Water (Special Measures) Bill [ Lords ] (Fifth sitting) Debate
Full Debate: Read Full DebateTim Farron
Main Page: Tim Farron (Liberal Democrat - Westmorland and Lonsdale)Department Debates - View all Tim Farron's debates with the Department for Environment, Food and Rural Affairs
(2 days, 7 hours ago)
Public Bill CommitteesAt the risk of having the same debate over and over, I refer the hon. Member to the last page of our fact sheet. I am not sure how much clearer we can make it:
“Would the shortfall recovery mechanism be used to compensate financial creditors or shareholders following a SAR?
No. The shortfall recovery mechanism could only ever be used to recover a Government shortfall in the unlikely event of a SAR.”
Once again, I welcome everybody to the last day of this Committee. As I may not have the opportunity to do so later, may I thank all Members for their contributions and for taking part? I especially thank the hon. Member for Westmorland and Lonsdale for tabling another new clause.
As I have said, a special administration regime enables a company that provides vital public services, such as water, energy or rail, to be put into administration in certain circumstances. During a SAR, a special administrator appointed by and answerable to the court takes over the affairs of the business.
The court-appointed special administrator’s statutory objectives, which are set out in legislation, are twofold: to continue the running of the company to meet its statutory functions until it is possible to rescue the company, for example via a debt restructure, or to transfer the company to new owners, for example by selling it. There is nothing to prevent the company, or parts of it, from being transferred as a going concern to mutual ownership by a company’s customers, should the special administrator deem that appropriate. Although in an insolvency scenario the special administrator’s primary purpose is to rescue the company as a going concern, mutual ownership could be an option following a SAR, provided that the organisation in question had sufficient funds and could ensure that the company, or parts of it, could continue properly to carry out its activities relating to water.
We pushed the Minister earlier on the Cunliffe review. I thought it had been explicitly stated that ownership was off the table for that review. By talking about mutuals being a potential outcome, is the Minister saying that what is actually off the table is full-scale nationalisation, but that mutualisation, public benefit companies and not-for-profit companies could be a serious option in the Cunliffe review and in whatever legislation might follow?
Yes. We have ruled out nationalisation, but all other forms of ownership are in the scope of the Cunliffe review. I stress, however, that in a scenario in which a company was exiting special administration, it could go into mutual ownership if the organisation in question had sufficient funds and could ensure that the company, or parts of it, could continue to properly carry out its activities related to water. Of course, no one would want, in any situation, to transfer to a company incapable of operating and providing water.
It is important to emphasise that it would not be appropriate for the Government to dictate the terms of exit from a SAR, as that would interfere with the conduct of the court-appointed administrator and their statutory objectives.
I beg to move, That the clause be read a Second time.
In my first speech of what I suspect will be our last sitting—we will see—let me thank you, Dr Huq, and every member of the Committee. It is no fault of anyone here, but I think these Committees are something of a charade. There was a brief time under the Theresa May Government when Committees were genuinely balanced, but I have never known a Committee to accept any Opposition amendment. I am sure it is not always because the Opposition’s ideas are bad—that is just how it works. We know that it is a bit of a charade. Having said that, 16 or 17 of us have been through the process of looking at the Bill in some detail, and that in itself has value.
Despite that frustration, which I have had for nearly 20 years, I am grateful to have been in the good company of courteous, decent people and to have had a robust but polite debate over the past few days. I am especially grateful to the Minister and her team for their engagement, which is genuinely appreciated; to the Conservative Front Benchers, the hon. Members for Epping Forest and for Broadland and Fakenham; and to my Green colleague, the hon. Member for Waveney Valley. They have all been very courteous and constructive.
I will seek to be brief, which does not always happen—whether I merely seek it, or whether it happens, let’s find out. We think that new clause 30 is very important. As we said in the previous sitting, the Government have chosen to underpin an awful lot of the scrutiny of the water industry on volunteers, citizen scientists and the like, which we strongly approve of. Groups such as Clean River Kent, and the Rivers Trust in Eden, south lakes and Windermere are great examples in my own communities, and around Staveley and Burneside, Staveley parish council has done a great job holding United Utilities to account. What they do is of immense value.
