Water (Special Measures) Bill [Lords]

Tim Farron Excerpts

Report stage
Tuesday 28th January 2025 Commons Chamber

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

I pay tribute to the Minister and the Bill team from the Department for Environment, Food and Rural Affairs who are in the Chamber, as well as to all my colleagues who sat on the Committee for what was a genuinely enjoyable and collegiate experience. I hope they will forgive me for making a few criticisms in the next few minutes.

We tabled 44 amendments in Committee, but only 34 today, you will be delighted to know Madam Deputy Speaker—[Interruption.] I know—I am failing. I will not speak to all of them for blindingly obvious reasons. We tabled those amendments because we in the Liberal Democrats, humbly yet enthusiastically, have taken on the mantle in this place and beyond of being the voice for many thousands of campaigners, volunteers and citizen scientists who continue to lead the way in exposing the failures and injustices in the water industry, and fighting for meaningful change. We are immensely grateful to those people all across the country.

Our water industry has become a money-making vessel for speculators, who appear to care little for the quality of our rivers, lakes and seas—something I can tell the House is a source of great fury in England’s precious Lake district. The water companies have accumulated £70 billion in debt since privatisation, while still managing to pay out £83 billion in dividends. That is more than a third of the total spent on infrastructure during that time. In the last year, water companies paid out £9.3 million in executive bonuses, and Thames Water’s bonuses doubled to £1.3 million that year. Money leaks out of the industry, infrastructure is failing, and it is our constituents who pay the price.

Meanwhile the regulatory framework has failed utterly and is not fit for purpose. As I speak, £164 million in fines has been levied against water companies by Ofwat, following an investigation that began four years ago, of which it has so far failed to collect a single penny.

[Layla Moran (Oxford West and Abingdon) (LD)]

Thames Water has had an increase in the number of pollution incidents, which went up 40% in six months last year. It has been issued with fines, but that has not changed anything. Does my hon. Friend agree that we need regulation with proper teeth, and that new clause 25 would do exactly that by putting water companies into special measures when they fail our constituents?

[Tim Farron]

I strongly agree with my hon. Friend. The water companies simply do not fear Ofwat, or indeed any other part of our fragmented regulatory system. They dwarf Ofwat in terms of resources, they flout the limited regulations that they face, and they run rings around the regulators and obviously get away with it. There was the outrage of the water companies being permitted, just before Christmas, to increase water bills by 36% by 2030, and what makes it even worse is that a third of customers’ bills are being spent just on servicing the debt—a debt that was in part run up to fund excessive dividends.

Water companies are already passing on the consequences of their complete financial mismanagement to our constituents—their customers—but this Bill could enable that to go further and to be even worse. According to the Government’s explanatory notes,

“following the provision of financial assistance by the Secretary of State to a company in special administration”,

clause 12 of the Bill, as drafted, would

“require a water company to raise amounts of money determined by the Secretary of State from its consumers, and to pay those amounts to the Secretary of State to make good any shortfall”.

In other words, when a water company goes into special administration, there is a cost to the Government of ensuring that supply is maintained, and the Government need to recoup that cost. That sounds reasonable at first glimpse, but it does not seem reasonable that bill payers should have to pick up the tab, despite bearing none of the blame for the financial mess a water company finds itself in.

My hon. Friends and I are keen to press amendment 9, which would make it explicit that it should be the creditors of the companies—the big financial investors that have loaded debt on to the water companies—that cover those costs instead. The amendment would strike out the Government’s provision in the Bill that opens up bill payers to carrying the cost of paying off company debt, even in the event of bankruptcy.

[Bobby Dean (Carshalton and Wallington) (LD)]

I fear that the Government’s drive for growth has meant that they have become fearful of the tough regulation that my hon. Friend suggests. They see it only as an impediment, instead of the basis for a stable economy. Does he agree that weak regulation is not only bad for consumers and for the environment, but also for investment over the long run?

[Tim Farron]

Somebody representing the water industry will say that the water industry, as structured, is deeply unappealing to investors. There is a case for changing the model of how we structure those companies. When a company goes into special administration, we do not think it is right that innocent customers should have to foot the bill. The management of those companies, and their investors and creditors, are responsible for the mess the company is in. They took the risks and speculated in order to make money, so it is only right that they should have to cover the costs of the risks that they took, not our constituents.

