (Epping Forest) (Con)]

It is a great privilege to serve under your chairmanship, Mr Vickers.

On behalf of His Majesty’s Opposition, I rise to challenge the Government on their plans in Government amendments 1 and 2. Before I go into the detail, I will make some general comments about the clause that are pertinent to the amendments.

The Opposition worry that the Bill, rather than taking original and new measures to tackle these issues, is purely an attempt to copy and paste the work done by our previous Conservative Government. In fact, many of the measures have already been copied from previous measures that we introduced in government.

[Helena Dollimore (Hastings and Rye) (Lab/Co-op)]

In the Environment, Food and Rural Affairs Committee, we took evidence from the chief executive of Ofwat, who was clear that the bonus that the boss of Southern Water, Lawrence Gosden, received this year would not have been paid had the previous Conservative Government brought the measures in this Bill before the House. The Conservatives had 14 years to change the rules, but they failed to do so.

[Dr Hudson]

With the greatest respect, I sat on the Environment, Food and Rural Affairs Committee in the previous Parliament, and we took evidence from the chief executive of Ofwat on some of the key measures that the Conservative Government brought forward. Our Government gave Ofwat teeth and powers, and we need to make sure it uses them.

As detailed in the explanatory notes, Ofwat already has wide powers to set the conditions of water company appointments and licences. The Conservatives worked hard to strengthen its ability and power to do that since this issue came to the fore in order to drive the regulatory change that was vitally needed to tackle the scale of the crisis that came to light.

I again remind Members on both sides of the House that when Labour left office in 2010, only 7% of storm overflows were monitored; when we Conservatives left office, 100% of outflows were monitored. We found the scale of the sewage problem and were the first party to start to address it. The Conservative Government’s Environment Act 2021 gave Ofwat the power to consider, when deliberating about dividends, the environmental performance of a company and its credit rating, whereby Ofwat could stop the paying of dividends if it felt that the firm faced financial risks as a result of its actions.

[Charlie Maynard]

The hon. Gentleman said that 100% of outflows are monitored, but I am afraid that is not correct. In fact, 100% of the 14,000 storm outflows are monitored—he did not mention storm—but 7,000 emergency overflows are not currently monitored. On the other aspect that he just mentioned, Ofwat was entirely devoid of looking at the balance sheets of the companies under the Conservatives’ watch. That is the root of all our trouble, and it would be beneficial to acknowledge that.

[Dr Hudson]

If the hon. Gentleman checks Hansard, he will see that in my speech on Second Reading and just now I said “storm overflows”. I gently remind the third-party spokesman that in the coalition Government the Liberal Democrats had a Water Minister who did absolutely nothing on this issue.

[Helena Dollimore]

Will the hon. Gentleman give way?

[Tim Farron]

Will the hon. Gentleman give way?

[Dr Hudson]

I will make some progress, if I may.

[Tim Farron]

The hon. Gentleman has just referred to me—

[Dr Hudson]

I was referring to the hon. Gentleman’s colleague.

It is therefore worrying that although the previous Administration went to great lengths to ensure that water companies were financially resilient, this Government are doing quite the opposite with Government amendment 1. That amendment, which will leave out lines 4 to 8 of clause 1, would amend the requirement for rules made by Ofwat under the clause to specifically include rules on financial reporting. That could not more clearly delineate the Conservative approach that the Labour party so derided—it promised the British people that it would do things differently—from the actual approach that Labour has taken in power.

Government amendment 1 undermines not only the hard efforts of the previous Conservative Government in taking the issue seriously, but the efforts of the cross-party consensus that secured the commitment to having financial reporting rules made by Ofwat in the Bill. That cross-party coalition, which included my Conservative colleagues in the other place, forced the Government to ensure that the original commitment would be in place in the Bill. Labour voted against the commitment and is simply seeking to overturn a clear cross-party consensus for Ofwat to be given powers to set rules on financial reporting.