Underpinning the ability of those groups to scrutinise in the future is this interesting live database, which will demonstrate the performance of various water company assets around the country. We want to clarify in the Bill that the database will be publicly and freely accessible and updated in live time, but critically, that it will contain not just current but historical data—that is probably the key bit of the new clause. If we are going to depend on volunteers, we cannot assume that they are going to be on it 24/7; they have lives to lead. We must clarify in the Bill that historical data will be available and searchable, so that if we blink, we do not miss it.
I thank the hon. Member for giving way and I thank you, Dr Huq, for your excellent chairmanship; it is a pleasure to serve under you today. The Bill already introduces a duty on water companies to produce and publish pollution targets and a reduction plan. We can also get data fairly straightforwardly on how water companies are performing overall. However, what my residents in North West Leicestershire want to know is how their water company is performing week in, week out on the sewage outlets that they are interested in. I believe we already have plenty of ways to monitor performance, and this addition is unnecessary.
I thank the hon. Member for her intervention. What we are talking about, though, is a toolkit that is being provided for the voluntary sector and for activists up and down the country, including ourselves. It is a great addition—this is a good new thing that the Government are proposing.
I have some examples of why this toolkit is necessary. About 10 months ago, at the Glebe Road pumping station water treatment works at Windermere, we had a significant deluge of untreated sewage going into the lake, and we found out only because a whistleblower told us. The Environment Agency was notified 13 hours after the incident took place. The good thing about what the Government are proposing is that there will be a live database so that we can see what is happening there and then, and we can be on it.
However, unless we include the new clause—I would be happy to accept clarification from the Minister if something similar is going to happen anyway—the assumption will be that there is someone on it. Matt Staniek, who leads Save Windermere, works every hour God sends, but he is allowed to sleep sometimes, and what if something happens at 3 o’clock in the morning and he is tucked up? Do we miss it? I am simply saying that we should put in the Bill that this very good toolkit, which I commend the Government for, should be historically searchable, so that we can really hold the water companies to account.
I am sympathetic to quite a lot of the intention behind the new clause, but as ever, the devil is in the detail. Proposed new section 272B(2)(d)(ii)(a) contains a duty to publish the start time, end time and duration of all sewage spill events. Does the hon. Gentleman accept that there has already been a duty to publish that information for some time? All undertakers have a duty to publish information from event duration monitors within—from memory—60 minutes of an event being triggered. Will the hon. Gentleman give a bit more detail on what he has in mind for the authority to publish? Proposed new subsection (2)(c) says that the database must
“contain such data or information as the Authority thinks is necessary”.
Such a bland statement will be open to challenge and interpretation, with all sorts of committed parties deciding that their “independently collected and analysed information” should be in the database, and other people saying it should not. Is this not just a charter for judicial review of the authority?
I will not rehash the debates we have had in Committee already, but we are talking about more than just event duration monitoring, as set out in proposed new section 27ZB(2)(d)(ii)(a); we are talking about flow and volume, and it is right to specify those things.
That may be the hon. Member’s intention, but the drafting does not say that. Part of the problem is that (ii)(a) deals the with start time, end time and duration, not flow. Does that particular sub-paragraph not duplicate the existing legal requirements for publication within 60 minutes?
We dealt with that with other amendments; even though they are not part of the Bill, that would be covered by the suite of things we have proposed. Fundamentally, all we are asking for is that the information and the evidence that is put out there will be searchable historically. That cannot be beyond the wit and capability of the very clever IT specialists who I am sure are already working for the water companies. This is important, and it is part of what those of us in this corner of the Committee Room are trying to do, which is to take the Government at their word when it comes to the elevation—and we support that elevation—of the role of volunteers and citizen scientists, equipping them to do their job properly and not expecting them to be at their computers 24/7 without sleep.
Very briefly, to return to the SAR—our favourite subject—it might be best if we take the conversation out of Committee and sit down with officials to make sure we are both having the same conversation about the same thing and we can clarify that. We will follow up on that, and of course I extend that offer to the shadow Minister.
New clause 30 would require Ofwat to establish a public database on the performance of sewerage undertakers. I understand and acknowledge the intent behind the new clause, and I echo the hon. Gentleman’s thanks to all the environmental campaign groups that have been working in this area to make information available. It is vital that the public are able to access and scrutinise information on the performance of water companies.
