South West Water: Environmental Performance

Rebecca Pow Excerpts

Tuesday 19th September 2023 Westminster Hall

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

Mr Hollobone, it is a pleasure to have you in the Chair today to preside over this important debate about one of our water companies, South West Water.

Like my hon. Friend the Member for Bridgwater and West Somerset (Mr Liddell-Grainger), I am disappointed at the overall environmental performance of South West Water and the impacts that that is having on the local environment. I have been regularly meeting the chief executive officers of companies identified as lagging in their performance commitments, including the CEO of South West Water. I expect to hear of the progress it has made this year and its plans on how it will continue to improve.

There are some promising signs of improvement since the previous debate on this topic in this Chamber, back in February, although I do not believe that my hon. Friend attended that. South West Water has been upgraded from one star in 2021 to two stars in 2022, according to the Environment Agency’s environmental performance assessment. Of course, this is a very long way to go to get the outcomes that customers, regulators and the Government expect.

South West Water has consistently been one of the worst-performing companies for high levels of total pollution incidents and, despite recent improvement, it was still significantly above the industry average for total pollution incidents in 2022. It must take urgent steps to further reduce these pollution incidents, and I expect to see sustained and continued improvement. I have spoken to it about this many times.

I am also aware of the concerns raised about South West Water’s use of combined sewer overflows and the impact that has on coastal communities. South West Water has made good progress on monitoring storm overflows, has met its deadline for 100% coverage by the end of the year, and has achieved a 30% decrease in the number of spills from storm overflows. I am pleased to say that I received an update just this week, from right across the water industry, to say that 96% of overflows are now monitored, with the remainder on track to hit our target of 100% by our deadline at the end of this year.

I welcome the shadow Minister, the hon. Member for Chesterfield (Mr Perkins), to his place. I do not think that this is our first meeting together. I have to point out, though, that under Labour, only 7% of overflows were monitored. It was this Government who introduced the monitoring, and that is why we have a picture of what is happening. It was actually the Labour party that allowed water companies to self-monitor. That was alluded to, I think, by my hon. Friend the Member for Bridgwater and West Somerset, and we must not forget that.

On 29 August, I called the CEO of South West Water regarding Harlyn bay, the most beautiful bay in Cornwall, following reports of discharges from storm sewage overflows and reports of increases in sickness among bathers and surfers. The Environment Agency is investigating that. Clearly, action can be taken only if we have the evidence and if there is an issue. There is a permit system and there are exemptions for extreme weather—we know why that is in place—but I have asked the CEO to ensure that, should pollution be identified, signage is put on the beach so that it is made very clear to bathers and surfers alike. They have taken up my point.

[Richard Foord]

Will the Minister give way?

[Rebecca Pow]

I will carry on for a moment.

On storm overflows and discharges in the south-west, Ofwat announced, as part of a £2.2 billion accelerated infrastructure package that this Government triggered, that South West Water will accelerate £70 million of investment to deliver 15 storm overflow improvement schemes in the Falmouth and Sidmouth catchments. That will ensure that they meet the new bathing water and shellfish requirements and will significantly improve standards to protect public health at some of the south-west’s most important sites. Further investment to meet our strict targets will be required as part of the draft water company business plans for the next price control period. Those are being looked at right now. They will be published shortly and scrutinised by the regulator to ensure that we get the infrastructure and efficiency we need, balancing the need for improvement with managing people’s bills.

No Government have ever done as much as this Government are doing to tackle storm overflows. In 2013, the Government set out expectations that water companies must monitor the vast majority of those combined sewer overflows, as I referenced earlier. It is that monitoring that has meant that regulators understand the scale of combined sewer overflow discharges and can take stronger action within the existing legal framework.

In 2022, the Government launched the storm overflows discharge reduction plan. Our strict targets will see the toughest ever crackdown on sewage spills and will require water companies to deliver the largest infrastructure project in water company history—that is, £56 billion by 2050. As my hon. Friend the Member for Bridgwater and West Somerset may be aware, there has been a court case and I am pleased to say that last week the High Court found that our plan went beyond legal requirements. We have been consulting on expanding our sewage overflows plan further to cover coasts, estuaries and marine protected sites—something I have particularly pushed for. We have announced our intention to make the plan’s target a legal requirement under that all-important Environment Act 2021, which I was so proud to take through Parliament. It is a game-changing piece of legislation; there is no doubt about that.

We also required water companies to produce action plans explaining how they will improve every storm overflow in England. South West Water will not be able to escape this; they have to do that, too. Those are on officials’ desks being worked through, and they will be published shortly. I hope that my hon. Friend realises that a great amount is under way by this Government.

[Richard Foord]

Will the Minister give way?

[Rebecca Pow]

I will do my final paragraph on this subject and then I will give way. In April 2023, the Government published their “Plan for Water”, which is a comprehensive strategy to transform our water environment, dealing with supply, demand and pollution, and pulling everything together to deal with the needs of society for water in future.

[Richard Foord]

I heard the Minister say a moment ago that enforcement action can only take place where there is evidence. Is it the case that the Minister does not have sufficient evidence for enforcement action to take place against South West Water?

[Rebecca Pow]

I thank the hon. Gentleman for that question. One cannot take a court case without sufficient evidence; that is absolutely critical to any court case. I will come on to that, the actions that the Environment Agency is taking and its enforcement powers in a minute, but first I must refer to what some of the other parties think would be the right thing to do.

The Labour party has been calling for mandatory monitoring when we have already delivered it, as well as automatic fines that would make sanctions weaker and a plan to tackle sewage that simply is not credible. When it comes to talking about water, the Liberal Democrats do not have a plan. They seem to think that we can flip a switch and fix it overnight. Even if we could flip a switch, it would mean sewage backing up into people’s homes and businesses and widespread mains waterpipe bursts across the country. We are the only party that has a credible plan to tackle this problem, backed by more investment, stronger regulation and tougher enforcement. That will all be applied to South West Water as appropriate.

I will touch on water security, because that has been a significant issue in the south-west. I am well aware that South West Water customers in Cornwall and Devon have been under hosepipe bans for extended periods of time—since last year, in some cases. I am pleased that South West Water will lift the hosepipe bans next week. I have personally visited South West Water to look at the issues: I have been to the reservoirs referenced, looked at how their size is being increased and how the issue is being tackled to address the whole water-resilient supply. We are working with South West Water, and it is working on emergency plans for situations of drought.

Where performance does not improve, the Government and regulators will not hesitate to hold water companies, including South West Water, to account. Back in 2015, the Environment Agency brought 59 prosecutions against water companies, securing fines of £150 million. As the House will be aware, South West Water has recently been fined £2.1 million in criminal charges relating to offences between 15 July 2016 and 20 August 2020. In response to the point made by the hon. Member for Tiverton and Honiton (Richard Foord), of course the EA had the evidence and data. That is how it could take that strong action.

The subject of enforcement was raised. The EA had its budget for enforcement expanded by £2.2 million a year to tackle enforcement, and Ofwat received a further £11.3 million uplift for enforcement. This is an absolute priority. Furthermore, following its categorisation as a lagging company in 2022, South West Water was required by Ofwat to publish an action plan setting out how it will improve its performance. It was published in 2023 and updated earlier this month, and I will be tracking its progress. Enforcement is being taken really seriously, and I am sure the House is aware that this is actually the largest criminal and civil investigation, investigating 2,200 sewage treatment works. It is being undertaken right now by the Environment Agency and Ofwat into water company permit compliance.

I must quickly allude to that BBC report. I was a news reporter, and I prided myself on my data and sources. They obviously did their report, but it would need to stand up in court if the EA chose to prosecute any of the cases raised by the BBC. If it stands up in court and the information is there, of course the EA will take action if it finds non-compliance. Huge amounts of data were analysed, and it must be thoroughly analysed by the EA in order to go to court, but more openness and transparency are very much needed in the water industry. That is being worked on.

We continue to take action to strengthen the regulator’s powers to better hold water companies to account, and we are in the process of removing the cap on civil penalties for environmental regulators to drive compliance. I share concerns about dividends and executive pay—they must reflect performance. Ofwat has recently strengthened its ability to take enforcement action against water companies that do not link dividend payments with their performance, using its powers under the Environment Act 2021. In June, Ofwat made it clear that customers will no longer fund executive bonus payments that have not been sufficiently justified. I know that my hon. Friend the Member for Bridgwater and West Somerset will be interested in that.

Motion lapsed (Standing Order No. 10(6)).

Water Resources Management Plan: Teddington

Rebecca Pow Excerpts

Wednesday 6th September 2023 Westminster Hall

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

It is a pleasure, Sir Christopher, to have you in the Chair.

I thank the hon. Member for Twickenham (Munira Wilson) for securing the debate and giving us the opportunity to discuss the subject and the whole issue of water supply that faces the country. I put on record an apology for the tardiness in replying to letters—I am trying to get to the bottom of exactly how that happened.

The hon. Member knows—we all know—that water is a precious and vital resource. It is needed for everything we do. It is essential for a healthy environment and a prosperous economy, but a reliable water supply is often taken for granted, as I have been discovering more and more since becoming water Minister. We have not experienced country-wide water shortages since the 1970s, although there were some significant strains on water supply in large parts of the country last year. There was drought, with that record heat and dry weather.

Climate change and a growing population, especially in the drier parts of the country, are causing real challenges for our water supply. I was glad that the hon. Member at least recognised that the system is under pressure. Water companies must take those factors into account when they plan in order to provide a reliable supply of safe drinking water, and water for all the other uses we require. It is our job as a Government to work with the water regulators to ensure that water companies do that effectively.

[Mr Virendra Sharma in the Chair]

The Government’s plan for water identified that by 2050 about 4 billion extra litres of water a day will be needed. That is a quarter as much water as we use now. That is a significant amount and it will be achieved in many ways, which I will outline. We have a detailed plan as to how that will happen. We have to take a strategic approach to planning future water needs, work with regional water resources groups and water companies to meet the challenges of climate change, and at the same time protect and enhance the environment. I totally agree that we must not do it at the expense of the environment.

We need to preserve those iconic habitats, such as chalk streams, which the Government have worked so much to protect, particularly through the chalk stream restoration group, which I am proud to have instigated. We are driving forward a vision for chalk streams, including the reduction of unsustainable water extraction. That will be delivered by measures in our plan for water and via the landmark Environment Act 2021.

The plan for water also reflects the Government’s commitment to a twin-track approach to improving water resilience, by investing in new supply infrastructure, and reducing demand through the reduction of leaks, as was mentioned. Of course, that is an important part, but in addition we plan to increase water efficiency. Half our additional water needs can be made up by water-demand improvements. By 2050, we expect to see leakage levels halved. Thames Water met its leakage target for 2019-20 by cutting leakage by 10.7%, but it did not do so well last year because of the dry weather and the freeze-thaw. I urge the company to get on track with its targets for leakage. That is an important part of the picture. It is not the case that it is not doing it, but it has to do it in addition to all the other things.

