Water Companies: Executive Bonuses

Steve Double Excerpts

Tuesday 5th December 2023 Commons Chamber

[Steve Double (St Austell and Newquay) (Con)]

It is a real pleasure for me to take part in this debate. I was born and raised in the heart of Cornwall, have lived there my whole life, and have always enjoyed the sea. Members who follow me on any my private social media platforms will know that I am found in, on or beside the sea at just about every possible opportunity. Therefore, I have taken a very keen interest in the whole issue of water quality, particularly bathing water and sewage discharge, throughout my life, long before I was first elected to this House.

We have to start by saying that this is not a new issue. Let us remember that Surfers Against Sewage was started in 1990 specifically to raise awareness about it and deal with it. At that time, less than 25% of UK bathing waters were at a minimum acceptable standard for bathing, whereas there is now only one beach in my constituency that does not meet that standard. I am sorry, but pretending that things are worse than they have ever been is absolute nonsense. We have seen incredible progress on this issue over many years.

I remember very clearly that the Labour Government did absolutely nothing in 13 years to address the issue—zero. When we came into office in 2015, we were the first ever Government to take this matter seriously and start to address it.

[Jerome Mayhew (Broadland) (Con)]

What my hon. Friend has just said is not actually accurate. Labour did not just do nothing; in 2006, it cut a deal with the water companies to agree self-assessment on their environmental performance. Does he agree that that is worse than nothing?

[Steve Double]

My hon. Friend makes a good point. Labour actually made the situation worse—so much so that in 2009, the Labour Government was taken to court by the EU for failing to deal with the issue—so I am sorry, but we will take no lectures whatsoever from the Opposition Front Benchers about dealing with it. We are the first Government who have ever taken this matter seriously and taken action to start addressing it. We do not even have to think back in history, because we have a living example right before us today: in the one part of the UK where the Labour party is in government, the situation is far worse than in England. Wales is responsible for 25% of sewage discharges for the whole of England and Wales, yet it has only 5% of the population, so again, we will take no lectures from the Opposition.

It was this Government who first introduced substantial monitoring of storm overflows. When Labour left office, 7% of storm overflows were monitored; that figure is now 91%, and it will reach 100% in the next few weeks. I place on record my thanks—and, I believe, our thanks—to one of my Cornish colleagues, my right hon. Friend the Member for Camborne and Redruth (George Eustice), who started the process of dealing with this issue when he came into DEFRA. I do not believe we would be in the position we are in today with monitoring, or with any of the other measures, if he had not initiated that work when he first became a DEFRA Minister.

[Jerome Mayhew]

The Liberal Democrats often claim that they are very interested in sewage, yet they fail to mention that the water Minister between 2013 and 2015 was the former Member for North Cornwall, a Liberal Democrat. What did he do to improve the situation? Nothing.

[Steve Double]

My hon. Friend makes an excellent point. It was not until 2015 that the Government started to take this issue seriously and take action; it did not even happen under the coalition Government. Therefore, all the crowing from the Liberal Democrats that they regard this as a really important issue is nonsense, because when they were in government, they initiated nothing to address it.

It is clear that there is now far greater public awareness and concern about this issue, and it is much higher up the political agenda than ever before, and rightly so. Some of us, particularly in Cornwall, have been pushing for that to be the case for a very long time, so I welcome the fact that sewage discharges are now a much bigger priority and there is much greater public awareness of them. However, again, let us be frank: people are only aware of what is going on because of the increased monitoring that we have introduced. For 13 years under Labour, all of this sewage was being discharged into the sea, but no one knew about it because there was no monitoring. It is only because of the increase in monitoring over the past few years that we know what is going on.

The first step towards dealing with an issue is to know what is happening. The first step that the Government took was to introduce monitoring, and we now have the data that enables us to hold the water companies to account. Before we had that monitoring and that data, we could not hold them to account because we did not know what was going on; now, we are holding them to account. Since 2015, there have been 58 prosecutions of water companies for failing to fulfil their obligations, and £141 million has been secured in fines. That money is being invested in environmental improvements and in reducing pollution. We must always remember that under this Government, it is the water companies that get taken to court; under Labour, it is the Government who get taken to court.