To support this, the Government are focusing our efforts on ensuring that the most salient information is published in a transparent way and is publicly accessible. That is why clause 3 already requires water companies to publish information on discharges from emergency overflows in a way that is readily accessible and understandable to the public. As mentioned, this matches the pre-existing duty for storm overflows. To support the storm overflow duty, Water UK has published a centralised map of discharge data from all storm overflows operated by English water companies on one website. A similar approach is intended for emergency overflows.
We have also requested that water companies begin installing continuous water quality monitors for storm overflows in the 2024 price review. This will provide useful information on the impact of sewage discharges on water quality, and we will be working with water companies to consider how best to publish the information in near-real time. That is in addition to the duty to publish information on pollution incidents in clause 2, as well as existing regulatory requirements for the Environment Agency to publish water company environmental performance data. This data includes the annual environmental performance assessment of the water sector, which provides information on the performance of waste water treatment works.
Information from flow monitors, as we have discussed previously, is very technical and does not relate to the impact of the discharge, unlike continuous water quality monitoring data. Therefore, we do not think there is sufficient additional value in requiring this data to be published. As the industry is already centralising data on sewage discharges from storm overflows on one website, and given the existing environmental performance reporting, the Government do not believe that an amendment to require further publications by Ofwet—Ofwat—to do the same thing is necessary. I therefore hope that the hon. Member feels able to withdraw his new clause.
We are not going to push this to a vote. I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
I thank the hon. Member for his kind words, and I look forward to his support in some of the votes at some point. In the meantime, if he has recommendations on the wording that he would like to put forward, I ask that he please do so. These new clauses are already in place, so maybe that is impossible, but let us by all means try to improve them.
I will say a brief word on the new clause. This is important, and I would like to add to the detail that my hon. Friend the Member for Witney has set out. Essentially, we have two problems here, one of which is that water companies are not statutory consultees, and they should be. I take the point that it could be more clearly stated, but the new clause does say “When participating” more than once, not “If participating”.
Without pointing fingers—well, maybe a bit at water companies in certain parts of the country, including mine—the key thing is that there is an incentive for a water company, when giving its advice to a planning committee, whether it be in the national parks, the dales, the lakes or a local council, basically to say that everything is fine, and why would it not? If a water company says, “We have no capacity issues. You can build those 200 houses on the edge of Kendal and it won’t cause any problems for our sewer capacity,” two things happen, do they not? First, the water company is not conceding the need to spend any money on upgrading the sewerage network. Secondly, it is guaranteeing itself 200 households that pay water bills, in addition to the ones it already has, so it has a built-in incentive—maybe not to be dishonest, but to not really give the fullest and broadest assessment of the situation.
I would like to give the hon. Member a practical example of where the absolute opposite has happened in Wales. In my constituency of Monmouthshire, Welsh Water was very clear that, because of the phosphate levels in the River Wye, there could be no development whatsoever in my area of the constituency—Monmouth—for several years. It absolutely stopped all development and seemed to be very honest in doing so. Now the problems have cleared up somewhat, and Monmouthshire county council has put forward a proposal in the local development plan to build houses. We also have a sustainable drainage systems regime, which means that absolutely nothing will be built without those systems. By the way, 50% of the homes will be affordable and they will be 100% net zero, so I commend Monmouthshire county council for putting that forward. I just wanted to say that there are examples where the opposite has happened to what the hon. Member for Westmorland and Lonsdale is saying.
I thank the hon. Member for the intervention; I am sure that is the case, and the two are not mutually exclusive. I want to see houses built. The great frustration in our communities in the lakes and dales and just outside is that we desperately need homes that are affordable, and we want homes to be zero carbon. We want to be in a situation where the local community is able to hold developers to account. The danger is that developers who are going to build stuff on the cheap that is not affordable to potential buyers or renters are able to get themselves off the hook because the water companies will not really test the resilience of the existing infrastructure.
It is true that both things can happen. We feel that this is about giving planning authorities the power to say, “The developer is seeking to do this, but the community as a whole does not have the resilience or the capacity to cope with 200 extra bathrooms; so what resources will the developer or the water company put in to ensure that the facilities are upgraded to make that possible?” This is about ensuring that planning does its job.