There are targets for reducing average per capita consumption to 110 litres per person per day. At the moment, the average is 144 litres, so there is a significant way to go. Lots of water companies are already making good strides in that direction. We have implemented legally binding demand management targets through Environment Act powers, to ensure that we remain on track to meet those targets, as I am sure the hon. Member for Twickenham will know.

We must expect all water companies to act on customers’ needs for that resilient supply and to manage the water sustainably. I hope the hon. Member appreciates our collaboration with the regional water resource groups, which include Water Resources South East. I met and spent a long time talking to them about water supply over the summer, to look at what they are doing. All those groups, including Thames Water, have been consulting on their draft plans, as she pointed out. Those consultations are helping inform future decisions on the right way to secure water supplies, including for Thames Water’s 10 million customers, which is a huge number to deliver water to.

To support the robustness of water resource planning, the water regulators issued detailed guidance to the water companies on how to do that. If water companies are forecasting a water supply deficit, as we will see in the south-east, they must study the options available to them and justify their preferred solutions. I understand that the Teddington direct river abstraction was one of 2,400 options modelled by Water Resources South East to address climate change and population growth and to protect our environment.

The hon. Member for Twickenham expounded on Thames not delivering any new water resources, but it is very difficult for it to do that if objections constantly arise. I will cite the Abingdon reservoir, on which another Liberal Democrat, the hon. Member for Oxford West and Abingdon (Layla Moran), secured a debate in Westminster Hall. More objections were raised about that reservoir. At some point, we have to work out where we will get this new water from. That is why we have a consultation process, to which people have rightly supplied input. I agree that they need to be listened to in the summary of what goes on, but we have to get new water supplies. Many other water companies are facing this and we have proposals for a whole range of models, including recycling facilities, new reservoirs, such as the south Lincolnshire reservoir and the fens reservoirs, desalination plants, such as those that South West Water has put in, and extensions to other reservoirs. We have already seen quite a number of those coming into place, so there is a whole range of options and they are looking at them all.

The Environment Agency and Ofwat have helped to shape those regional plans. They are statutory consultees on the water resources management plans, and the Environment Agency also invited the Secretary of State, as the hon. Member for Twickenham knows, to consider the draft plans before they are finalised. It will be advising the Secretary of State later this year. The hon. Lady asked about the date. It is going through due process. It will be later this year. As she knows, the Secretary of State has a number of options to consider: to accept the plans, to change the plans or to trigger an inquiry.

I have mentioned all the new schemes and systems. Because this is so critical, £469 million was recently made available by Ofwat to properly investigate the range of potential strategic water resources options such as new reservoirs, recycling projects—the one that the hon. Lady is talking about is a recycling project, as she knows—and inter-regional water transfers. That is the work that is supported by RAPID, or the Regulators’ Alliance for Progressing Infrastructure Development. This joint team is made up of the three regulators—Ofwat, EA and the Drinking Water Inspectorate—and works with companies to develop their strategic water resources infrastructure in the best interests of water users and the environment. The environment is absolutely critical and we must ensure that it is taken into account. I am not going to give detailed comments on the hon. Lady’s particular project but obviously one of the reasons for it is to put extra water into the river to keep that flow going because we need to ensure that the environment of the river remains good. As far as I understand it, it is to be used when needed and is not a continuous use project at all.

[Munira Wilson]

I have a final point. Although it is meant to be a drought measure, for technical reasons, to keep the system working, what is known as a sweetener flow would have to be operational every single day, so we are talking about millions of litres of treated effluent going into the Thames every single day to keep the system going. On the Minister’s point about all projects being objected to, as I pointed out in my speech, a very popular proposal in the consultation had broad public support, but Thames Water dismissed it out of hand and is proceeding with this, which will waste bill payers’ money and have a massive impact on the environment. It is not the case that everyone is objecting to everything.

[Rebecca Pow]

I thank the hon. Lady for that. This is long term and strategic—that is what we have to talk about now in terms of water supply. I am concerned that it keeps being described as treated effluent. She will know that, once water has gone through a treatment plant and has had the full and correct treatment, it goes back into the rivers. This will have an extra layer of treatment to ensure that it really is fresh water being returned to the river. We must be very careful about how that is interpreted.

I would be the first person to say that if this goes ahead or gets the support, it has to be permitted by the EA and strictly controlled so that there are no issues about the actual quality of the water going into the river. I agree that it is important to keep the environment going, and I hope I have demonstrated that we have a robust system to look at these projects and get the water that our country needs. The new infrastructure requirements were set out in our national policy statement for water resources infrastructure, and the statement applies to the planning consent of nationally significant infrastructure projects. The proposed Teddington district river abstraction might qualify for one of those.

As I have said, the Environment Agency will be a statutory consultee on development consent orders, and the EA will also determine any abstraction licence or environmental permit. Water quality, temperature, flow and fish protection are all things that will have to be considered. I hope that the hon. Member agrees with and understands this robust process. Obviously, we need to listen to people’s voices, but we also need to secure those resilient supplies for the future and for our water supply. We have a sound and robust system in place, with targets and our twin-track approach. We need to ensure that the right schemes go ahead. I thank the hon. Lady for her words.

Question put and agreed to.

Mains Water Connections: Cost for Rural Communities

Rebecca Pow Excerpts

Tuesday 5th September 2023 Westminster Hall

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

It is a pleasure to serve under you this afternoon, Ms Ali. I must begin by thanking my right hon. Friend the Member for Middlesbrough South and East Cleveland (Sir Simon Clarke) for bringing this matter before the House, and for championing those in his constituency, who he speaks about so clearly and with a great deal of compassion. I obviously realise on hearing his words—we have talked about this before—that there are some real challenges in this case. I welcome this opportunity to air the subject. I will talk generally about private water supplies, which will not surprise him, and then come on to his specific case about the cottages.

As my right hon. Friend will know, drinking water policy is devolved—we had a comment from Northern Ireland earlier—so these comments will apply only to England. Obviously, private water supplies generally originate from a range of local sources, whether they are boreholes, natural springs, brooks or becks. I grew up on a farm. We had our own private water supply for some parts of the farm, and for some cottages. Over the years, all that sort of changed according to how the situation was going. It is something that I have a bit of background knowledge on.

According to the Drinking Water Inspectorate, 1.7% of the population in England get their water from a private supply as of 2022. I am pleased to say that, overall, the compliance of private supplies with the drinking water standards has been steadily improving. According to the Drinking Water Inspectorate’s annual report summarising the data from all local authorities, the compliance rate was 96.4% in 2022, up from 91.4% in 2010. That is a pretty good record; it is improving.

Private water supplies, as my right hon. Friend will know, are regulated under the Water Industry Act 1991 and the Private Water Supplies (England) Regulations 2016. Local authorities are the regulators of private supplies and are responsible for identifying the risks to the quality of the water. They may serve a notice if they determine that the supply is, was, or is likely to be unwholesome or insufficient, and they must serve a notice if they consider there to be a potential risk to human health. My right hon. Friend mentioned that the water had been sampled a number of times by the local authority. He also mentioned what had been flagged as a result, and the advice given.

Local authorities can recover the costs incurred for the duties that they perform from those responsible for the supply—a point I will come back to. Although private water suppliers are found across most regions of England, the highest number are in rural areas. In my constituency and wider Somerset, it is not uncommon to have a private water supply. Often farmers supply their own water, but some of them supply other houses, although there can be other providers. In many cases, people can and want to remain on their private supply, and that is their right.

We recognise that in some cases property owners wish to connect to the mains water network. In such cases, water companies have a duty under the Water Industry Act to make supplies available where it is feasible to do so. They obviously check capacity and so forth. The water company that has distribution mains closest to the property would then check that there is capacity in the network and so forth. However, water companies do not need to provide a mains connection free of charge. We understand that the costs of connection can be high, but it is right that the legislation should allow a water company to charge to make a new connection. Otherwise, the cost of such connections would need to be absorbed by all the existing customers, who do not benefit from new people connecting, and there would be a knock-on impact on people’s bills. I think people understand the point about whether others should carry the can for the cost of someone joining.

When it comes to connections to the mains, the role of Government, via the economic regulator Ofwat, is to ensure that water companies act responsibly and transparently in the services they provide and the fees they charge. That is why Ofwat requires water companies to set charges that reflect the cost of undertaking the work. That has to be clear and transparent. Ofwat also requires them to publish up front the charges for most of the new mains and connection services they provide, and to provide worked examples, so that customers can understand how the charges are calculated. On top of that, there is an element of competition in the market, which might help to reduce connection costs. Customers have the option of contracting with third-party providers, known as self-lay providers, who compete for the work against the water companies.

There are also avenues for recourse when people on private supplies are not happy with the costs quoted by the water companies. They can complain to the water company in the first instance. If that does not resolve the concern, they can ask the Consumer Council for Water to look at the case. Although the Consumer Council for Water has no formal responsibility to review charges for connection, it will challenge companies to provide clarity and review their charges where it considers that appropriate. That might be another avenue to explore further. Ofwat is responsible for enforcement if a water company is not complying with the expected charges, and can issue directions if companies do not comply with Ofwat’s charging rules. Constituents therefore also have the option of contacting Ofwat with their concerns.

On Aysdalegate cottages, the example being talked about today, officials from DEFRA and the Drinking Water Inspectorate were in contact recently with the local authority, Redcar and Cleveland Borough Council, to discuss the case. I understand there are nine households supplied by a beck located on third-party land—the third party is a local livestock farmer. I understand that the local authority has in the past proposed a number of options as part of its risk assessment, including: improving the existing supply; exploring a new water source, such as a borehole; and mains connection.

I was pleased to hear that the water company has stepped up to say that it will pay for the cost of exploring the options, and it should be thanked for that, because it is not an insignificant amount of money that it has committed to, so I am pleased about that. Installation of high-quality filtration and UV treatment equipment at the point of use in each household is likely to significantly improve the quality of the supply. The Drinking Water Inspectorate provides guidance on UV treatment on its website and recommends that any UV system used for this purpose be tested by an accredited laboratory. The inspectorate was at pains to explain to me that it is really important that the right kit be used if that road is taken, because some kit would not be as good.

I understand from my officials’ discussions with the local authority that, to date, not all residents at these properties have wanted to connect to the mains. Ultimately, the householders will need to reach a consensus on what joint action they want to take to improve their water supply.

[Sir Simon Clarke]

I thank the Minister for her helpful reply. From my conversations with the residents, I think that they have in some cases indicated a lack of willingness to connect precisely because the costs are anticipated to be beyond their means. This goes to the fundamental point that I was driving at: there is a mechanism, but it is effectively out of reach for, in this case, a very deprived group of people.

[Rebecca Pow]

I hear what my right hon. Friend says and thank him for clarifying. I obviously sympathise with the challenges faced by people on private supplies.

My right hon. Friend might be interested to hear that the Drinking Water Inspectorate has recently commissioned a research project to review the impact of the current private supplies regulatory framework on public health. To be honest, the inspectorate considers that some areas may need to be looked at forensically, and it will return with its results early in 2024—not too long away. As with all legislation, the Government will keep the regulatory framework for private water supplies under review, but we look forward to hearing what the inspectorate comes back with, because it may well have some synergy with some of my right hon. Friend’s points. As for individual cases, the Drinking Water Inspectorate can provide technical advice to local authorities, and that facility should be made full use of. My office would be happy to provide all the details and contacts if my right hon. Friend does not have them.

