Environmental Audit Committee

Sheryll Murray Excerpts

Thursday 13th January 2022 Westminster Hall

[Mrs Sheryll Murray (in the Chair)]

Before we begin, I remind Members that they are expected to wear face coverings when they are not speaking in the debate, in line with the current Government guidance and that of the House of Commons Commission. I remind Members that they are asked by the House to have a covid lateral flow test before coming on to the estate. Please also give each other and members of staff space when seated, and when entering and leaving the room.

We begin with the Select Committee statement. Philip Dunne will speak on the publication of the fourth report of the Environmental Audit Committee, “Water Quality in Rivers”, for up to 10 minutes, during which no interventions may be taken. At the conclusion of his statement, I will call Members to ask questions on the subject of the statement, and I will then call Philip Dunne to respond to these in turn. Questions should be brief.

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[John McDonnell (Hayes and Harlington) (Lab)]

I congratulate the right hon. Gentleman’s Committee, and him in particular, on the campaign he has waged over the years on the issue of the purity of our water systems. I look forward to the Committee’s work on monitoring the implementation of these recommendations.

As the right hon. Gentleman will know, however, my anxiety about the report is its timidity with regard to the operation of the water companies themselves. My view is very clear: as long as those companies operate as profit-making organisations, I do not see how they will act on long-term investment or, to be frank, the standards of behaviour we would expect of either a body in public ownership or a not-for-profit organisation. I wonder whether this report will result in opportunities for the Committee to look at the whole issue of ownership and management of the water companies themselves.

[Mrs Sheryll Murray (in the Chair)]

Other Members have indicated that they would like to ask questions, but before I call them, perhaps you would like to respond to those two questions, Mr Dunne.

[Philip Dunne]

Thank you very much, Chair; I certainly would. I thank the hon. Member for Blaydon (Liz Twist) for her contribution to this issue. I attended a debate, I think in this Chamber, in which she raised issues about the Tyne. She has been a strong champion in her area, trying to make sure that that river is cleaned up. In response to her specific query, the Environment Agency took the view that water companies could be relied on to self-monitor. It is palpable that that has failed, so we are calling for the Environment Agency to be adequately resourced so that it can perform its functions appropriately.

I do think there is help on the way through technology. Technology now exists, to an extent that it has not in the past, that allows for continuous monitoring of water quality within water bodies, and for that information to be passed through telemetry back to a database. That information can then become available to the public and the water companies themselves so that if there has been a sudden incident, they can pick up on it. There might have been a breakdown in a system, and if that information is available in real time, those companies will catch it much quicker than they have been able to do hitherto. That will not involve as many employees of the Environment Agency being on hand to do the testing themselves physically and then go back to their laboratory, so it will speed up the whole process of identifying problems in the system. I think that will ultimately be to the benefit of all of us, our rivers and all the species that rely on them as arteries of nature. I am hopeful that there are solutions and that the Environment Agency will receive a good settlement from the Department for Environment, Food and Rural Affairs. I hope that the Minister will take that on board.

In response to the right hon. Member for Hayes and Harlington (John McDonnell), I reciprocate by offering him my thanks for supporting my private Member’s Bill 18 months ago. He will not be surprised to hear that I take a slightly different view from him on the issue of ownership of the water companies. In the 10 years before the water companies were owned by the state—as they were up until 1991, I think—the collective capital investment of the water companies into water treatment capital expenditure was of the order of half a billion pounds a year. In the next 10 years, it was of the order of £1 billion a year, so under private ownership there was around double the investment in water treatment specifically.

Having said that, there are issues about the nature of current ownership and the fact that several of the companies have been leveraged through private equity ownership, which has caused some challenges regarding available capital expenditure. At least one of those companies has suspended dividends for the last three years, I think. There is recognition on those company boards that they need to change some of their behaviour.

I am sure that the right hon. Gentleman will seek to promote the report’s recommendation that, in the event of persistent material breaches of permit conditions, it would be inappropriate for water company boards to pay themselves significant bonuses without taking proper action to remedy those breaches. I am sure he will agree with that and not regard it as timid.