I thank the hon. Member for Monmouthshire for her excellent point. It is very interesting that a mutually owned water company is taking that very sensible decision and approach. It highlights that that is a benefit. They are not trying to make money hand over fist. They are trying to do the right thing.
I beg to move, That the clause be read a Second time.
We have conferred, and hon. Members will be delighted to hear that we have two proposed new clauses to go and we will not press either to a vote. My hon. Friend the Member for Witney and I may disagree, but I think we have confirmed that that is our view.
I have little to say on new clause 34. We had the substance of this debate on amendment 19, but the new clause is significant all the same. The point is simply that among the things that deeply undermine the public’s confidence in the water companies, and in the industry in general, is the very obvious revolving door between the regulator and the water companies themselves.
I will reiterate some points and add to some things that were said the other day. In its analysis in 2023, The Observer found 27 former Ofwat directors, managers and consultants working in the water industry that they had previously regulated.
The hon. Member mentioned directors. I think we all agree that the strength of this Bill is its clarity, but in his new clause, he has chosen to write “any individual”. Does he agree that it is the directors, not the catering team, the cleaning staff, the admin people, the accountants and so on, who have sought to swindle customers or flim-flam the taxpayer? That is where we should focus the attention, and that vagueness does not add to the Bill.
That is an excellent point, and if I was pushing the new clause to a vote, that might make me think twice. I am not the only person who has done this, but I have spoken at length on this issue, not just during this Committee, to make the point that we understand that this is a heated debate, which at times has become quite fiery out there in communities and in this place. But the people who work for the water companies, the regulators and so on are human beings doing a job, and we need to value them. That even includes the directors.
Having said all that, it is clearly wrong that directors are switching from one to the other. I add that our research found that the director for regulatory strategy at Thames Water had previously been a senior Ofwat employee. We had a senior principal at Ofwat moving directly from Thames, where they had worked on market development. We also found links between Ofwat and Southern Water, Northumbrian Water and South West Water, including directors and those who work on regulation.
I am grateful for that well-informed and thoughtful intervention. The hon. Member is absolutely right: that is what we should do. To be reasonable, we want people who understand the industry working for the regulators. We understand why there could be a benign reason for what is happening, but nevertheless, we trace it to some of the reluctance in the culture of Ofwat towards taking action. I talked about the £168 million-worth of fines still not collected by Ofwat from three transgressing water companies. Some of the reluctance comes not from corruption but cosiness, and we need to make sure we address that, as the new clause seeks to do. We dealt with this issue on amendment 19 and it was pushed to a vote. I do not want to trouble the Committee again, so I will be happy to withdraw the new clause.
I thank hon. Members for their contributions. Again, we recognise the intent behind new clause 34, tabled by the hon. Member for Westmorland and Lonsdale. However, it would be disproportionate to prevent all water company employees from being able to accept employment in Ofwat.
Ofwat seriously considers the handling of actual and potential conflicts of interest. Staff in Ofwat are bound by the civil service business appointment rules, which do not apply to every agency, but they do in terms of Ofwat, and by the duty of confidentiality and the Official Secrets Act. Any new employees in Ofwat, regardless of their previous employment, would be bound by those rules. Compliance is mandatory and any breach may result in disciplinary action being taken.
Individuals with experience working in the water sector have a wealth of knowledge—the hon. Gentleman mentioned this—that might be a valuable asset to Ofwat and could support better policymaking. I hope that this reassures him on his concern about the potential conflicts of interest in Ofwat, and that the new clause, as drafted, is therefore unnecessary.
I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 35
Companies to be placed in special measures for missing pollution targets
“In section 2 of the Water Industry Act 1991, after subsection (2D) insert—
‘(2DZA) For the purposes of ensuring that the functions of water and sewerage undertakers are properly carried out, the Authority must establish—
(a) annual, and
(b) rolling five-year average
pollution targets which must be met by water and sewerage undertakers, and the penalties to be imposed for failure to meet such targets.
(2DZB) The performance of a water or sewerage undertaker against such targets must be measured through independent analysis of monitoring data.
(2DZC) A timetable produced under subsection (2DZA)(b) must require the following reductions in the duration of sewage spill events, using the annual total hours’ duration of all sewage spill events recorded by Event Duration Monitors, based on an average from the last five years, as a baseline—
(a) a 25% reduction within five years;
(b) a 60% reduction within ten years;
(c) an 85% reduction within fifteen years; and
(d) a 99% reduction within twenty years.