I cannot give my right hon. Friend exactly what he has asked for, but he has raised an important issue. I think the review will be helpful in directing us, so we look forward to its outcome. I thank him again for bringing the matter to the attention of the House.

Question put and agreed to.

Draft Environmental Permitting (England and Wales) (Amendment) Regulations 2023

Rebecca Pow Excerpts

Tuesday 5th September 2023 General Committees

[The Chair]

Before I call the Minister, I would like to say that, as the eagle-eyed will have spotted, Members may remove their jackets.

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

I beg to move,

That the Committee has considered the draft Environmental Permitting (England and Wales) (Amendment) Regulations 2023.

It is a pleasure, as ever, to have you in the Chair, Mr Davies. The regulations were laid in draft before this House on 28 June and amend schedule 9, part 2, to the Environmental Permitting (England and Wales) Regulations 2016. The Government committed to amending those regulations in the response to the 2021 consultation on the extended producer responsibility for packaging, or EPR, scheme to obtain enhanced packaging waste data from materials facilities. The EPR scheme will move the cost of dealing with waste generated by households from local taxpayers and councils to businesses that handle and use packaging, making producers responsible for the packaging they place on the market.

In 2020, the Department for Environment, Food and Rural Affairs undertook a post-implementation review of schedule 9, part 2, to the Environmental Permitting (England and Wales) Regulations 2016. The review included a recommendation to explore the connections between materials facilities data reporting and the EPR scheme. In many cases, those facilities are where the material ends up. The review concluded that DEFRA would consider amending the regulations. These amendments will improve the quantity and quality of packaging waste data that materials facilities are required to collect, record and report. That in turn will support fair and accurate cost assessments and payments through the EPR scheme.

I turn to the details of this instrument. These amendments to the regulations will introduce enhanced sampling, recording and reporting requirements for materials facilities and increase the scope of the regulations to include more types of facilities. Materials facilities will be in scope of the amended regulations if they receive and manage at least 1,000 tonnes of household or household-type material a year for the purpose of reuse and recycling. The sampling requirements will include a higher input sampling frequency—in other words, sampling will be conducted more often—and more material categories for facilities to sample and report against. There will be an increase in the number of categories from four to 10, and new categories including a requirement to record data on fibre composites such as Tetra Paks and coffee cups that have a layer of aluminium or plastic inside. Facilities will also need to separately record and report against packaging and deposit return scheme material proportions, to support packaging composition calculations or exemptions under EPR.

[Rachael Maskell (York Central) (Lab/Co-op)]

It seems that these regulations are necessary, but I am concerned that the Government’s approach will drive behaviour change far too slowly and that the scale of non-recyclable packaging usage will still have an impact on the environment. What is the Minister doing not only to recycle and to reuse, but to reduce the amount of packaging used?

[Rebecca Pow]

I share the hon. Lady’s views entirely. That is the whole purpose of this: to drive the change we need to reduce the overall amount going on the market, because our hierarchy is reduce, reuse, recycle. The reason why the data is so important is that it helps to inform how much is in fact going on to the market; it will then be used by the scheme administrator, in setting up the extended producer responsibility scheme, to work out what the fees will be.

The less recyclable a company’s product is, the more that company will pay—so it will say, “Hold on a minute. Could we make this recyclable?” Loads of companies are probably already reducing the amount of packaging that they use ahead of this system; they know that if they do not, it will cost them. All the schemes that we will be rolling out will work in tandem to achieve what the hon. Lady is asking for.

[Charlotte Nichols (Warrington North) (Lab)]

To pick up on that point, the Minister referred to companies paying according to how much of their product is recycled. What consideration has she given to producers that already have closed loop recycling schemes in place? Wiltshire Farm Foods in my constituency is an example. It has a scheme that is more effective for recycling its own products than what the Government propose here.

[Rebecca Pow]

I thank the hon. Lady. I have met representatives of the company—as have many colleagues, I believe. It has a really interesting model. In fairness, it was ahead of the game in having effective closed loop models. We are working with it to come up with a solution for all. Obviously, we do not want to penalise people who are already doing the right thing.

The enhanced recording and reporting requirements will require materials facilities to provide more information on waste suppliers and samples taken, and to report all raw data to regulators to support the improved analysis. To give an example of that in practice, I should say that in my constituency of Taunton Deane the council contracts Suez, a waste management company, to perform our waste collection. When a Suez truck picks up household waste—I hope my son has put ours out this morning; I forgot to leave him a note—and delivers it to a materials facility for reuse and recycling, that facility will sample the waste so that we know how much is EPR packaging material and how much is newspapers, magazines, deposit return containers, contamination or other non-packaging materials. The waste collected by Suez from neighbouring councils, or from its own commercial contracts with business, would be sampled separately.

The process will help to ensure that the EPR payments to my local council reflect the quality and quantity of packaging materials collected from my constituents’ homes. That will provide valuable new information to help my council to optimise waste collection operations, and, through EPR payments, to provide a new means to incentivise councils to improve performance and ensure that producers get good value for money.

These amending regulations apply to England and Wales only. Scotland and Northern Ireland are aligned to our policy intent when it comes to bringing in enhanced materials facility sampling requirements and waste data reporting to support EPR.

[Rachael Maskell]

I am very conscious that local authorities are tied into waste disposal contracts that will not deliver on the Minister’s objectives. What is she doing to enable local authorities to renegotiate those contracts to meet these environmental standards?

[Rebecca Pow]

I thank the hon. Lady for that intervention. My officials have close and continuing engagement with local authorities. We understand that there are a whole lot of different models. We are engaging with local authorities on how they can work through the new systems to deliver what we need, without creating hardship for those authorities. Some councils are clearly tied into contracts, and all that is being worked through with them. However, as I said, the general direction of travel is to reduce, recycle and reuse and to get to our targets for cutting down the overall amount of waste that we create as a society.

As I was saying, these amending regulations apply to England and Wales only. Scotland and Northern Ireland are aligned with our policy intent to bring in the enhanced materials facility sampling requirements and the waste data reporting to support EPR. My officials and I are working closely with the relevant Departments in the devolved Administrations to develop that legislation. The measures will be crucial for providing a mechanism to obtain enhanced data on packaging and the waste management services needed to achieve the effective implementation of EPR, and realise the associated environmental benefits.

--- Later in debate ---

[Rebecca Pow]

I thank the shadow Minister. Although he is a stand-in, it is always good to see him. I also welcome the new shadow DEFRA Minister; I know we will be meeting very soon.

The shadow Minister suggested that it had been a bad summer for me, but in fact it has been a good summer. I went on my water walkabout around the country. Contrary to what one might read in the press, I saw an awful lot of excellent work going on in the water space, across a whole range of facilities, including a great many sewage treatment works, where I looked at the monitoring kit. I analysed in great detail how the whole system works, as well as the new schemes we are bringing forward to get duration monitoring, and extra monitoring upstream and downstream.

Similarly, I saw some of the excellent work going on with chalk stream restoration, particularly in the consistency of my hon. Friend the Member for Bury St Edmunds and other counties. It gave me great heart that what we are doing on chalk stream restoration in particular is game changing. We absolutely will be committed to that.

While we are talking about our record, let me say that, far from people overseas looking at us and thinking that we are downgrading what we are doing and that what we are doing is not good enough, we are actually revered across the world. I did go to see another piece of DEFRA work, which was overseas, that was working on waste recycling and ocean protection regarding plastics. I can tell hon. Members that the schemes that we are bringing in—the way they all knit together—and our collection system, from household to recycling facility and onwards, are really revered by other countries.

Yes, we still have a long way to go to knit this all together in a completely circular economy, but I will not allow the shadow Minister to berate us for what we are doing, because I know that it is the right thing to do. We will continue with it—we are absolutely committed to it, as he knows—and it will make the difference that we need; we are already well on track. That was slightly out of the box, but while we are at it, I will point out that 93% of bathing waters are good or excellent—I have seen a lot of that, too.

To answer the shadow Minister’s questions, yes, there has been a great deal of local authority consultation. It has been ongoing with officials and ongoing with me. As I explained earlier, it is very important, and it will continue. On the impact assessment, as I said earlier, as part of the Government response to the consultation on the EPR scheme, we produced an EPR impact assessment, which included the expected costs to materials facilities in meeting the proposed regulatory requirements. Assumptions about the estimated number of materials facilities in scope were then revised with regulators, following clarification on the definition and the types of facilities in scope of these amending regulations, further reducing the burden on facilities where possible. Originally, 739 facilities were estimated to be in scope in England. That was revised down to 159, following our receiving the updated data and the assumptions of the Environment Agency. As a result, the threshold required for producing a full impact assessment for this SI was not reached. The shadow Minister asked about that, so I hope that what I have said answers his question. A lot of the facilities that were in there were moved out, because they will be assessed in a different way—they are mostly the household recycling centres, where material goes to. That material will be captured, but in relation to what we are dealing with today, the facility numbers have been revised right down.

This will be a new recording requirement for local authorities, but they have known that it has been coming down the track, because we consulted a while ago, and it does not actually come in for 12 months, so they have more time to gear themselves up to it. They will also get their first invoices when all this data and other data has been used to calculate the expected fees—they will get their first invoices for EPR in October 2025.

[Daniel Zeichner]

On the costs, will the Minister clarify something? Many of these organisations seem to think that there will be a significant extra cost. Does she think they are wrong?

[Rebecca Pow]

Well, we carried out the impact assessment. One of the purposes of the entire scheme, when it is correctly functioning, is that the amount of waste going into the system will overall be reduced. Of course, that is why we are asking the organisations to collect data, for example on what later will be in the deposit return scheme. Most of that will not be in this waste once this gets working properly. A lot of it will not even be there. It will, just to start with, and that is why gathering the data is so important, because the whole system will be functioning as one, so that the costs will not be prohibitive, according to our calculations and working with them, when they have to start doing this extra sampling.

The shadow Minister also asked about enforcement. The EA is already starting work with the permitted facilities to talk to them about what is expected of them, what they will have to do, and how they will bring that in. I hope that answers his question; we can write to him with more detail on the funding if he would like. We are also constantly working with the producers. They are the ones who put the packaging on the market and they will be the ones who have to pay the fees. That is why, as the hon. Gentleman will know, we moved the date for the start of the EPR, which, along with current impacts around the cost of living and inflation, was largely to give industry members more time. Work with them is ongoing to make sure we get this right. It is new and complicated, but I am engaged with the Food and Drink Federation, the British Retail Consortium and so on, as are my officials. That is important.

That covers the questions. The shadow Minister asked about the overall schemes for the circular economy and the “polluter pays” principle. All the schemes are linked to the whole “polluter pays” principle, and that is what underpins them. Although there have been some delays, we are still doing all the work to make sure they are introduced within the timescales we have set. We are looking all the time at feedback from industry, hence the delay on the EPR scheme by 12 months, and I also remind the shadow Minister that it was a joint decision with the devolved Administrations. The additional year gives everyone more time to prepare for the systems when they come in. The materials facilities will need to meet the requirements introduced by this statutory instrument in advance of the EPR in 2025. We want all those requirements implemented before then to ensure that the data can be used by the scheme administrator, as I said earlier, to continue developing their fees and payment mechanisms.