We now have a plan to reduce storm overflows, which I had the great privilege of launching during my brief time as water Minister. I acknowledge that my hon. Friend the Member for Taunton Deane (Rebecca Pow) put in most of the legwork to produce that plan; I just had the glory moment of crossing the t’s, dotting the i’s and launching it. We now have a plan to invest £56 billion in upgrading the infrastructure to reduce sewage discharges, but we have to be honest with the British public. We hear comments from Opposition Members like, “Let’s stop sewage immediately; we could do it straightaway,” but that is nonsense. We are talking about Victorian infrastructure that has been in place for over 100 years: it is going to take an awful lot of money and an awful lot of time to upgrade and improve that infrastructure to address this issue. However, we now have a plan to make sure that it will happen, and we can hold the water companies to account to ensure that they make that investment and deliver on that plan.

There is also a myth—I am sure Labour Members will mention it today—that somehow Conservative Members voted to allow water companies to continue to discharge sewage. It is a lie: it is not the truth. Actually, we were the ones who brought forward the Environment Act 2021, which contains all the measures that enable us to hold the water companies to account. The Opposition did not support the Act so, if anything, they were the ones who tried to stop us taking action against the water companies, and we were the ones who voted for the Act and all the measures it contains. We need to be absolutely clear that we are the ones taking action and we are the ones taking this matter seriously.

The motion mentions directors’ bonuses. It is absolutely right that directors of water companies who fail to keep their obligations when it comes to sewage discharge and other forms of pollution should not be rewarded because of that, but we are already doing it. Ofwat has confirmed that it has the power to review both dividend payments and bonuses where water companies fail to keep to their environmental obligations. I know it is difficult for Labour Members, because they probably sit there looking at all the things we are doing and thinking, “Why on earth didn’t we do this when we were in government for 13 years?” I know it must be difficult for them, because they did absolutely nothing. They made things worse, not better, and it is this Government who are delivering on this issue.

I take this issue seriously. I have taken this issue seriously for many years—long before I came to this House—and it is right that the public are now much more aware of how important it is, but let us get real: we are dealing with it. We are taking the necessary steps to reduce the amount of sewage that will be discharged, and I welcome that. I believe that this Government will continue to deliver on our plan, and we will see things continue to improve in the years ahead.

--- Later in debate ---

[Mr Toby Perkins (Chesterfield) (Lab)]

Sometimes we witness revelations that are incredibly shocking, yet simultaneously not surprising at all. And so it was with the exposure of this week’s “Panorama” investigation that United Utilities, one of Britain’s largest water companies, had been systematically falsifying its environmental performance to mislead consumers and regulators and to push up profits.

Although Labour had decided to use one of our precious Opposition day debates to discuss water companies and directors’ bonuses in advance of those revelations, they have clearly added to the urgency and salience of the debate. Several Members commented on the fact that the issue has a much higher profile that it did. I pay tribute to Feargal Sharkey, who has done some amazing campaigning and played a significant role in raising the issue of water quality. He has proved that he has not just “a good heart”, but a switched on head as well.

It has been a good debate; what was said was important, as well as what was not said. The demeanour of Government Members spoke more loudly than the words we heard from them. My hon. Friend the Member for Birkenhead (Mick Whitley) mentioned the number of Secretaries of State there have been—we have had six Secretaries of State for the Environment, Food and Rural Affairs since 2019. Interestingly, the newest one, the right hon. Member for North East Cambridgeshire (Steve Barclay), could not be bothered to turn up and respond to the debate. The Minister who did respond, the Under-Secretary of State for Environment, Food and Rural Affairs, the hon. Member for Taunton Deane (Rebecca Pow), could not wait to race away and has not returned to this important debate, despite having spoken at its start.

Even more powerful was the row upon row of empty green Benches behind the Minister during the debate. It is clear that Conservative Members of Parliament do not want to be anywhere near here to speak up for their Government’s record on this issue. I have great affection for the Under-Secretary of State for Environment, Food and Rural Affairs, the hon. Member for Taunton Deane, but she appeared to inhabit a parallel universe when it came to the state of our water industry. Had she been here to listen to the debate, she would have heard Member after Member reflect the fury of their constituents and of a raft of organisations including the Environment Agency, which last year described the performance of English water companies as “very disappointing”, saying it was

“simply unacceptable to see a decline in this vital metric”,

in reference to the increase in pollution incidents.