Ensuring that Ofwat can view a water company’s financial structuring will help it to scrutinise and have an understanding of how the company is operating. It will also ensure that the consumers who have been let down by the water industry for far too long are protected. With close financial monitoring, water companies will face the necessary scrutiny to reduce the risk that ordinary consumers are left without a supplier. Financial mismanagement poses great risks, so every sinew must be strained to prevent it; financial reporting is key to ensuring that that takes place. The financial resilience of the water companies is not a hypothetical issue, but a paramount concern right now.

As recently as November, Ofwat’s monitoring financial responsibility report identified 10 companies that needed an increased level of monitoring and/or engagement concerning financial resilience. Seven of those companies were placed in the elevated concern category, meaning that some concerns or potential concerns with their financial resilience have been identified. Three companies were placed in the highest category of action required, meaning that action must be taken or is being taken to strengthen the company’s challenges with financial resilience, and therefore they need to publish additional information and report on improvements at a more senior level with Ofwat.

[Catherine Fookes (Monmouthshire) (Lab)]

Does the hon. Gentleman agree that his Government had 14 years to reform Ofwat, during which time they did absolutely nothing?

[Dr Hudson]

I respectfully disagree with the hon. Member. We passed the Environment Act 2021, we gave Ofwat and the Environment Agency more teeth and, as I have said, we were the first party to start measuring and collecting the data that meant we could act on this issue. Moving forward, we are trying to ensure that Ofwat and the Environment Agency use the teeth given to them by the previous Conservative Government to make our waters better. To suggest with Government amendment 1 that Ofwat should not be concerned with financial resilience rules quite simply sends the wrong message to the public, so I urge the Government to reconsider. The Opposition will seek to push Government amendment 1 to a vote.

--- Later in debate ---

[Tim Farron]

I will just have a quick canter through three things that I should have talked about earlier. My apologies, Mr Vickers, and thank you for your indulgence. I will speak to amendments 21 and 19 and new clause 26 briefly.

I reiterate the comments by my hon. Friend the Member for Witney about amendment 21. I have great respect for the hon. Member for Epping Forest, but I think he has misunderstood. As my hon. Friend said, our amendment seeks to ensure that we do not run the risk of kicking into the long grass the taking of action against bonuses by sticking that provision anywhere other than in the Bill. We were not planning to divide on it, but we will be happy to be the ones voting in favour of immediate action rather than kicking it into the long grass, if that is what he wishes to do.

I do not want to bore anybody about the coalition, but it has been mentioned—give me 20 seconds on it, Mr Vickers. The privatisation of the water industry was where all this went wrong. All the parties that have been in government in the 35 years since then share some responsibility. Just for the record, it is worth stating that DEFRA had no Liberal Democrat Minister in it at all for the majority of the coalition period. For 18 months, my great friend Dan Rogerson served in that position. That was the time during the coalition, by the way, in which we undid some of the foolish capital costs that were made at the beginning of the coalition. It is the opposite of the truth to say that we did nothing; we actually did the only thing that did happen during that time. It is also worth bearing in mind—people might remember—that we were in the EU then and properly regulated, and things were different. That is the end of that defence.

[Dr Hudson]

Will the hon. Gentleman give way?

[Tim Farron]

Oh, go on.

[Dr Hudson]

His recollection is perhaps different from many people and the public at large regarding the Liberal Democrat record on water. His party seemed to jump on this bandwagon once the Conservatives were the party that actually started measuring the scale of the problem.

Returning to amendment 21, the hon. Gentleman has the word “Democrat” in the name of his party. I do not know why they are so scared of having democratic and ministerial accountability by having a very simple clause in the Bill that would provide for a statutory instrument being laid so that the Secretary of State for DEFRA would have some accountability for that. I take on board the point about the first part of paragraph 5 in terms of the first six months of the Bill, but with the amendment would remove two thirds of that clause, which was put in with cross-party consensus in the other place. I am surprised that they are scared of democratic accountability.

[Tim Farron]

Well, that is bizarre. With total respect for the hon. Gentleman, he completely misunderstands. We are seeking to put this on the face of the Bill and not kick it off to a statutory instrument. That seems the opposite of anti-democratic—or, indeed, democratic.