(2DZD) A water or sewerage undertaker which fails to meet pollution targets set out by the Authority will be subject to such special measures as the Authority deems appropriate, which may include—
(a) being required to work on improvement projects with or take instruction from the Authority, the relevant Government department, or such other bodies or authorities as the Authority deems appropriate; and
(b) financial penalties.’”—(Charlie Maynard.)
Brought up, and read the First time.
This is a big one: companies to be placed in special measures for missing pollution targets. I will read out the key bits:
“(2DZA) For the purposes of ensuring that the functions of water and sewerage undertakers are properly carried out, the Authority must establish…annual, and…rolling five-year average pollution targets which must be met by water and sewerage undertakers, and the penalties to be imposed for failure to meet such targets.”
On the five-year average, obviously we have wet years and dry years. We cannot just have flat numbers. We have to take an average. The new clause also states:
“A timetable produced under subsection (2DZA)(b) must require the following reductions in the duration of sewage spill events, using the annual total hours’ duration of all sewage spill events recorded by Event Duration Monitors, based on an average from the last five years, as a baseline…a 25% reduction within five years;…a 60% reduction within ten years;…an 85% reduction within fifteen years…and…a 99% reduction within twenty years.”
What are we trying to get at? Clause 2 is about pollution incident reduction plans. That is about specific events, so it is at a micro level. We have a national problem and need to think about things at a national level. We have a lot of data already. I think it was Peter Drucker who said, “If you can’t measure it, you can’t improve it.” We have been advocating for measuring it; we have had that debate. The good news is that we already have one metric of measurement—event duration monitors—that tells us how many hours of sewage are spilled per year. EDMs are a long way from perfect in two respects. First, we do not know the volumes going out or how much of that is actually sewage, as we have discussed at length. Secondly, a lot of EDMs are sub-par. I will give a shout-out to Professor Peter Hammond, who has highlighted some essential messages about that. However, that is still the best dataset we have, and we should all take the view that we should not let the perfect be the enemy of the good.
As soon as we put in flow monitors and quality monitors—I know the Government do not support that—we will advocate using those as a metric, but we do not have those now. However, we do have EDM data, so I am advocating that we use that metric. We already know how many hours are spilled by operator. We can take the five-year average and start setting out targets.
Businesses like knowing where they stand. I am a naive politician who is only six months into the job, so there is an awful lot I do not know. I probably committed a key error here by putting in numbers, so some smart politician could come along and say, “That is an incredibly generous number. We’ll go lower than that.” Fine—I do not really care if someone wants to play that game. I want our rivers fixed, and we get our rivers fixed by setting targets, telling the water companies that we want them to meet those targets and giving them sticks, and possibly carrots, to meet them.
We are missing an opportunity—respectfully, I feel that we have missed a lot of opportunities. We did not have to have this Bill now, but we do have it. We ought to be going for the wins now, but every single amendment has been rejected regardless of which party tabled it. That is a loss for our rivers as much as for hon. Members present. However, this new clause provides an opportunity to set some targets. Whether it is today—although this new clause will almost certainly fail because we will not push it to a vote—or in the future, I encourage the Government to take the metric they have, which is hours of sewage spilled, set benchmarks against which to measure water companies and set out bad news or good news depending on whether they miss or hit them. If we hit those targets, we are seriously getting closer to fixing our rivers. Without them, we are not.
I echo my hon. Friend the Member for Westmorland and Lonsdale in saying that I have really enjoyed most of the three days of this Committee. I appreciate the courtesy and generosity in the answers. I thank the Chair, the team of Clerks, who have been so helpful, and the DEFRA team.
It is a great pleasure to again serve under your chairship today, Dr Huq. May I first, on behalf of the Opposition and, I hope, colleagues from across the Committee, give a vote of thanks to everyone involved in this process? I have a list here, and please shout out if I miss anyone out.
First, I thank the Chairs—Dr Huq and Mr Vickers—for guiding us through the process. I thank all the Bill Committee staff—the Clerks and officials—for their assiduous, thorough work, which keeps us on message as Members of Parliament scrutinising this legislation. We thank them for that. Dr Huq, thank you—I will use the word “you” for you. I thank the DEFRA officials for all their hard work on this and for engaging with the Opposition as well. I very much appreciate the Minister allowing the officials to do that.