Consistent collections in England for households will introduce a simpler system for recycling waste material. That will not be introduced until after the implementation of the EPR for packaging scheme in 2025. Councils are still waiting for the absolute detail on that, and that is why we are working with them to make sure that everything is streamlined and they know what will be required. I hope I have covered most, if not all, of the shadow Minister’s questions. I will write to him about the detail of the sums.

In summary, this statutory instrument will make crucial changes to the Environmental Permitting (England and Wales) Regulations 2016. Those amendments will introduce a new sampling requirement on materials facilities and bring more facilities in scope. That in turn will enhance the quality and quantity of waste data, strengthening the original objective of the regulations in response to the post-implementation review, and support fair and accurate payment calculations in the EPR scheme. I trust that I have made it clear about what the SI brings in; once again, I thank all hon. Members.

Question put and agreed to.

Strengthening Environmental Civil Sanctions

Rebecca Pow Excerpts

Wednesday 12th July 2023 Written Statements

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

Protecting our natural environment is a Government priority. The Government are pleased to announce today that we have laid new secondary legislation to strengthen environmental civil sanctions and provide the environmental regulators with the tools they need to hold operators to account.

Currently, there is a cap of £250,000 on variable monetary penalties imposed by the environmental regulators for a wide range of offences. We are removing this cap to make the penalty unlimited, so that penalties are proportionate to the degree of environmental harm and culpability. Strong safeguards are in place, including the ability of an offender to pay, when regulators determine the size of penalties. The Environment Agency will use the independent Sentencing Council guidelines to underpin all penalties.

Strengthening regulations that ensure polluters will be held to account is part of our wider plan to reduce pollution and protect the biodiversity and ecology of our natural environment. All funding from fines and penalties handed out to water companies that pollute our rivers and seas will be invested in schemes that benefit our natural environment.

We know that people across the country want to see more progress in tackling pollution and, if operators breach regulations, our environmental regulators need the right powers to impose penalties. These new penalty changes will deter organisations from polluting and increase their incentive to comply with environmental regulations.

We are also introducing unlimited variable monetary penalties as a civil sanction for offences under the Environmental Permitting (England and Wales) Regulations 2016, to ensure regulators have the right tools to drive compliance across a range of sectors and breaches.

This announcement follows our recent consultation, first announced in “Plan for Water”, on strengthening the enforcement regime where the overwhelming majority of responses from the public supported our proposals. These changes complement a suite of Government action under way to better hold water companies to account, including new powers for Ofwat that will enable it to take enforcement action against water companies that do not link dividend payments to performance for both customers and the environment. More details can be found in the attached annex.

Together, these changes will provide a proportionate deterrent and punishment for operators who breach their permits and will help regulators to better protect the environment.

The civil sanction regime for environmental offences should act as a clear deterrent to offenders across all industries, from water companies to waste operators—we will not let companies get away with illegal activity and where breaches are found we will not hesitate to hold companies to account.

Annex 1

As set out in the Government’s “Plan for Water”, we are driving action to strengthen regulation and drive improvements across the water sector, including:

More investment

The £2.2 billion of accelerated investment by water companies, to spend on new infrastructure to tackle pollution and increase our water resilience—including £1.7 billion on storm overflow improvements to cut discharges by 10,000 per year.

Creating a new water restoration fund, using money from water company fines and penalties to support local environmental projects.

Delivering long-term catchment action plans—community-led schemes which aim to improve waterways and surrounding eco-systems—to improve water bodies in England.

More than doubling the money for slurry infrastructure by increasing funding to £34 million for farmers to improve slurry storage, reducing a major source of water pollution.

Supporting farmers to store more water on their land through the £10 million Water Management Grant to fund more on-farm reservoirs and better irrigation equipment.

Stronger regulation

Consulting on banning the sale of plastic wet wipes.

Enabling key water supply infrastructure—such as reservoirs and water transfer schemes—to be built more quickly.

Bringing forward the deadline for water companies to reduce chemicals in wastewater treatment to 2027.

Consulting on extending environmental permits to cover dairy and intensive beef farms, and to improve how this is done for pig and poultry farms, in order to better manage sources of pollution.

Tougher enforcement

Enabling Ofwat to link dividends to company performance, and tightening up measures on “water bosses” bonuses.

Ofwat has also announced measures to penalise companies that fail to properly monitor storm overflows and determined that in the financial year 2023-34, the water sector must return £132 million to customers as a result of underperformance.

[HCWS929]

Environment, Food and Rural Affairs

Rebecca Pow Excerpts

Monday 10th July 2023 Ministerial Corrections

[Seema Malhotra (Feltham and Heston) (Lab/Co-op)]

Many of my constituents are hugely worried about reports of Thames Water being on the brink and what that could mean for their bills. Thames Water has been managed appallingly: leaks have not been dealt with, sewage has been continually dumped and the former chief executive officer Sarah Bentley needed to be asked to forgo her bonus. All the while, the Government have been missing in action. Why are the Government yet again running to catch up—nothing in the Minister’s statement gives confidence that they have a grip—with our constituents paying the price?

[Rebecca Pow]

Where water companies underperform and do not meet their targets, a process is in place whereby basically they have to credit the money back to their customers. Last year, £143 million was credited back in that respect. So the regulator does have the tools to do that. It has tightened up so many of its measures, all of which will affect all the water companies.

[Official Report, 28 June 2023, Vol. 735, c. 286.]

Letter of correction from the Under-Secretary of State for Environment, Food and Rural Affairs, the hon. Member for Taunton Deane (Rebecca Pow):

An error has been identified in my response to the hon. Member for Feltham and Heston (Seema Malhotra).

The correct response should have been:

[Rebecca Pow]

Where water companies underperform and do not meet their targets, a process is in place whereby basically they have to credit the money back to their customers. Last year, £132 million was credited back in that respect. So the regulator does have the tools to do that. It has tightened up so many of its measures, all of which will affect all the water companies.

[Dame Angela Eagle (Wallasey) (Lab)]

When they were privatised, water companies had all the debt written off, so they started with zero. Since then, they have borrowed £53 billion, much of which has been used to help pay £72 billion in dividends. The investment has been made by borrowing and putting it on to customers’ bills. Now, the ratings agency S&P has negative outlooks for two thirds of the UK water companies it rates, because they are over-leveraged and took out too much debt in an era of low interest, which they now have to pay back. This is not a triumph but a huge problem for the resilience of our water industry. What will the Minister do when water companies start falling over?

[Rebecca Pow]

For information, Thames Water itself has not paid any dividends for the last six years. Ofwat will rightly hold companies to account when they do not clearly demonstrate the link between dividends and performance. We made that possible through the landmark Environment Act.

[Official Report, 28 June 2023, Vol. 735, c. 288.]

Letter of correction from the Under-Secretary of State for Environment, Food and Rural Affairs, the hon. Member for Taunton Deane (Rebecca Pow):

An error has been identified in my response to the hon. Member for Wallasey (Dame Angela Eagle).

The correct response should have been:

[Rebecca Pow]

For information, Thames Water itself has stated that it has not paid any dividends to shareholders for the last six years. Ofwat will rightly hold companies to account when they do not clearly demonstrate the link between dividends and performance. We made that possible through the landmark Environment Act.

Oral Answers to Questions

Rebecca Pow Excerpts

Thursday 6th July 2023 Commons Chamber

[Sir Simon Clarke (Middlesbrough South and East Cleveland) (Con)]

6. What mechanisms exist to supply safe drinking water to homes without access to mains water.

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

Private drinking water supplies are regulated by local authorities, which receive scientific and technical advice from the Drinking Water Inspectorate. Local authorities sample and identify water-quality risks, can serve notices to correct any issues identified and have remedial powers if those responsible for the supply do not comply with the notice. Private water supply compliance is steadily improving. In 2022, 96.4% of private supplies were compliant, up from 91.4% in 2010.

[Sir Simon Clarke]

The nine homes of Aysdalegate near Charltons do not have access to mains water. Over the last decade, Redcar and Cleveland Borough Council has performed drinking water checks nine times, and on all occasions, the supply has been judged unsatisfactory owing to bacterial contamination, including E.coli and enterococci. A regulation 18 notice, which specifies that the water requires boiling before drinking, has been in place permanently since December 2017, and residents report to me finding tadpoles and other life in their drinking water. This is a Dickensian scandal in 2023, but Northumbrian Water has advised that it will cost these low-income homes over £100 each simply to give them a quote for mains water connection. That is obviously unacceptable. Will my hon. Friend agree to meet me urgently so that we can discuss how to help my constituents?

[Rebecca Pow]

I am sorry to hear about this issue, which my right hon. Friend has already brought to my attention. Our legislation does allow for those on a private supply to request a connection to the mains supply, but it is right that the legislation allows a water company to charge for the cost of making a new connection, because otherwise it would impact on all customers’ bills. The local authority can give advice, and I urge him to keep contacting it, but if there is anything more we can discuss usefully, I would be happy to do so.

[Jim Shannon (Strangford) (DUP)]

Like yourself, Mr Speaker, I am of a generation that can well remember when water came from the wells, and it was pure and clean. Times have moved on, and we have realised that such water is not available to everyone, as the right hon. Member for Middlesbrough South and East Cleveland (Sir Simon Clarke) said. I ask the Minister this question ever mindful of the discussions that she will have had: have there been any discussions between the Government and the devolved Administration in Northern Ireland to ensure that grants are available for people who need to go on to mains water and that their water is pure, as it was many years ago but is not always today?

[Rebecca Pow]

I thank the hon. Gentleman for his question; I, too, have a well, but it does not supply our drinking water. I think a lot of people have wells on their properties, or locally on their roads or wherever. The issue he has raised is a matter for the Northern Ireland Administration, but here the Drinking Water Inspectorate has commissioned research into the impact of future private water supplies, as well as the whole regulatory model and legislative framework.

[Antony Higginbotham (Burnley) (Con)]

7. What steps she is taking to support farmers.

--- Later in debate ---

[Robbie Moore (Keighley) (Con)]

A couple of weeks ago, I visited Yorkshire Water’s sewer improvement project. This £15 million scheme under the A65 in Ilkley is only happening as a result of a huge campaign by the Ilkley Clean River Group and our passing the Environment Act 2021, which the Opposition voted against at every stage. Does the Minister therefore agree that the Government are purely focused on cleaning up the water quality of our rivers?

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

I could just say yes, but I will add a bit more. My hon. Friend is absolutely right that it is this Government who have got water quality on the radar. We are cleaning up our rivers and our bathing waters, 93% of which are classed as good or excellent. Our plan for water will ensure that we provide the clean and plentiful water we need for generations.

[Liz Twist (Blaydon) (Lab)]

Gateshead food bank and Feeding Families, both of which operate in my constituency, have seen huge increases in the demand for food parcels over recent years. With food inflation running at 18.3%, the situation will only get worse. What will the Minister do to tackle food inflation, so that people do not have to rely on those organisations?