Let us move on to the other issues I would like to briefly mention. New clause 26, which is in this group—

--- Later in debate ---

[Emma Hardy]

I have to say that it is slightly disappointing that we do not have a full contingent for such an important Bill Committee, which matters so much to people up and down the country. There could be personal reasons, so let us reserve judgment, but it is a little surprising to me too.

[Dr Hudson]

The Minister said that she worries that the amendment from Lord Cromwell would duplicate things. Actually, it is quite a simple amendment that achieved a lot of cross-party support in the other place. If it duplicates things, a bit of repetition is not a bad thing to ensure annual financial reporting by water companies. It would not create confusion: repeating this important matter on the face of the Bill would just create clarity, so we urge the Government to reconsider.

[The Chair]

Just for the record, I am advised by the Clerk that Adrian Ramsay has sent his apologies, as he is ill.

--- Later in debate ---

[Emma Hardy]

I strongly disagree that this amendment weakens the Bill or is retrograde. Instead, it is doing things effectively. If we were to put a six-month deadline in the Bill and rush to get the rules done in that period of time and there were complications, we would risk leaving a loophole that could be exploited by companies that have exploited loopholes for an incredibly long time and become rather apt at doing so. With respect, I would rather do it properly.

[Dr Hudson]

The Minister says that she would like to do this properly. We all agree around this House on the scale of the problem, the public outrage at some of the things that have happened with water companies and the fact that we are trying to address and improve our water quality. I am therefore curious why both the Government and the third party are shying away from giving the Secretary of State and the Department the democratic powers and accountability to pass statutory instruments, which, as we all know, can be done very quickly. We have talked about dental analogies. I am an equine vet; I have rasped many teeth in my time. It would help ministerial oversight to see that the dental work is being done properly.

[Emma Hardy]

I am desperately searching for a dental analogy. I have already outlined to the hon. Gentleman that we tabled this amendment to protect the independence of Ofwat, protect investor confidence and ensure that rules under clause 1 are effective and in place as soon as possible. It is therefore necessary to remove Lord Roborough’s amendment. I again urge hon. Members to look at the written evidence supplied by Ofwat today. On that basis, and considering the arguments I have put forward for removing the six-month deadline for the rules to be published, I ask the hon. Member for Westmorland and Lonsdale not to press amendment 21.

Turning to amendment 22, also tabled by the hon. Member for Westmorland and Lonsdale, public trust in the water sector has been severely damaged and the number of serious pollution incidents is increasing. At the same time, companies are paying out millions in bonuses. I therefore fully support the intention behind the amendment and agree on the importance of ensuring that customers and the environment are put at the heart of companies’ objectives. That is why the Secretary of State announced immediate action to improve the performance of the water industry in his first week in office. That included an agreement that companies would update their articles of association to make the interests of customers and the environment a primary objective. I am pleased to inform the House that a number of companies have already made that change, and DEFRA is working to ensure that all companies implement it as soon as possible.

This is a Government of service, focused on improving people’s lives, and it is important that consumer interests are represented at the heart of decision making. That is why, under clause 1 of the Bill, Ofwat must make rules requiring consumer involvement in corporate decision making. Companies will be required to put in place arrangements to involve consumers in decisions that have a material effect on consumer interests. I trust therefore that the hon. Member for Westmorland and Lonsdale is reassured by the steps being taken by Government and he feels able to withdraw amendment 22.

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[Tim Farron]

I will speak to amendments 23 and 25 first, as they are connected, then amendment 24, and then amendments 9 and 6, which were tabled by those on the Conservative Front Bench. I think amendments 9 and 6 are both fine and helpful, and we would be supportive of them.

In amendments 23 and 25, tabled in my name and that of my hon. Friend the Member for Witney, we are referring to impact. There is reference in the Bill to an incident reduction plan, to reduce occurrences and to have reports about occurrences. Our concern is about much more than occurrences; it is about impacts. We know, for example, that a spillage into the River Kent, River Eden, Windermere or Coniston may last a certain amount of time, but we do not know about the volume. We may have a trickle over a day or a deluge over a half-hour period.