I thank the Doorkeepers and Hansard. I do not think I have missed anyone in the room except the public. This gives me the chance to thank the members of the public who have come in and watched our proceedings, as well as people who have watched online from afar. There are also, as the Minister said, the stakeholders: the environmental groups, the volunteers and the experts who have fed into this Bill and the water debate that we are having and who are helping legislators across the House to improve and refine legislation. We thank the public very much as well.
We have had a very interesting few days. It has shown us that there is a lot of cross-party consensus on what we are trying to do to improve our water quality. There is some disagreement about how best we do that, but this Committee has shown the House that, actually, there is a lot of agreement about the scale of the problem and the fact that we need to address it.
I respectfully say that I am disappointed with the comments from the third-party spokesperson, the hon. Member for Westmorland and Lonsdale, about the Bill Committee stage being a charade. I do not think that line-by-line scrutiny of Bills is a charade. Yes, there is a process as to how Committees are populated, but that is democracy. I would have thought that that particular party, given its title, would respect election results. That is how democracy works. We have seen that they have had some disagreement among themselves about some of their votes as well, but I will leave that point there.
We have had some interesting discussions, and it would be remiss of me not to talk about teeth. We have had dental analogies aplenty: we are wanting to give more teeth to the various regulators. Finally, I think I did detect—we will have to check Hansard—the Minister using the word “Ofwet”. When this matter goes to the commission, “Ofwet” might be an interesting term for a new body that might be set up, but I will leave that with the Minister.
Thank you, Dr Huq, and Mr Vickers, in his absence, for brilliantly chairing our five Committee sittings. I will not list everyone that the hon. Member for Epping Forest just did, but I endorse what he said. I thank the Clerks, the DEFRA officials, the Minister’s team and colleagues on both sides of the House for their courtesy and the seriousness with which they have engaged with the Opposition, the members of the public who attended the Committee in person and those who have followed it from afar.
There is no doubt that the voluntary sector and the public have been ahead of politicians on this issue for many years. I would argue that the UK leaving the European Union was a key moment, because we had to go back and look under the bonnet to see what was already accepted and already permitted. We could argue about whether the previous Government gave us regulations and standards that were as good as what we had before we left the European Union. That might be an additional issue, but none the less, the likes of Surfers Against Sewage, Windrush Against Sewage Pollution, Save Windermere, the Clean River Kent Campaign and so many others in all our communities have led the debate on this and created great scrutiny. That is why we strongly approve of a significant part of the Government’s ethos in the Bill, which is to put an awful lot of power in the hands of those who care so much in our communities.
I do not mean to offend people by referring to this as a charade, but the reality is that we spent five years in Government, and I am pretty confident that the Government that I was part of never allowed a single Opposition amendment to pass in Committee. There is a little bit of pretence in this. All the same, it is an enjoyable pretence. Having gone through the Bill line by line, we all understand it better, which means that, on Report, a dozen and a half of us can speak about this Bill in the Commons with a greater awareness than beforehand.
We support the Bill. If anybody was to call a Division on it, we would go into the Aye Lobby. Our frustration is that we feel that the Government have missed an opportunity. Their answer is obviously, “Here comes the Cunliffe review, and we will see what happens next.” Are we going to get an undertaking that there will be another Bill in the next King’s Speech? If there is, that is exciting and interesting, and that could answer many of our concerns.
The Bill could have been much clearer about limiting bonuses and about recognising that a fundamental problem with the water industry is the fragmentation and the weakness of regulation. It could have recognised that the financials are clearly all wrong, unfair and wasteful. We are looking at duration, but not volume, content or impact, and we are not supporting the citizens behind the citizen science enough by giving them the information, the resource and the place on the water company boards that they need. There are many areas where we think the Bill could be so much better, and where we do not need to wait for Sir Jon to do those things.
Having said that, what is wrong with this Bill is what is not in it, not what is in it. We are therefore happy to support it and are very grateful for the constructive nature of the debate throughout.
Anyone else? In that case, for the last tearful time, I call Minister Emma Hardy to respond.