[Anna Firth (Southend West) (Con)]

The use of storm overflows is of huge concern to my residents in Southend-on-Sea. Due to this Government’s actions, Anglian Water was supposed to have its plan for mitigating the use of overflows on the Secretary of State’s desk last Friday. Was it there, and when will my residents be able to see it?

[Rebecca Pow]

Every water company was asked to put a plan for every storm overflow on the Secretary of State’s desk. I can tell my hon. Friend that all the plans have arrived and are being analysed.

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

What should I say to my twin grandsons, who are here today, about their future given that they live in Cambridge, where air quality is poisoning young people, pregnant women and many others? What will the Secretary of State really do about cleaning up the environment for that generation?

Draft Environmental Protection (Plastic Plates etc. and Polystyrene Containers etc.) (England) Regulations 2023

Rebecca Pow Excerpts

Tuesday 4th July 2023 General Committees

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

I beg to move,

That the Committee has considered the draft Environmental Protection (Plastic Plates etc. and Polystyrene Containers etc.) (England) Regulations 2023.

It is a pleasure to have you in the Chair, Mrs Harris—and particularly in those glasses, if I may say so. I think you are the envy of the room. The regulations were laid before the House on 23 May and their purpose is to restrict the supply of single-use plastic plates, bowls and trays and to ban the supply of single-use plastic cutlery, balloon sticks and expanded and extruded polystyrene food and drink containers, including cups. This statutory instrument applies to England only as environmental protection is a devolved matter. I will cover both its purpose and its impact, starting with the former.

It is the Government’s ambition to leave the environment in a better state for the next generation. Our 25-year environment plan and resources and waste strategy outline the steps we will take to eliminate all avoidable plastic waste by 2042. Government measures focus on extracting maximum value from plastic materials by making sure that we keep them in circulation for longer, moving away from the take, make and throw model and shifting towards a circular economy. Single-use plastic items are especially problematic as they are typically littered or discarded to general waste, rather than recycled, because of the difficulty in segregating, cleaning and processing them.

The statutory instrument will restrict and ban commonly littered single-use plastic items that we so often see polluting our environment and that are, sadly, frequently reported in beach litter surveys. Such items can then endanger wildlife and damage habitats. As well as the items causing damage to biodiversity, there are costs associated with their clean-up. It is estimated that the UK spends more than £15 million each year just on removing beach litter. I think all those present will agree that that is a colossal waste of money that we should not really have to spend. That amount does not include the costs imposed on our tourism and fishing industries, which are also impacted.

As is well understood, plastic eventually breaks down into microplastics that end up in our soils and seas and eventually permeate our food chains. The full impact of microplastics, especially on human health, is still being uncovered. To build on the success of the bans of other single-use plastic items and our carrier bag charge, further action is needed to curtail the use of problematic single-use plastic items and their release into the environment.

Let me turn to the statutory instrument’s impact. We acknowledge the ongoing voluntary action that industry is taking to reduce the use of the relevant items. That action is led by the UK plastics pact, which has done really beneficial work. The new regulations will provide support and ensure that all businesses move to more sustainable alternatives.

To inform the regulations, we gathered the views of key stakeholders by running a public consultation on the measures, between November 2021 and February 2022. The consultation showed overwhelming support for the measures, with more than 80% of respondents supporting their introduction. We also consulted a range of businesses, the NHS and charities to determine the regulations’ scope. To minimise the impact on small businesses, we have given a nine-month lead-in time since the announcement of the ban. It is intended that the instrument will come into force on 1 October this year, from when it will be an offence to supply single-use plastic cutlery, balloon sticks and certain types of polystyrene, with no exemptions.

The ban on the supply of single-use plates, trays and bowls will apply only when the items are supplied to the end user—typically, a consumer will then use the item for its intended purpose. Businesses can continue to supply the items to other businesses, thereby allowing the continuing use of single-use plastic plates, trays and bowls for packaging, as defined in regulation 3 of the Packaging (Essential Requirements) Regulations 2015. This will avoid confusion with the Government’s proposals for extended producer responsibility for packaging, which will make producers responsible for the costs of their packaging throughout its cycle. Those items will, then, be captured elsewhere, although it is important to stress that in all cases we encourage businesses to use reusable alternatives where practical.

We are determined to get this right and it is vital that businesses and the public are informed about what they can and cannot do. We have recently published guidance for businesses, and we will publish our guidance for local authorities in advance of the instrument coming into force. The guidance will assist manufacturers, suppliers, retailers and the public in understanding the enforcement and sanctions regime. The Department for Environment, Food and Rural Affairs intends to raise awareness further by meeting local authority representatives to provide clarity and support on the restrictions and the exemptions, and to empower trading standards officers to carry out effective enforcement.

The instrument also amends the Environmental Protection (Plastic Straws, Cotton Buds and Stirrers) (England) Regulations 2020 and the Environmental Protection (Microbeads) (England) Regulations 2017. It amends the civil sanctions provision in those instruments to provide for fixed monetary penalties instead of variable monetary penalties. There was a great deal of discussion and consultation about this. The change was actually called for, because fixed penalties would be easier to understand and to apply. The amendments will ensure consistency with the civil sanctions provisions in the instrument before the Committee and will make enforcement easier for local authorities. The amendments to the 2020 regulations also remove a transitional provision relating to medical devices, which is no longer needed.

[Valerie Vaz (Walsall South) (Lab)]

I know the Minister is about to finish, but before she sits down, will she say whether local authorities, which are broadly the enforcers of the measure, will be given extra resources?

[Rebecca Pow]

There has been full consultation on the funding that will be required for trading standards departments to carry out the duties that will fall to them. It amounts to approximately £660,000 a year over three years, and local authorities have agreed that that is an adequate sum. There was much negotiation with them to make sure that the funding was in the right ballpark, but such measures are always reviewed three to five years after implementation to see how they are working and whether any tweaks are needed. I can therefore assure the right hon. Lady that resources have been discussed and clarified.

Finally, I have to mention a typographical error in the draft instrument. The heading preceding regulation 40, “Part 1: Amendments”, should be “Part 6”. I am glad that somebody spotted that. Our intention is to correct the error before the instrument is made.

I believe the regulations send a strong signal to industry and the public that we need to think really carefully about the products we buy, the materials from which they are made, and what is being put on the market. The instrument will definitely bring us a step closer to protecting the environment and reducing the risk of harm to human health and marine life. I commend the draft regulations to the Committee.

--- Later in debate ---

[Rebecca Pow]

First, although there were a number of questions—I have come to expect nothing less—I thank the shadow Minister for welcoming the regulations. I think we are all agreed that the measure is necessary and that we need to get behind it. It is certainly incredibly popular with the public, who want to see us doing the right thing for the environment. That is certainly what we are doing on the Conservative Benches, and it is good to have the Labour party supporting us in that.

The hon. Member for Newport West asked a number of questions. If I do not cover them all, I will of course write to the Committee, as there was quite a list pouring out. She asked about the consultation process and mentioned 15 days. Actually, prior to those 15 days we consulted extensively on the issues. We did so in 2021 and throughout 2022 before announcing our intentions this January. We have worked really closely with stakeholders throughout to shape the policy, because we need it to work for businesses.

I thought the hon. Lady would mention the 15-day issue, but it applies only to this statutory instrument to implement the policy, not to the details of the policy, which were all thrashed out in the 12-week consultation. The requirements for the London Gazette consultation, including the minimum length of time, are all specified under the Environmental Protection Act 1990 and are, therefore, deemed suitable for Parliament. DEFRA chose to go a bit further than required by the Act and consulted for longer and published the SI alongside the Government’s consultation response, to ensure that it reached as wide an audience as possible. I hope that the hon. Lady is satisfied with that.

The hon. Lady asked how engaged we have been with businesses. Obviously, that is really important. Our response to the consultation was published in January. As I have said, we have engaged extensively with businesses, trade groups and even individual organisations such as the NHS. We also published guidance on gov.uk back in May, giving industry ample time to prepare. When we first announced our intentions, I went out and did a whole lot of media. I seem to remember that we went to the Co-op and did a whole lot of items about single-use plastics, which got wide coverage and, indeed, wide support from the public.

The hon. Lady asked about the WTO. We did not expect to get comments back from it. Lots of its members have implemented measures on plastics, so it is something that it was expecting. I will not say that it was a formality as such, but it is something that we had to go through, as she will well know.

The hon. Lady also raised the devolved Administrations. Of course, this SI is for England only, but as ever we collaborate really closely with the devolved Administrations. We are doing so right now on our other, wider measures to reduce plastic packaging, particularly the extended producer responsibility regime. Just the other day, I chaired a meeting with all my counterparts in the devolveds. Officials are working incredibly closely. In devolved areas, other nations are perfectly able to act as they wish in their own circumstances. There was an exemption under the United Kingdom Internal Market Act for a number of single-use plastic items, including straws, stirrers, cotton buds, plates, cutlery, balloon sticks, and expanded and extruded polystyrene food and drink containers. That was largely because Scotland brought in its ban in June and ours will come in October, so that seemed a perfectly sensible thing to do just for those few months. I hope that the hon. Lady agrees with that.

I think that that more or less answers the points that have been raised. I am very grateful to the shadow Minister for her support. I reiterate that we believe that these measures are a really important part of our much wider strategy to tackle plastic pollution, not least on the international stage, where we are heavily involved in the international plastics treaty, and that they are an important marker for us in all the other, wider things we are doing as a Government. I thank Members for listening so intently and hope that they are reassured that we are doing the right thing for the environment. I certainly believe that we are doing so and therefore recommend the draft regulations to the Committee.

Question put.

2.49 pm

Committee rose.

Fishing Industry

Rebecca Pow Excerpts

Thursday 29th June 2023 Commons Chamber

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

My goodness! What a passionate and vociferous lot we have on all Benches. They are all champions for the fishing industry. We have even had some fishing-activity rivalries between constituencies—I see all that as very healthy, as, I am sure, do you, Mr Deputy Speaker.

I start by thanking my hon. Friend the Member for Banff and Buchan (David Duguid) for stepping in at short notice to lead the debate. He is, of course, a huge champion for the fishing industry and speaks with such great knowledge given the ports in his constituency, including Peterhead and Fraserburgh, and the rich fishing grounds that he so often talks about in this place. We also send our best wishes to the right hon. Member for Orkney and Shetland (Mr Carmichael), who was going to lead the debate but could not be with us.

A lot of important points have been raised. I will try to deal with as many of them as I can in the time available. Those that I do not cover I will pass to the Minister for Food, Farming and Fisheries, my right hon. Friend for Sherwood (Mark Spencer), and I promise that he will reply to Members on any outstanding issues that must be dealt with.

Many Members have mentioned what a dangerous job fishing is in the UK. The collision last October between the Guiding Light and the Guiding Star, off the constituency of my hon. Friend the Member for Banff and Buchan, was a reminder to us all of the dangers that our fishers face day in, day out. Fortunately, the crews of both vessels were rescued safely and no lives were lost, but we know that the outcomes of such instances are often sadly much more tragic, and I want to remember those who have lost their lives, not least— I am sure she will not mind me mentioning it—the husband of our hon. Friend the Member for South East Cornwall (Mrs Murray).