It is important to understand the impact not only on marine life, fish stocks and biodiversity, but on things such as leisure activities. As an occasional wild swimmer myself, and as somebody who knows a lot of anglers, canoeists and sailors in my constituency, it seems wrong that we should not put front and centre, not just a greater awareness of and action on incidents, but a look at the impact—the measured impacts on biodiversity, wildlife, livestock, farmers and the tourism economy in places like the Lakes, which is the biggest visitor destination in the country after London. I would be very grateful if amendments 23 and 25 were taken on board by the Government.

Amendment 24 relates to nature-based solutions and looks at incident reduction plans. As the Chartered Institution of Water and Environmental Management put it:

“Nature-based solutions…can help address many of the water sector’s challenges while also providing significant benefits for people and planet, such as water quality improvement, flood risk reduction, carbon sequestration, climate resilience, nutrient neutrality, biodiversity enhancement, community engagement, and public health and wellbeing.”

Indeed, nature-based solutions are also a vital source of funding and income for farmers. Examples include natural flood management techniques, such as wetland restoration, tree planting across catchments of areas of unproductive land—not of productive agricultural land, I hasten to add—and building resilience to flooding; the construction of treatment wetlands and reed beds to treat waste water and improve water quality; the creation and restoration of ponds and pondscapes; climate mitigation and adaptation; and the building of resilience to drought.

Finally, the multiple benefits delivered by working with nature also create opportunities for blended finance by drawing in private investors or gaining income from buyers and ecosystem services. That further increases taxpayer value for money at a time when the delivery burden on the water industry, and therefore customer bills, is at a record high. Investment in nature-based solutions will help to ensure that water industry spending supports the delivery of the maximum environmental and social benefits.

Amendments 23, 24 and 25 are about assessing the damaging impact of pollution incidents in our lakes, coastal areas and rivers in my communities and across the country. Through amendment 24, they also try to provide practical solutions that will help to address those issues. They are meant to be helpful amendments and I hope that the Government will take them on board.

[Dr Hudson]

I rise to speak about amendments 6 and 9, proposed by His Majesty’s Opposition. I hope that they are self-explanatory amendments that are quite simply about the core concept of accountability, which was at the heart of the previous Government’s mission to improve our water system. We must remember that at the heart of every failure that damages our waterways, it is the Great British public—those who rely on our waterways as consumers and as members of communities served by them—who are let down and denied the rights to pollution-free water systems to which they are entitled.

Amendment 6, which would require water companies to publish their implementation reports accessibly online, gives the public a tangible and visible sign by which water companies can be held to account for the promises they make and the actions they say they will take. It is a vital step in trying to restore the trust that water companies may be seen to have lost in recent years with the public through their inadequate actions to deal with this issue, as people have seen and as hon. Members have articulated today on both sides of the House. It is very much about having not just words and promises but explicit standards to judge water companies by, and it would form a kind of contract between the companies and their consumers, who would then know what to expect from their individual company.

His Majesty’s Opposition have no objections to the principle of clause 2 and its requirement that water companies publish an implementation report, nor in the specific details that companies would be expected to produce in proposed new section 205B of the Water Industry Act 1991. In fact, we welcome the Government’s willingness to listen to the concerns from Conservative peers, including Lord Roborough, and peers from other parties in the other place to strengthen clause 2, including the requirement for implementation reports to be drafted by water companies in the first place and ensuring that the requirements for pollution incident reduction plans also include water supply system-related incidents, not just sewage-related incidents.

However, we believe that amendment 6 would go even further to strengthen that proposal and advance the accountability that we all want water companies to have. Requiring implementation reports to be published online in an accessible way sets out an explicit and clear definition to water companies of how they are expected to publish any such plans, as the clause requires, and demonstrates how water companies must comply with the law in unequivocal terms.

In stressing accessibility, amendment 6 would end the ambiguity that can sometimes exist for the public, which means that it is often too easy for companies to hide away behind protocol and procedure. By making such information available to consumers, we would ensure that there could be no hiding in murky waters on this vital issue and the concrete commitments to improving our waterways.