Members have reflected what Surfers Against Sewage has said, and the Rivers Trust has slammed the Government’s performance, yet the Minister—[Interruption.] She marches back into the Chamber just as I was saying that if she had been here, she would have heard about a very different reality in respect of our water industry from the one that she appeared to inhabit. She described the “wonderful water” that we deserve and are all experiencing. She seemed to believe that she and this Government had brought forward strong measures that Labour and the Liberal Democrats had stood against. She said that if we introduced automatic fines, it would somehow be good for the water companies because it would prevent other kinds of action from being taken.

I am afraid it was really quite bizarre to listen to that depiction of what has happened, but there were many other, very relevant, contributions to the debate. They started with the hon. Member for Bridgwater and West Somerset (Mr Liddell-Grainger), who cut through the word that might be used to describe some of what we heard and what is also in our rivers. He clearly admitted that in the 23 years he has been a Member of Parliament, the situation has got worse. He did not buy the idea that we are living in some golden age of river hygiene.

My hon. Friend the Member for Bermondsey and Old Southwark (Neil Coyle) spoke about the broken Government promises on environmental standards; the right hon. Member for Hereford and South Herefordshire (Jesse Norman) spoke of his frustration at the Government’s failure on this issue; and my hon. Friend the Member for Easington (Grahame Morris) gave us a passionate and evocative description of the beautiful coastline in his area, and accused the Minister of—just like, unfortunately, the surfers in the constituency of the hon. Member for St Austell and Newquay (Steve Double) —going through the motions.

[Steve Double]

rose—

[Mr Perkins]

I will come to the hon. Gentleman in a moment.

The hon. Member for Broadland (Jerome Mayhew) made an interesting contribution. He slated the record of the Liberal Democrat Minister between 2013 and 2015, apparently forgetting that that Minister served under a Conservative Secretary of State, in a Conservative-led Government who were implementing policies as a result of the Conservative austerity programme. I stand behind no one when it comes to condemning Liberal Democrats for their record between 2010 and 2015, but even I thought that was a bit rich.

My hon. Friend the Member for Hammersmith (Andy Slaughter) spoke about the performance and failure of Thames Water. He said that the Under-Secretary of State for Environment, Food and Rural Affairs, the hon. Member for Taunton Deane had given an extraordinarily complacent speech. I think he spoke for many when he said that.

My hon. Friend the Member for Brentford and Isleworth (Ruth Cadbury) spoke about 2 billion litres of sewage outflow in two days in her area in 2020; my hon. Friend the Member for Reading East (Matt Rodda) spoke about the appalling levels of pollution in his constituency; and the hon. Member for Somerton and Frome (Sarah Dyke) spoke of the duplicity of water companies on self-monitoring. It is important to say that although some Members gave credit for the increased amount of monitoring, the “Panorama” programme has called into doubt whether we can believe any of the figures we see.

My hon. Friend the Member for Bristol East (Kerry McCarthy) rightly referred to the other causes of river pollution—another important factor, which was not covered as much in this debate. She also spoke about the lack of capacity in the slimmed-down Environment Agency to take on those alternative causes of river pollution. My hon. Friend the Member for West Lancashire (Ashley Dalton), in a very good speech, mentioned the Environment Agency saying in 2010 that we had the healthiest rivers since the industrial revolution, and its frustration that we are seeing that progress stall under this Government.

[Steve Double]

I take note of what the shadow Minister says. He mentions both Surfers Against Sewage and surfers in my constituency. Will he acknowledge that when Surfers Against Sewage began its campaign in 1990, less than 25% of the beaches in the UK met the acceptable minimum standard for bathing water quality, and today that figure is over 90%?

[Mr Perkins]

The first thing to say is that the hon. Gentleman is absolutely right: the state of the beaches back in 1990 was even more disgraceful than it is today. The vast majority of the progress was made between 1997 and 2010, almost—[Interruption.] Yes, it was. It was almost up to 80% by then. If we read its reports, the Environment Agency expresses its frustration that the significant progress made in that period has slowed since then.

[Steve Double]

Can the shadow Minister explain to me why it was that the Labour Government were taken to court by the European Union in 2009 for failing to address the issue?

[Mr Perkins]

The hon. Gentleman should listen to what the Environment Agency has said. It has said the improvements in water quality have slowed under this Government and it has expressed its frustration that we are plateauing.