I will put out a few key points before I turn to the points that have been raised. First, I am really proud, as I believe we all are, of the contribution that fishing makes to the lifeblood of this nation and to our coastal and rural communities. We have only 22 miles of coast in Somerset, but we still love it and are very proud of it. Every time a fisherman goes to sea, they are helping to support their local communities and economies and to provide healthy, low-carbon, nutritious food.

Secondly, the fishing industry relies on a healthy ocean, and no one knows that more than the fisheries industry itself. I am so aware of it, as the Minister responsible for environmental quality. We must have a joint approach of achieving both economic sustainability and environmental sustainability; those two things go hand in hand for our seas.

[Alex Cunningham]

The Minister talked about water quality. She heard my speech about the issue affecting the north-east coast. Does she agree that we have to step up the testing not just on Teesside and off the North Yorkshire coast but across the country, if we are to ensure that our sea is healthy and sustaining sea life?

[Rebecca Pow]

I was going to come to the hon. Gentleman’s point later, but it is this Government who have increased the testing and brought in all the monitoring. We have a real focus on the bathing water areas along our coasts. That has been made a top priority through our storm overflows discharge reduction plan and our plan for water.

Let me touch quickly on the issues that the hon. Gentleman raised about the area around Whitby and Scarborough. He will know that our chief scientific adviser invited a group of independent scientists to join a crustacean mortality panel to review all the evidence, and that panel was unable to identify a clear, convincing single cause for the mortality. We continue to monitor it—he is right: that is critical—and to look at any reports of dead sea life on the north-east coast. Everything we do must be based on scientific evidence, and monitoring is key to that.

The health of our fish stocks in our waters is improving. For 2023, 40% of total allowable catches were set consistent with International Council for the Exploration of the Sea advice, compared with 34% in 2022. That is the biggest improvement we have had since the metric was introduced in 2020. We look forward to ICES publishing its scientific assessments of many of our key stocks tomorrow.

We know that much more needs to be done to ensure that more of our stocks are fished at levels in line with the maximum sustainable yield and that we protect important species and habitats, ultimately reaching our goal of good environmental status. It was great news that the Shark Fins Bill received Royal Assent today, which is just one indication of the care we take with the species around our coasts—and even the other ones being fished off our waters—and of the steps we have taken.

Thirdly, I recognise that one of the greatest concerns of the sector is spatial pressure or spatial squeeze, to which many Members have referred, in particular my hon. Friends the Members for Banff and Buchan and for South East Cornwall. These pressures are significant. I was made well aware of that when I had offshore wind in my portfolio as the marine Minister. In Grimsby I met lobster farmers in the Holderness Fishing Industry Group who were concerned that growing offshore wind development, which is important for the nation, would reduce the industry. But through liaison and close working, they have worked out a good model so that they can continue to catch lobsters in a healthy, sustainable way and we can have offshore wind. That is a very good example.

In England, the cross-Government marine spatial prioritisation programme is helping to support a more strategic approach to managing all the pressures. The matter is devolved, and other nations will have their spatial issues. We are dealing with this in England, but it is important that everyone talks together and deals with it. As the hon. Member for Strangford (Jim Shannon) said, everything going on around our coasts is important, and we must try to make these things work together. It is only with the input and involvement of the fishing industry that we can understand its views, with everybody having a piece of the sea—if we look at a map, we see that everybody does want a piece of it. It is a complicated picture, but we must work together to steer through it.

Fourthly, this Government have grabbed the opportunities offered by EU exit to start reforming our fisheries management arrangements here in the UK. We are moving away from the one-size-fits-all straitjacket of the common fisheries policy, which was so disliked by fishermen, to a fisheries management system that will better reflect the needs of our diverse industry here in the UK, support our coastal communities and better protect our marine environment. We have to take every opportunity.

The SNP and the Liberal Democrats wanted to stay in the common fisheries policy, but it is this Government who took the step to move out of it, and we have to take the opportunities of doing so. That includes the joint fisheries statement, which will provide a framework for sustainable fisheries management for years to come. It also includes our fisheries management plans, which are being developed with the fishing industry, the first six of which are due to be consulted on shortly. The idea is that they will become the gold standard for fisheries and used as a template. We have also consulted on how to share out from 2023 and beyond the additional fisheries quota gained from our exit from the EU and put in place reforms to strengthen the economic link conditions.

There has been a lot of talk today about trade and about the trade and co-operation agreement. The TCA set out a new quota-sharing arrangement for UK and EU fish stocks, with a significant uplift for UK fishers— 25% of the average annual EU catch from UK waters is being phased in over five years from 2021, with further increases each year until 2026. There has been a lot of discussion about what will happen in 2026. In 2026, access to waters will become negotiable as part of the UK-EU annual consultations, and this could be used to pursue several possible objectives, such as increased quota shares in the stocks we fish and sustainability improvements. We have already begun talking with stakeholders to seek their views, and this will be increasingly important. I hear all the calls, which I will pass on to the Fisheries Minister, about making the most of the Brexit opportunities. Clearly, fishers want to see that, and we must ensure that it comes about.

Another key issue raised by many Members across the House was labour. I am pleased that the Home Secretary has offered seafood businesses a package of support to help them use the skilled worker route. In May, the Home Office announced that various fishing jobs, including trawler skippers and experienced deckhands on larger fishing vessels, would be added to the shortage occupation list this summer, and they will qualify for a lower salary threshold and lower visa application fees.

I hear the point about the English language made by my hon. Friend the Member for Banff and Buchan. I will raise that and ensure that the Fisheries Minister is made aware of it, but the Home Office is the lead Department on these things, as it would be for the issue raised by the hon. Member for Aberdeen North (Kirsty Blackman) about how many people have applied for that visa. I urge her to contact the Home Office about that.

Mr Deputy Speaker has asked me to wind up, but I must mention seafood promotion. We have our £100 million seafood fund, which is being shared between large companies and small and medium-sized enterprises. Officials are working closely with the industry on small haddock. I loved the idea from my hon. Friend the Member for Waveney (Peter Aldous) about regional fish food markets, even though it caused a bit of a storm between him and my hon. Friend the Member for Totnes (Anthony Mangnall). We all want to eat more locally caught food.

If you will allow me, Mr Deputy Speaker, I must touch on the issue of medical certificates raised by my hon. Friends the Members for South East Cornwall, for Poole (Sir Robert Syms), for Totnes and for Waveney. I fully support the Maritime and Coastguard Agency’s focus on improved safety, which I understand has unearthed significant non-compliance, but I recognise that those measures have caused concern in the fishing industry. The Fisheries Minister has been meeting with Baroness Vere. He will continue to have those meetings, and all the points raised in this debate will be passed to him, because we have to make this work for everyone. My hon. Friend the Member for Truro and Falmouth (Cherilyn Mackrory) cannot be here, but I am delighted to report that her husband, who is a fisher in the under 10 metre group, has been through the process and has just got his certificate. I am sure that she will be pleased to share their experiences, but she does raise the challenges for that sector.

I will get the Fisheries Minister to write to my hon. Friend the Member for Totnes about water quality and oysters. We have had a meeting about water quality. With my water quality hat on, I will just say that there should be opportunities to sort out any issues for shellfish fishermen by working on the wider catchment basis that is in our plan for water, with catchment plans. That is the kind of thing we could be working on with our farmers and those all the way up the catchment, to sort out the problems that end up on the coast. If necessary, I am happy to look into that issue at another time.

Mr Deputy Speaker, you have been incredibly patient, but we have had so many questions; I have not been able to get through them all, but as I said at the beginning of my speech, it has been a really vibrant debate. The fishing industry has shown resilience, adapting to a new, changing world post Brexit. Obviously, there is still work to do. Our fisheries management plans will be a big step towards our new future. It is all about balance, working together and feeding in to make sure that we get the right outcomes economically, for the environment and for our communities. I thank everyone for taking part, and I will follow up on any outstanding issues with the Fisheries Minister.

[Mr Deputy Speaker (Mr Nigel Evans)]

I call David Duguid, who has two minutes.

Water Industry: Financial Resilience

Rebecca Pow Excerpts

Wednesday 28th June 2023 Commons Chamber

[Jim McMahon (Oldham West and Royton) (Lab/Co-op)]

(Urgent Question): To ask the Secretary of State for Environment, Food and Rural Affairs if she will make a statement on the financial resilience of the water industry.

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

Water is what makes life possible on our planet, and it is essential for our health and wellbeing, as well as for our economy, including the production of food and clean energy. The Government are taking significant steps to ensure that the water industry is delivering the outcomes that bill payers expect and deserve. Water companies have invested £190 billion since privatisation in 1989. In April, the Government published the plan for water, bringing together more investment, stronger regulation and tougher enforcement capacity for regulators in relation to those who pollute.

Ofwat and the Government take the financial resilience of the water sector very seriously. Ofwat is the independent economic regulator for the water sector and has responsibility for its financial resilience. The sector as a whole is financially resilient. Ofwat continues to monitor the financial position of all the key water and waste water companies. Ofwat reports annually on the sector’s financial resilience, and Ofwat’s latest annual monitoring financial resilience report shows that the water sector is financially resilient.

Market confidence in the sector is demonstrated by new acquisitions, such as Pennon’s purchase of Bristol Water, and by shareholders being willing to inject new capital. Ofwat has taken steps in recent years to strengthen the sector’s position. That includes action to update the ringfencing provisions in water company licences to better safeguard the interests of customers, and barring water companies from making payouts to shareholders and removing money or assets from the business if they lose their investment grade credit rating. Ofwat has outlined that water companies must be transparent about how executive pay and dividends align to the delivery of services to customers, including environmental performance. Since privatisation, total capital investment has outstripped dividends by 250%.

On 20 March 2023, Ofwat announced new powers that will enable it to take enforcement action against water companies that do not link dividend payments to performance for both customers and the environment. In December 2022, Ofwat strengthened its powers on executive pay awards by setting out that shareholders, and not customers, will fund pay awards where companies do not demonstrate that their decisions or pay awards reflect overall performance. We support Ofwat’s work, and we urge all water companies to take this opportunity to review their policies.

The scale of Government commitment to the water industry is highlighted by the integrated plan for water, and by our commitment to the financial resilience of the sector in delivering for customers and the environment.

[Jim McMahon]

Thank you, Mr Speaker, for granting the urgent question, but it is a concern that the Secretary of State did not proactively make a statement to the House on an issue of such importance. Indeed, where is the Secretary of State? One of the largest water companies in Britain is potentially going to go to the wall, and the Secretary of State is missing in action.

It was clear to anyone looking on that a culture that allowed vital investment in ending the sewage scandal and tackling water leaks to be sacrificed in favour of a goldrush for shareholders was never sustainable. Just last year, as raw human sewage was being pumped out across the country, £1.4 billion was paid out to shareholders. Now, all that was warned about is coming to pass: leaks are leading to water shortages; sewage dumping pollutes our rivers, lakes and seas; and the only thing on the up is debt, at £60 billion. The Conservative party’s cycle of privatising profit, usually for multibillion-pound foreign sovereign wealth funds, and nationalising risk is not sustainable, and neither is it a fair deal for working people.