Water companies can also benefit from the chance to make reflections on their progress available in full sight of the public. In all walks of life, sometimes people’s efforts to make good on promises cannot come to full fruition for reasons beyond their control. If genuine reasons arise for not meeting targets, there can be full transparency for the public as to why, so they can understand more about the nature of the industry and the issues involved in protecting the quality of our water system. In other words, full transparency is in everyone’s interests.

A 2023 review commissioned by Ofwat about the importance of open data was clear that open data provide great benefits in a range of areas when it comes to the water industry. In terms of the environment, it highlighted that open data from sewage overflow monitoring were beneficial to the creation of the predictive analytics tools used in Wessex Water’s intelligent sewers competition, which helped to identify sewage blockages much earlier than they otherwise would have been. That demonstrates an explicit link between the work of recent years to require data monitoring in the water industry, such as on storm overflows—I reiterate that 100% are monitored thanks to the work of the previous Conservative Government—and improvements in the water industry’s tackling of pollution. That is in addition to the improved accountability and the responsibility that data publication places on water companies to get the issue right.

The report highlighted, however, that at the time there was a trend towards companies sharing data with their key partners, rather than making information completely and clearly available for unrestricted public access. The report therefore explicitly recommended that companies in the water sector should look at the data they had been sharing only with specific groups and partners, and take steps to make available those data where they can.

Amendment 6 would solve the problem of information reports before it could even arise—upstream—by unequivocally stating that water companies must publish implementation reports on their websites that would be accessible to all members of the public, not just those with the time and influence to ask for such data. We talked about citizen science: this will give those data to the people to analyse and hold water companies to account. The Conservatives will therefore be pressing amendment 6 to a Division.

I am conscious of time, Mr Vickers. Are you going to call stumps in about 20 seconds?

[The Chair]

No. We can keep going until 1.30 pm.

[Dr Hudson]

On that note, I will move on to amendment 9, which would make it a requirement for pollution incident reduction plans to include how an undertaker intends to reduce the occurrence of pollution incidents in national parks attributable to their water system. The Opposition tabled the amendment to strengthen the existing plans that the Government have put forward, so that no stone is left unturned in ensuring environmental protections from our water companies. The amendment ensures that water companies make it clear how they will work to reduce pollution incidents in national parks in a system that a water company operates in.

National parks are an area that the previous Conservative Government took great efforts to protect in their legislative programme on protected landscapes. We worked to encourage water companies to invest in peat restoration, and allowed teams at national parks to bid for investment that improved their water environments. The history of recent work on national parks goes beyond just the most recent Government, with the Glover review being published in July 2019. In a response to that review, the Conservatives highlighted their commitment to national parks and water quality, such as through developing the natural capital and ecosystem assessment, which combined data science, citizen science and earth observation technology to inform water quality improvements as a priority target; and ensured that capital and natural capital reporting were embedded into the management plans of protected landscapes.

Flooding

Neil Hudson Excerpts

Monday 6th January 2025 Commons Chamber

[Dr Neil Hudson (Epping Forest) (Con)]

I thank the Minister for advance sight of her statement. I put on the record my gratitude to the Minister and her whole team for hosting a constructive and helpful cross-party meeting on Friday, together with officials from DEFRA, the Environment Agency, the Met Office and the Ministry of Housing, Communities and Local Government.

On behalf of His Majesty’s Opposition, I pay tribute to the emergency services, local authorities and the Environment Agency for their efforts, over the challenging festive period and the ongoing start of the working year, to help people quickly, often in dangerous circumstances. I thank members of the public, volunteer groups and our amazing farmers, who have once again stepped in to help their neighbours and local communities in difficult times.

The current flooding, snow and rain have had, and continue to have, hugely detrimental impacts across the United Kingdom. Today, roads are closed, many schools have been unable to reopen on what should have been the first day of term, rail services have been suspended, and airports have experienced extreme delays. Furthermore, as the Minister said, as a result of the extreme weather Leicestershire Fire and Rescue Service has declared a major incident across Leicester, Leicestershire and Rutland. Our thoughts are with all those whose homes and businesses have been damaged, and with all those who continue to be affected.