One of the positive aspects of the Bill is the Government’s decision to deploy volunteers, citizen scientists and campaigners to ensure scrutiny of the water industry. Only last week, I spent time speaking with the leaders of the Save Windermere campaign and the Clean River Kent Campaign. I also enjoyed getting my hands dirty and my legs very wet alongside the Eden Rivers Trust in the River Eden not long ago. We are lucky across the whole country to have passionate, committed, expert volunteers who are dedicated to cleaning up and protecting our precious waterways, yet we are saddened that the Government have failed to provide those volunteers with the resources they need or the power they deserve.

[Gideon Amos (Taunton and Wellington) (LD)]

Does my hon. Friend agree that one kind of support that such community groups need is water restoration grants? Those are vital and will flow from the water restoration fund, which is the subject of one of his amendments. Those funds are vital to cleaning up bathing waters across the country.

[Tim Farron]

Those funds are vital. Bathing water status is important. We hope that DEFRA will come out with new criteria soon so that places such as the River Kent can bid to be included.

We have tabled new clauses 4, 10, 13 and 15, which between them would strengthen the hand of those wonderful volunteers, including by ensuring that the Government’s proposed live database, which we support, retains comprehensive historical data. If it does not, the Government are expecting campaigners to be watching that database 24/7. If they have the temerity to go to sleep, look after their kids or go to work, they may miss something. If we are to back campaigners and volunteers, the least we can do is give them the tools to scrutinise water companies’ performance. Knowledge is power, and our amendments would give those campaigners knowledge and power.

New clause 11 and amendment 14 address monitoring. Event duration monitors tell us how long a spill took place over. For instance, they tell us that last February, United Utilities spilled into Windermere for 10 hours in one go, but those monitors do not tell us anything about volume. As a result, they do not tell us enough about the impact of sewage spills on the ecology and wildlife of our waterways. It is equally possible to have a long duration trickle or a short duration deluge of sewage into our lakes, rivers and seas. New clause 11 would insist that water companies have to measure and report on the volume of discharges and that regulators hold them to it.

New clause 25 would put into law concrete pollution targets and proper penalties when companies fail to meet them. Companies who fail to meet those targets would be put into what we are calling special measures, meaning that they would be subject to financial penalties and/or be made to undertake a specific improvement project. No water company chief executive will quake in their boots if they are not held to targets that are ambitious and enforceable with penalties, and which actually mean something.

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[Louise Jones (North East Derbyshire) (Lab)]

I thank the Minister for all the hard work she and her team have been doing on the Bill. It is very important to my constituents.

To go back to the very basics, we are talking about something that everybody in North East Derbyshire uses every day—water. I believe that everybody in my constituency, and in the whole country, has a right to know that the water in our rivers and streams is clean, clear and free from pollution. The reason I have to state that now in this House is that we have not had the action we should have had over the past 14 years. That is a huge failure of the previous Government to get action taken and completed on this important issue. Instead, in 2023 water was polluted over 2,000 times in North East Derbyshire—and that is in just one constituency.

Last week, I met local residents in Ashover, which is situated on the River Amber, in my constituency. They impressed on me their concerns about pollution in that very picturesque part of the river. We have had good news, in that Severn Trent Water has improved treatment tank capacity in the area, but my residents are worried that that will not be enough, and indeed that we will not know whether it is enough. They are already concerned that the water they see does not live up to the standards they wish to see. That is why I particularly welcome the fact that the Bill is bringing in independent monitoring of water quality. I am afraid I disagree with the hon. Member for Westmorland and Lonsdale (Tim Farron). What I think is important is not that we get carried away with volume, but the impact on water quality. That is what matters most.

[Tim Farron]

They are not mutually exclusive, are they? Knowing the duration of a spill is important, but knowing what went into it and how much also helps to know the impact so we can regulate it. Is that not true?

[Louise Jones]

The Bill looks at the result—the impact. I do not understand why we need to look at the volume if we are looking at the impact.

A huge amount has been spent on bosses’ bonuses: over £9 million in 2023-24. To put that into perspective, the average salary in my constituency is just over £30,000. If bonuses are received, we expect it to be for work well done and not just as a matter of course for the failings those bosses are responsible for.