The news we are seeing is the result of the Conservative party’s failed “profit above public interest” experiment, in which it handed over the water industry at a knock-down price to private enterprise, together with the entire infrastructure serving the nation. That was almost unique to water. For instance, when rail was privatised, the tracks were not sold off. With water, however, the lot was handed over, with few safeguards for our national interest, our national security or bill payers.

When was the Minister’s Department first made aware of the financial situation at Thames Water? Has her Department had any reason to believe that those responsible at Thames Water would not be able to meet their licence conditions or legal obligations? If this means a taxpayer-funded bail-out, how much will that cost and how will it be paid for? What assessment has she made of the liability of UK pension funds that are invested in Thames Water, and in other water companies considered to be at risk? Given where we are, will she confirm her confidence in the financial regulator? Finally, given what we see with Thames Water today, does she have concerns about any other water companies, or does she consider this to be an isolated case?

[Rebecca Pow]

In the Department for Environment, Food and Rural Affairs, we have our individual portfolios, and I am the water Minister. The Secretary of State has full confidence in her Ministers when sending them to the Dispatch Box.

The shadow Minister raised the issue of debt. For information, debt to equity fell last year by 4% in the water industry, actually making it more resilient. Since privatisation, capital investment in the water industry has been 84% higher than it was pre-privatisation—we need to get that out there and on the table.

In terms of Thames Water, it is not for me to comment on the individual financial position of a water company. We have an independent regulator that is doing that; indeed, that is what the regulator, Ofwat, is for. Water companies are commercial entities, and it is for the company and its investors to resolve any issues. The Government, of course, are confident that Ofwat, as the economic regulator of the water industry, is working closely with any company that is facing financial stress.

[Mr Speaker]

I call the Chair of the Select Committee.

--- Later in debate ---

[Sir Robert Goodwill (Scarborough and Whitby) (Con)]

Sewage treatment plants are all too often overwhelmed at times of heavy rain. As well as installing stormwater tanks, such as the new 4 million litre stormwater tank in Scarborough, does the Minister agree that we should do more to encourage homeowners to harvest grey water, which can buffer the effects of heavy rain, and use that for such things as flushing the toilet?

[Rebecca Pow]

I thank my right hon. Friend for broadening the scope of the debate. We are in discussions with the Department for Levelling Up, Housing and Communities—many of these issues involve working with other Departments—on grey water harvesting and better using the rain that does fall. A farmer in Devon whom I visited was collecting all the water from his farm buildings roofs to supply his animals.

[Sir Stephen Timms (East Ham) (Lab)]

In assessing, as the Minister has explained, the resilience of the water industry, what assessment is she making of the impact on UK pension funds if a major company such as Thames Water fails, as is being widely suggested in the press?

[Rebecca Pow]

There is a structure and a process for working through this matter. It is up to the individual water companies and the regulator working with them to ensure that they are resilient. That is why Ofwat reports annually on how resilient each water company is. If that flags any issues, Ofwat works closely with them, because we need our water companies to be fully functioning. We need to attract investment—a huge sum of money has been invested since privatisation, as I mentioned earlier—in infrastructure to give our customers the kind of service they deserve. We should also be mindful that it is not all piled on to customers; we have to share the load.

[Robbie Moore (Keighley) (Con)]

It is worth making the House realise that it was the Opposition who voted against the Environment Act 2021, which gave Ofwat more powers. Can my hon. Friend assure me that the water regulator Ofwat will be able to clamp down on excessive cash payouts and ensure that water companies put their customers first?

[Rebecca Pow]

I thank my hon. Friend for pointing that out. He is absolutely right: whatever the Opposition say today, one of the measures they did not vote for in the Environment Act 2021 was to enable Ofwat to hold water companies to account where they do not demonstrate a link between dividends and performance. They must have sound performance and be performing for their customers, otherwise they cannot pay out their dividends.

[Ms Karen Buck (Westminster North) (Lab)]

The staggering complacency we are hearing from the Minister will come as no comfort to my constituents who were flooded out three years ago in the west London floods, which were the second 100-year event in less than a decade. If Ofwat has been doing such a good job in holding the water companies to account, as she is now apparently telling us, why are we in this situation? What exactly has Ofwat been doing?

[Rebecca Pow]

It has to be remembered that privatisation occurred in 1989. We have had a succession of different Governments during that time, and it has been this Government who have accelerated clamping down on water companies and opening up transparency. The hon. Lady asks what Ofwat has done, and I will name just a few things. Since 2020, Ofwat has updated the licences so that if a water company loses its investment credit rating, it is barred from making payouts to shareholders. In July 2022, it set out additional proposals to increase financial resilience, including companies having a stronger credit rating. In March, it announced that it would take enforcement actions against water companies that do not link dividend payments to performance. We have done more than any Government before to ensure that we have a fully functioning, strong regulator.

[Philip Dunne (Ludlow) (Con)]

On financial resilience, has the Minister taken the opportunity to consider the hotchpotch of policies coming from Opposition Front Benchers on the subject? Under their prescription, they would seek to take all the profit of water companies to invest in capital expenditure. That would undermine the financial resilience of those companies that rely on private capital for investment in tackling this problem. In the one part of the country where Labour does have responsibility—Wales—has she noticed that the sewerage overflows are almost double the rate per overflow pipe as in England?

[Rebecca Pow]

I thank my right hon. Friend for pointing that out; I cannot support more strongly what he said. We have a private system, and Ofwat says that it is financially resilient. We need investment in these companies to make them function properly. Obviously, we need to hold the companies to account, but we need to see enormous investment. Everything in the Government’s plan for water, including the storm overflow discharge reduction plan, is fully costed. We are not pulling the wool over people's eyes; we are telling them clearly what this will mean and how it will deliver the water services that we need.

[John Cryer (Leyton and Wanstead) (Lab)]

Thames Water, which is on the verge of going under, provides a quarter of the population with their water supply. When was the Minister told about its financial plight? What is the plan if the worst comes to the worst and it does go under?

[Rebecca Pow]

The hon. Member is right that Thames Water supplies an enormous part of our population. Ofwat has been working closely with Thames Water, as it does all water companies, and the Government work with Ofwat, giving it our strategic policy statement on what its priorities will be. Overall, the water companies are considered resilient, and much work is going on behind the scenes with Thames Water to ensure that customers will not be affected. If necessary, there is a process in place to move us to the next stage.

[Sir Robert Buckland (South Swindon) (Con)]

Swindon residents will be concerned about the future of Thames Water, so I ask my hon. Friend please to keep me and colleagues updated on any issues relating to that. Underlying this issue, Labour’s model will clearly never work—we must understand that only the private sector will be able to invest. [Interruption.] Labour Members bleat now, but they did nothing about it when they were in government. Is the point not that where we have in effect a private monopoly, the regulator must be as effective as possible? Will my hon. Friend do everything possible to ensure that Ofwat is working in the full interests of customers? Aspects of its operation do not seem to pass that test.

[Rebecca Pow]

I thank my right hon. and learned Friend. Thames Water is a big water company that delivers on a wide scale. Ofwat is working very closely with the company on its plans, which will be looked over and submitted, and accounts will be submitted in due course, so that we have a resilient pathway. Customers, including his constituents, should rest assured that both their water and wastewater supplies will be protected.

[Clive Efford (Eltham) (Lab)]

This privatised industry knows that, at the end of the day, the banker of last resort is the British taxpayer. That is exactly where we are with Thames Water, which has been taking profits for the last 35 years and not investing for the future. Regardless of what went on before, we must have investment in what is in front of the industry, but Thames Water has failed to plan ahead. It has taken money but not done the job expected of it while being in charge of such an essential public service. What will the Government do to protect consumers and ensure that we plan ahead for the industry?

[Rebecca Pow]

Ofwat is the independent regulator and, as the hon. Member will know, the Government direct it through the strategic policy statement. It is Ofwat’s job to ensure that in the price review, when the water companies submit their plans—they are going over the draft plans now—they demonstrate that they will deliver on the Government’s targets on storm overflows, leakage and demand reduction. It is for Ofwat to ensure that companies will be resilient in delivering that infrastructure. There is a firm structure in place. Ofwat also constantly monitors companies’ gearing—debt-to-equity—levels, and the Government are confident that the regulator is taking reasonable measures to challenge companies to reduce those gearing levels where appropriate.

[Richard Fuller (North East Bedfordshire) (Con)]

About a quarter of the country’s economic output is in sectors under regulators, including the water industry. With Ofwat and in other sectors with Ofgem and the Financial Conduct Authority, we have seen regulators not performing to the standards that the public, or indeed industry, would expect. If we are honest, we in this House and in Parliament do not have the toolkit to assess regulators’ performance on a systemic basis year in, year out. Will my hon. Friend work with ministerial colleagues to see whether we can improve the regular oversight of regulators such as Ofwat so that we can take a more rounded view on such issues, rather than have them come through urgent questions as brought by the Opposition?

[Rebecca Pow]

I thank my hon. Friend for that. It is essential that we have fully functioning regulators. Since the Government came to power, Ofwat has done an enormous amount to streamline what it does, improve transparency, change licences and make changes so that dividends are not paid if any environmental damage is being caused. The Government have directed that through the strategic policy statement. Indeed, our targets will ensure that the regulator enables the water companies to put the right measures in place. He is right, however, that one should never be complacent, and if things need to be improved through the regulators, they should happen. But I assure him that a big effort is being made.

[Seema Malhotra (Feltham and Heston) (Lab/Co-op)]

Many of my constituents are hugely worried about reports of Thames Water being on the brink and what that could mean for their bills. Thames Water has been managed appallingly: leaks have not been dealt with, sewage has been continually dumped and the former chief executive officer Sarah Bentley needed to be asked to forgo her bonus. All the while, the Government have been missing in action. Why are the Government yet again running to catch up—nothing in the Minister’s statement gives confidence that they have a grip—with our constituents paying the price?

[Rebecca Pow]

Where water companies underperform and do not meet their targets, a process is in place whereby basically they have to credit the money back to their customers. Last year, £143 million was credited back in that respect. So the regulator does have the tools to do that. It has tightened up so many of its measures, all of which will affect all the water companies.

[Robert Courts (Witney) (Con)]

The Minister will not be able to comment on Thames Water’s finances in detail, but can she assure my constituents, who will be really worried, that, whatever happens, their day-to-day services will be protected and the much-needed upgrades will still be delivered?

[Rebecca Pow]

I thank my hon. Friend for that. He is right that customers come first, and Thames Water customers will be assured their water supplies and wastewater services. I am happy to meet him to discuss that.