Many of those people will be distressed, angry and completely exhausted as they begin the new year with the process of restoring and rebuilding their homes and businesses. I sound a bit like a broken record, but I reiterate that we must not underestimate the mental health impacts of flooding on communities, in respect of both the anxiety of being flooded and the trauma when flooding hits. It is essential that practical support is provided as quickly as possible and remains in place after the waters have subsided and the blue lights have departed. Will the Minister update us on the action the Government are taking to get schools open as soon as possible? What steps are her Department taking to ensure that insurance claims can be processed as quickly as possible, so that those affected can return to their homes as soon as they can?

In addition, what steps are the Government taking to review and potentially expand the vital Flood Re scheme, so that insurance cover is expanded in terms of the age of building eligibility and to include businesses? We discussed that issue at the cross-party meeting on Friday. While in government, the Conservatives ringfenced £100 million to help communities threatened by repeated flooding. Will the Minister commit to that funding, and will those affected by flooding again, in the latest period of bad weather, be eligible to apply?

Furthermore, will the Minister provide assurances that discretionary funding, such as the flood recovery framework or the Bellwin scheme, will be implemented to alleviate the effects of flooding? Even if the thresholds for the numbers of properties affected are sometimes not met, will the Minister and her colleagues across Government commit to a compassionate, pragmatic and case-by-case approach to awarding that vital discretionary funding?

Additionally, the previous Conservative Government established the farming recovery fund to support farmers recovering from uninsurable damage. Will the Minister confirm whether the Government will renew that Conservative initiative and provide new funding for this winter’s storms?

Finally, the Secretary of State has set up a flood resilience taskforce to improve flood preparedness that has met only once. What work did the taskforce do ahead of the latest bad weather? Should it not meet more regularly—certainly before the end of this month, as the Minister stated—to learn any lessons and to respond to the ever-dynamic weather events we have seen in recent weeks? With many warnings for flooding still in place, I know that many people will be experiencing huge anxiety and uncertainty, so I conclude by wishing every community, and the services and people supporting them, a safe period moving forward.

[Emma Hardy]

I will try to answer as many of the hon. Gentleman’s questions as I can. I share his concern about the impact of flooding on people’s mental health, which cannot be exaggerated. Someone losing their home, or seeing it damaged, and having to move out over the winter has a devastating impact on them. I agree that farmers have done a great job in supporting communities at risk of flooding.

On Flood Re, we do not currently have plans to extend the scope; however, we regularly review all policies. If any hon. Member wants to contact me with specific suggestions on Flood Re, I am open to receiving them.

On the different pockets of funding that the previous Government announced, we will look at how the flood funding formula works as a whole. I mentioned the review of the formula, and I will let the hon. Gentleman know as soon as it goes live so that he can join in the consultation.

We will hopefully be able to announce the schemes that are being funded by next month. I know that people have been impatient to receive that information. We have worked as quickly as we can. There is a formula for when Bellwin is activated—a local authority has to hit a certain level of expenditure. We have been really pleased that money from the farming recovery fund has already arrived in farmers’ bank accounts. We have been getting that money out the door to the people who need it the most.

Oral Answers to Questions

Neil Hudson Excerpts

Thursday 19th December 2024 Commons Chamber

[Mr Speaker]

I call the shadow Minister.

[Dr Neil Hudson (Epping Forest) (Con)]

The autumn Budget put family farms in jeopardy. Those farms also need biosecurity to protect their futures. With avian influenza spreading, bluetongue still with us and African swine fever at our doorstep in Europe, biosecurity is national security. Central to that is the Animal and Plant Health Agency, whose headquarters in Weybridge needs a £2.8 billion redevelopment to protect farming and animal, plant and public health. The Conservative Government rightly started that work with £1.2 billion committed in 2020. I note that Labour has committed £200 million to support that transformation, but that will not touch the sides. Will the Secretary of State confirm that the Government will complete the project in full, as the Minister for Food Security and Rural Affairs called for in opposition, and commit the remaining £1.4 billion to protect our nation’s biosecurity and prevent an animal disease outbreak catastrophe?