The hon. Gentleman said in his comments that Ofwat already has the power to ban bonuses. If he had listened to the Minister, he would have known that that is not true. What Ofwat has at the moment is the power to ensure that those bonuses are not paid from the money paid by bill payers. That is not the same as what we propose. Our proposal is very different, so he was incorrect to say that the powers we are proposing are those that currently exist.

My hon. Friend the Member for Birkenhead (Mick Whitley) summed up the difference between the behaviour of bosses and the experience of his constituents. As my hon. Friend the Member for Croydon North (Steve Reed) made clear earlier, the Government have been complicit in this disgraceful practice, through the funding cuts that my hon. Friend the Member for Wakefield (Simon Lightwood) referred to. They have cut the Environment Agency’s funding in half, leading to the dramatic reduction in monitoring, enforcement and prosecutions that in turn has led to the dramatic increase in illegal sewage discharges.

Now, to make matters worse, the Government are simply ignoring the BBC’s investigation. It was shocking that the Environment Agency did not provide anyone for that programme; it is a Government regulator and should be answering for the performance of the water companies. While Tory Ministers claim that they have a grip on this issue, even the Environment Agency has been forced to admit that the water companies’ performance in the most recent year was “completely unacceptable”.

Britain cannot afford years more of the decline in its natural habitat and of worsening water quality, but these years of failure may finally be at an end. Soon, people across Britain will have an opportunity to bring down the curtain on what by then will be 14 years of failure, and to elect a Labour Government to address this shocking situation. The Labour party’s DEFRA team have already met with water company bosses and, while the meetings were cordial, the message was unmistakable: the days of a Government turning a blind eye to the failure and corruption of self-regulation will be at an end under Labour.

That starts with punishing the worst actors. We will give the water regulator the power to ban bonuses for water bosses until they have cleaned up their filth, but that is only the first step to clean up the water industry. Labour will go further, putting the industry under special measures. We will end the pointless practice of self-monitoring, and will require water companies to install remote monitors on every outlet overseen by the regulators and the Government. Any illegal spill will be met with an immediate and severe fine—no more delays, no more appeals, no more lenient fines that are cheaper than paying to upgrade crumbling infrastructure. Rogue water bosses who overseer repeated severe and illegal sewage discharges will face personal criminal liability.

The days of failure under this Government are now coming to an end. A Labour Government will get our water cleaned up and resolved.

--- Later in debate ---

[Robbie Moore]

I will give way in a second.

Ofwat is monitoring companies’ gearing levels closely and has encouraged water companies to de-gear, with the average gearing across the sector falling to 69%, down from 72% in 2021. In March 2023, Ofwat announced new powers that will strengthen the financial resilience of the sector, including powers to stop water companies making dividend payments earlier this year. Those powers are already being put in place by Ofwat, despite what the Opposition may say.

Many Members across the House made the point about bathing water quality, including my right hon. Friend the Member for South Holland and The Deepings (Sir John Hayes) and my hon. Friend the Member for St Austell and Newquay. Bathing water has improved significantly over time. In 2010, the proportion of areas with good or excellent bathing water, meeting the highest standards in force at the time, was 76%. Now, in 2023, 90% are classified as good or excellent, which is a significant improvement. It has to be noted that Labour actively did nothing in its time to improve bathing water quality, but this Conservative Government are delivering on that point.

[Steve Double]

Would the Minister acknowledge that the reduction in bathing water quality is often to do not with sewage, but with water run-off from agriculture?

[Robbie Moore]

Picking up on that point, the quality is not only to do with sewage. Of course, that is one of the factors, but there are many other factors to do with agricultural run-off, as well as with faeces from birds and from dogs, particularly in beach environments. I have to be clear that where water companies are significantly contributing to the poor designations that have been identified for bathing water, we will take action.

The Labour party is all talk when it comes to protecting our water, but look no further than Labour-run Wales, where sewage is discharged into waterways more frequently. Just remember that this is what the Leader of the Opposition wants as a blueprint for a Labour Government in England. Look at Labour’s record in government, when it managed to monitor only a tiny fraction of storm overflows—only 7% in 2010—and we are now at nearly 100 % this year. If we do not monitor, we cannot enforce. Look at its voting history. Labour and the Lib Dems voted against reducing pollution in the Agriculture Act 2020. Look at their faces now. They know deep down that this Conservative Government are taking action.