[Munira Wilson (Twickenham) (LD)]

Residents in Twickenham, Teddington and the Hamptons will be extremely worried to hear that Thames Water is on the brink of collapse, but they are also fed up to the back teeth with this company. Not only does it pump sewage into our precious River Thames, but recently we have seen sewage flooding our streets at times of flooding from rainfall, and there are now plans to pump treated sewage into the Thames at times of drought. That is indicative of the company’s underinvestment in fixing leaks and being stripped to the bare bones while lining executives’ pockets. All the while, the Government have been missing in action and the regulator has failed. Will the Minister back the Liberal Democrats’ proposals to reform water companies into public good companies, transforming their boards and priorities in the interests of the environment and consumers?

[Rebecca Pow]

I will highlight the Thames super-sewer—it will be ready to open in the not-too-distant future—which is a tremendous project for the people of London, including many of her constituents. We have a privatised system, whose financial resilience, as I have reported, has increased rather than decreased in the last year. These companies attract money from investors so that we can get what we need. The Government have costed plans. The Liberal Democrats have no costed plans for what they suggest they might do with the water companies, nor plans for where the money will come from.

[Duncan Baker (North Norfolk) (Con)]

It is worth pointing out to Opposition parties that 93% of all UK coastal bathing waters meet good or excellent conditions. In North Norfolk we have lost three blue flag beaches, which went from excellent to good. But guess what? There is not a single reason why they lost that flag. Under the Environment Agency’s marking, it looks like it is down to not combined sewage overflows but entirely natural phenomena. Could the Minister help me get my blue flags back and hold the Environment Agency to task, to ensure that it has a proper testing regime that transparently shows that we have excellent bathing water quality all over North Norfolk?

[Rebecca Pow]

I thank my hon. Friend for raising the issue of bathing water quality. Since privatisation we have virtually the best quality water coming out of our taps of almost anywhere in the world. We also have phenomenal results for our bathing water areas—93% are classed as good or excellent. He has concerns about his area, but I hope those beaches will soon be back up to blue flag status. The Environment Agency works closely on individual cases where concerns have been highlighted. I am happy to put him in touch with the Environment Agency or work with him to find out what those individual cases were, so that we can get those beaches back up to the fantastic standard that they deserve.

[Andy Slaughter (Hammersmith) (Lab)]

Today, not for the first time, most of my constituents have little or no water supply. Two years ago, not for the first time, hundreds of my constituents had their homes flooded with raw sewage. Year after year, Thames Water has failed its customers while obscenely rewarding its management and shareholders. No one will miss the asset strippers at Thames Water if it goes under. All we want is working infrastructure and good customer service at a reasonable cost. Is that too much to ask?

[Rebecca Pow]

That is what we want for all our customers. That is why we have launched our plan for water to pull everything together to ensure that we deal with any pollution incidents, water supply issues and the future of the water industry. It is why we have set our targets and produced our storm sewage overflow plan, and why the water companies will have to spend £56 billion on capital investment by 2050 to address that. Every water company, including Thames Water, has to make an action plan for each of its storm sewage overflows. Thames Water will do that.

[Dame Angela Eagle (Wallasey) (Lab)]

When they were privatised, water companies had all the debt written off, so they started with zero. Since then, they have borrowed £53 billion, much of which has been used to help pay £72 billion in dividends. The investment has been made by borrowing and putting it on to customers’ bills. Now, the ratings agency S&P has negative outlooks for two thirds of the UK water companies it rates, because they are over-leveraged and took out too much debt in an era of low interest, which they now have to pay back. This is not a triumph but a huge problem for the resilience of our water industry. What will the Minister do when water companies start falling over?

[Rebecca Pow]

For information, Thames Water itself has not paid any dividends for the last six years. Ofwat will rightly hold companies to account when they do not clearly demonstrate the link between dividends and performance. We made that possible through the landmark Environment Act.

[Caroline Lucas (Brighton, Pavilion) (Green)]

I want to bring the Minister back to the figures we have just heard. Water companies had no debt when they were privatised. Since then, they have borrowed £53 billion, and much of that has been used to help pay £72 billion in dividends. Meanwhile, we have an appalling sewage scandal, particularly in the south-east of England. The failing company Southern Water, which my constituents have no choice but to rely on, is considering raising bills by £279 per year by 2030, largely to pay for the investment that it should have been making in previous years. Does that not show that the privatisation of water was a serious mistake that needs to be permanently rectified?

[Rebecca Pow]

Privatisation has enabled clean and plentiful water to come out of our taps. It has unlocked £190 billion of funding to invest in the industry. That is the equivalent of £5 billion annually, and is double what we had pre-privatisation. I am not saying that there is not still a lot of scope for improvement. I have stood at this Dispatch Box many times, as has the Secretary of State, to say that some actions of water companies are completely unacceptable. That is why we have introduced the storm overflow plan and our plan for water.

[Mr Khalid Mahmood (Birmingham, Perry Barr) (Lab)]

As two Members have said, funding and loans to the water companies are a huge issue, as that is where they have paid their dividends from. On shareholders, we have foreign investors taking huge amounts of money away from this country, and we need better fund managers who are able to assess where they put their money. They should be held accountable, too.

Ofwat has not been doing what it is supposed to do. I believe that the chief executive of Ofwat applied for a job at Thames Water. That shows what the companies are doing and how Ofwat works with them—rather than scrutinising them, people are looking for the next job. We have to stop that and stop my constituents paying more for water. They need decent water in their homes and in the environment around them. That is what we want the Government to ensure. This Tory policy has failed for years.

[Rebecca Pow]

I am not sure what the question was. We want the same things: value for customers, and clean and plentiful water. We want to hold the water companies to account. We want them to invest the money needed to deliver the right services. That is why we have a plan for water, our targets and the measures in the Environment Act. It is why the regulator Ofwat has taken all the actions I mentioned to increase the transparency of water companies and to ensure that money is not being paid out if there is any environmental impact or performance negativity.

[Mr Clive Betts (Sheffield South East) (Lab)]

In the last year, a number of my constituents on the Westfield estate have had their homes and gardens flooded with raw sewage. Yorkshire Water accepts that it is its sewage, but does not accept responsibility to help with the clean-up. Will the Minister look at the legal position to ensure that water companies are held accountable? In the meantime, we should put pressure on Yorkshire Water and others to pay for the clean-up that my constituents are having to fund themselves.

[Rebecca Pow]

The hon. Gentleman will know that we have put huge pressure on the water companies, which now have to invest £56 billion in infrastructure to deal with sewage issues. If he wants to meet me to talk about that issue, I will be happy to.

[Dan Jarvis (Barnsley Central) (Lab)]

Back in January I asked the water Minister whether she thought that the current system of regulation was fit for purpose, and she said yes. I ask her again: does she still think that it is?

[Rebecca Pow]

Yes.

[Rebecca Long Bailey (Salford and Eccles) (Lab)]

Water companies were sold with no debt when they were privatised in 1989. In fact, they were given a £1.5 billion green dowry by the Government. Since then, they have taken on borrowing of £60.6 billion, diverting income from customer bills to paying dividends and interest payments. As a result, water bills have increased by upwards of 40% in real terms. Does the Minister honestly think that consumers hail privatisation as a success?

[Rebecca Pow]

Ultimately, the customers pay for investment in the industry, but over a very long period, as the hon. Lady will know. If a company did not pay out dividends it would struggle to get access to finance to fund future investment. That would limit the level of investment and have an impact on future customers. Companies have to pay up front for a lot of that investment, because they need to secure a large amount of funding to pay for it. To avoid customer bills increasing drastically to pay for that, companies have to secure the money by raising debt or equity. She knows how it works. The regulator has to ensure that that system is fully functioning, the water companies are resilient and we have all the resilient water supply that we require.

[Kerry McCarthy (Bristol East) (Lab)]

It has been reported that the companies are drawing up their business plans for 2025 to 2030 and that, on average, they are looking at a 25% increase in bills. Given what we have heard today, would billpayers in my constituency not think that rather than paying extra to water companies, they may as well just flush their money down the drain for all the good it will do to improve water quality, services and investment in infrastructure?

[Rebecca Pow]

All those plans are being assessed right now. The draft plans go to Ofwat, where they are analysed with a fine-toothed comb. All the things I have mentioned today will be scrutinised, so that we can deliver the infrastructure that is needed and have the clean and plentiful water supplies we require as well as a clean and healthy environment, with no undue impact on customer bills. All those things have to be taken into account to deliver the water supplies that the people we meet and the people we serve deserve.

[Mick Whitley (Birkenhead) (Lab)]

The British public should not be asked to cover the cost of failures by the water monopolies and their shareholders. They have borrowed extensively to pay dividends while failing to make necessary investments in infrastructure and resilience. Does the Minister agree that if the Government are compelled to take Thames Water into public ownership, it should stay in public hands?

[Rebecca Pow]

I am not aware of the situation the hon. Gentleman is referring to. Ofwat is working very closely with Thames Water to ensure that the business is viable, that customers are not impacted, and that water supply and waste water services are delivered. As I mentioned, Ofwat has strengthened many measures so that we have a much more resilient industry in the future. Indeed, those changes and the fall in the debt to equity ratio demonstrate that we do have a more resilient industry.

[Richard Foord (Tiverton and Honiton) (LD)]

We have seen bonuses and dividends put ahead of investment in infrastructure or maintaining sufficient reserves. Our area of Devon and Somerset is covered by South West Water; the company has paid out £112 million in dividends this year, despite having just £144 million in reserves, which is £2.5 billion less than it had two years ago. This week, a water firm chief executive officer has resigned, but no Conservative Minister has ever taken responsibility. When will a Conservative Minister finally take responsibility and get a grip, or step aside?

[Rebecca Pow]

As the hon. Gentleman knows, Ofwat has announced new measures to enable it to take action against water companies that do not link dividend payments to performance. That is just not happening. I think he needs to look again at some of the stats he has just quoted, because I think they might relate to the wider Pennon Group. I have just visited South West Water to have a really forensic look at its systems and how it delivers water. That is what we do with our water companies. It is Ofwat’s job to hold water companies to account, and it has just got measures through the Treasury so that it has another £11.3 million to tackle enforcement.

[Jim Shannon (Strangford) (DUP)]

I thank the Minister for her answers. We are ever mindful that house building is important, and development opportunities are critical to the future as well, so with developers being charged more and more to connect to the network but facing delays in those connections being installed, what plans does the Minister have to make the connection system for new developments more affordable?

[Rebecca Pow]

The hon. Gentleman raises an important issue. We always have be mindful of costs, not just to customers through their bills but to developers building houses. We are working closely with the Department for Levelling Up, Housing and Communities on a range of measures and on its planning guidance, so that we can tackle a range of issues connected to water, working with developers on things like rainwater harvesting and sustainable urban drainage systems, which will really help the whole of our water infrastructure.

[John Cryer]

On a point of order, Mr Speaker. I think the Minister may have inadvertently misled the House. She said clearly that Thames Water has not been paying out dividends. The reality is that Thames Water has not been paying out dividends in the usual way, but it did pay dividends last year to the parent company, so it has been paying out dividends.

[Mr Speaker]

Does the Minister wish to respond?

[Rebecca Pow]

Yes, Mr Speaker. I will check the wording, because I would hate to mislead the House. If I have inadvertently said something incorrect, I will happily put it straight on the record.

[Mr Speaker]

Right.