[Steve Reed]

I am grateful to the hon. Gentleman, who raises an important point. However, I find it a little ironic that Conservative Members are calling for this Government to commit to spending that their Government never committed to. The Weybridge biosecurity facility is so dilapidated that it faces obsolescence by the early 2030s—that is the legacy that the Conservatives left. The £208 million that we have committed will start the process of improving those facilities, and through the spending review phase coming forward, we will consider how we can commit further funding to ensure biosecurity for farmers, which the Conservatives absolutely failed to do.

Water (Special Measures) Bill [Lords]

Neil Hudson Excerpts

2nd reading
Monday 16th December 2024 Commons Chamber

[Dr Neil Hudson (Epping Forest) (Con)]

It is a pleasure to wind up for His Majesty’s loyal Opposition in what has been a comprehensive debate tonight. I want to thank all Members, who have made so many interesting points across the House about many different aspects of policy.

The hon. Members for Reading Central (Matt Rodda) and for Hastings and Rye (Helena Dollimore) talked about water supply issues and when companies fail to deliver on their duties. The hon. Member for Scarborough and Whitby (Alison Hume) talked about the fantastic Wave Project helping young people with their mental health in her constituency. The hon. Member for Shrewsbury (Julia Buckley) raved about the magnificent Severn, and the hon. Member for Morecambe and Lunesdale (Lizzi Collinge) waxed lyrical about her local birdlife.

My hon. Friend the Member for Beaconsfield (Joy Morrissey) talked about the importance of monitoring and of a holistic approach to water management, as was echoed by my hon. Friend the Member for Bognor Regis and Littlehampton (Alison Griffiths). My hon. Friend the Member for Mid Bedfordshire (Blake Stephenson) talked about the importance of fit-for-purpose water infrastructure for new developments. My hon. Friend the Member for South Northamptonshire (Sarah Bool) eloquently articulated the issues with our Victorian sewage network and about the importance of the water restoration fund. My hon. Friends the Members for Exmouth and Exeter East (David Reed) and for Windsor (Jack Rankin) are proud advocates for standing up for water quality for their constituents.

As for those in the party sitting to my left, the Lib Dems seem to airbrush themselves out of Government history and seem to forget that they were in coalition Government for some five years. May I gently remind the Liberal Democrats that they actually had a Water Minister in that coalition Government who did absolutely nothing on this issue when they were in power? They pivot and posture as the party of protest, jumping on their stand-up paddleboard bandwagon, but far from being concerned about water quality and safety, they appear more than happy to strap on their wetsuits and dive headfirst under the water.

The amendments to the Environment Bill in the last Parliament that Labour and the Liberal Democrats voted for would actually have cost in excess of £300 billion to rebuild the entire Victorian sewage and drainage systems. That was completely unaffordable, and it would have put up taxpayers’ water bills by hundreds of pounds each year. They did not tell the public that when they cast their smears on Conservative MPs and peers who voted for sensible, costed plans to realistically address the sewage situation, but they never let the truth get in the way of stand-up paddleboard bandwagons.

Water quality and how sewage is dealt with are of vital importance to all our constituents right across the House, and we on this side—the Conservatives—are proud that we were the party that began the process of addressing this while in government. What we can now see with this new Labour Government is an attempt to copy and paste many of our Conservative achievements and plans, rebadging them as their own. It is an interesting approach and a recurrent theme. They opposed and blocked all of our plans when in opposition, and now they are scrabbling around and trying to say that they agreed with our plans all along. In fact, just look what the Government have been saying this week about the Conservative-delivered comprehensive and progressive agreement for trans-Pacific partnership, which Labour now thinks is the best thing since sliced bread, having distanced themselves from it when they were in opposition. That is the theme of this new Government.