Time and time again, we heard from the former Government that the water industry would change. Unfortunately, it did not under the previous measures, and that is why I welcome the action to ensure results as soon as possible. The Bill will mean cleaner rivers, which is my hope for the River Amber and what my constituents deserve; better infrastructure; better protection for those who use our waters for leisure activities; and better protection for the nature in our beautiful constituency. That is why it has my full support.

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[Steve Reed]

I echo my hon. Friend’s commendation for the citizen scientists and the work they have done to highlight the scale of the problem.

The support for the Bill across the House and among the public demonstrates our collective desire to clean up our rivers, lakes and seas. I am proud of the progress we have made through the Bill, but it is not the extent of our ambition.

In October, I announced the biggest review of the water sector in a generation. Sir Jon Cunliffe has appointed an expert advisory group with leading voices representing the environment sector, public health, engineering, customers, investors and economists, and is preparing to launch a public call for evidence within weeks.

[Tim Farron]

The Secretary of State talks about Sir Jon Cunliffe’s water commission, and we are obviously interested in engaging with that. Does he think, though, that today’s appointment of a former Thames Water executive to the commission will fill the public with confidence that it will be independent in any way?

[Steve Reed]

Of course, it is an independent commission; it is up to Sir Jon to appoint to the board whom he likes. However, it is a very balanced board, and I hope the hon. Gentleman will recognise that voices from many stakeholder groups are represented, as indeed they should be.

The commission will report to the UK and Welsh Governments this summer, after which both Governments will respond and consult on Sir Jon’s recommendations, including on further legislation.

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[Victoria Atkins]

I do love being mansplained to by Labour Back Benchers. I suppose it is part of the Labour party’s women problem. The hon. Gentleman is now throwing his thumbs up at me—goodness me!

What I will say is that throughout the passage of the Bill, we have said, “We have made some progress, but there is more to do.” That is precisely why we are supporting the Bill tonight, although we will try to improve it and strengthen it.

[Tim Farron]

Will the right hon. Lady give way?

[Victoria Atkins]

I will not, because I want to allow others to speak.

The Government have also sadly failed to recognise the importance of chalk streams, refusing to confirm the continuation of protections put in place by us Conservatives. I am afraid that warm words about rainforests, much as we agree with them, will not protect these vital habitats. We want to see improved water quality, and I urge the Government to take stock and seek to adopt a more rounded approach that cleans up our rivers and seas, treats bill payers and taxpayers properly, and builds on our work to construct the water systems of the future.

[Tim Farron]

Let me say, without going through all the flowery stuff that we did earlier, that I am grateful to Members in all parts of the House for what has been a broadly collegiate debate. However, the shadow Secretary of State said something that is worth reflecting on. I think she was talking about what I am about to mention, namely the fines of £164 million that Ofwat had indeed proposed should be levied against the very three water companies to which she referred. For what it is worth—and I am not here to defend the Treasury—this was not a Treasury decision at all. It was because of Ofwat’s weakness, and a culture of timidity that is evident when it comes to gathering money from the water companies, that the money was not collected. That information is 100% correct, because it was given to me in response to one of my Freedom of Information Act requests.

In any event, the key feature is my disappointment in the Bill. I will certainly support it should it come to a vote, and I support it anyway, but its weakness lies in the fact that it is not radical enough. It does not go far enough, and it does not tackle the weakness in regulation to which, in a roundabout, accidental way, the Secretary of State has referred .

We will engage with the Cunliffe water review and recognise it as independent. My reflection is simply this. The Labour party has been in opposition for a long time. They were a well-funded Opposition through short money—we could only dream of such things—and surely had the capability to come up with a set of plans that meant they could get on with it straightaway, rather than kicking it to halfway into the Parliament. This is an unambitious Bill, but it is good enough, and it will have our support.

Question put and agreed to.

Bill accordingly read the Third time and passed, with amendments.

[Jerome Mayhew]

On a point of order, Madam Deputy Speaker. I need some assistance in understanding how the House can express its displeasure at the Government’s manipulation of the business of the House to stop proper consideration of this Bill. Water was at the heart of the last general election—it is really important to our constituents—and yet the Bill’s Report stage was limited to less than one and a half hours, and not a single Back Bencher has been able to contribute on Third Reading. Is there a way that we can express our disapprobation of the Government putting forward two non-urgent statements today on Gaza and on Sudan and the eastern Democratic Republic of the Congo—both of them important in their own right but, I suspect, designed to eat up time?