The Labour manifesto promised to put failing water companies under special measures to clean up water and clean up our rivers that have been polluted by illegal sewage dumping. Now it is Labour Members’ turn in government to deliver on these promises to ensure that these are not more broken promises, such as their heartless family farm tax, which they promised they would not do and then cruelly went on to do, or their promise not to raise national insurance.

I note that we would not be talking about this issue today, or we would be talking about a worse situation, had it not been for the previous Conservative Government being the first to investigate the problem, grasp the nettle and meet the ambitious pledge to ensure that 100% of storm overflows are monitored, so that we could get accurate data on what is being put into our waterways. Without that, we would need to do far more groundwork to start determining what we need to do. We must remember that the last time Labour was in charge of DEFRA in England, when it left office in 2010, only 7% of storm overflows were being monitored, compared with 100% when the Conservatives left office. It was left for us to sort and improve monitoring, so that we can have an accurate view of what is happening—an evidence base for policy making, rather than poking around in the dark under Labour.

I really hope that Labour does not break its promises to improve water quality in England, because the story in Labour-run Wales is sub-optimal to say the least. In 2022, the average number of spills from storm overflows was two thirds higher in Labour-run Wales than in England—not exactly the best blueprint for government that Labour at Westminster said it would emulate. Some 92% of English bathing waters meet water quality standards, but that still needs to be higher and we look forward to the new Government detailing their plans to achieve better results.

We have heard from many Members about Thames Water, which is a notable, critical issue at this moment, but so far Labour has failed to come up with a clear plan for how it will address that and protect both the bill payer and the broader taxpayer. The Labour Government are promising to review the water system, with more reviews and more reboots, but what they should be doing is rolling their sleeves up and continuing the progress that the Conservatives started. That progress includes our landmark Environment Act 2021, delivering our plan for cutting plastic pollution and holding water companies to account; our work on measuring storm overflows; our ambitious “Plan for Water”; and strong action on water companies that were illegally dumping sewage into our waters—we have heard a lot about that tonight. That has included quadrupling water company inspections, meaning a pathway to 4,000 inspections a year by April 2025, and 10,000 a year from April 2026. That was part of our plan to crack down on poor-performing water companies.

We banned bonuses for the bosses of water companies that have committed criminal breaches, so that polluting our waters is not rewarded—a Conservative measure that this Bill copies. We also fast-tracked £180 million of investment from water companies to prevent more than 8,000 sewage spills this year, and stepped up requirements on water companies to increase investment in water infrastructure, with a commitment upwards of £60 billion over the next 25 years. We put pressure on those companies. We also prosecuted water companies that illegally pollute our rivers, making it clear that polluters must pay for damage to our natural environment. We tried to give more teeth to the regulator, Ofwat, and to the enforcer, the Environment Agency.

Let me touch briefly on the Bill’s passage in the other place. Our colleagues there tabled amendments to the Bill that we are happy were accepted, but we were disappointed that amendment 51, tabled by Lord Roborough, did not pass. It would have stopped customers across the country having their bills increased in the event of a water company being put into special measures. Under the current Bill, if a company in one part of the country is placed in special measures and costs are incurred, consumers in the rest of the country may still be liable to pay for it, despite not using the company that has been placed in special measures. The amendment would have provided a significant improvement to the Bill, and in Committee we will be asking Labour to think carefully about amendments to improve the legislation. It was disappointing that when the Labour Minister in the other place was asked about amendment 51, she failed to commit to protecting consumers from higher bills if a water company goes under.

Our Conservative colleagues in the other place also worked hard to bolster important nature-based solutions, and we are glad that the Government listened to them. We will look to strengthen that, along with the important role of the Water Restoration Fund.

His Majesty’s loyal Opposition will support this Bill on Second Reading, and we will look to improve it in Committee, as our Conservative colleagues did in the other place. We will scrutinise the Bill as it goes through the rest of the legislative process, to ensure that it can be the best for all our constituents right across the House. This Bill must function in the way that the British public expect, to continue the work to clean up our British waters. The strong action that began under the Conservatives to improve our waters needs to be upheld by this new Labour Government.