Water (Special Measures) Bill [ Lords ] (Fifth sitting)

Tim Farron Excerpts

Committee stage
Thursday 16th January 2025 Public Bill Committees

[Emma Hardy]

At 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.

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

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?

[Emma Hardy]

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.

--- Later in debate ---

Brought up, and read the First time.

[Tim Farron]

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.

[Amanda Hack (North West Leicestershire) (Lab)]

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.

[Tim Farron]

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.

[Jerome Mayhew (Broadland and Fakenham) (Con)]

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?

[Tim Farron]

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.

[Jerome Mayhew]

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?

[Tim Farron]

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.

[Emma Hardy]

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.

[Tim Farron]

We are not going to push this to a vote. I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

--- Later in debate ---

[Charlie Maynard]

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.

[Tim Farron]

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.

[Catherine Fookes (Monmouthshire) (Lab)]

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.

[Tim Farron]

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.

[Charlie Maynard]

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.

--- Later in debate ---

[Tim Farron]

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.

[Darren Paffey (Southampton Itchen) (Lab)]

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.

[Tim Farron]

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.

--- Later in debate ---

[Tim Farron]

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.

[Emma Hardy]

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.

[Tim Farron]

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.

[Charlie Maynard]

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.

--- Later in debate ---

[Dr Hudson]

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.

[Tim Farron]

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.

[The Chair]

Anyone else? In that case, for the last tearful time, I call Minister Emma Hardy to respond.

Foot and Mouth Disease

Tim Farron Excerpts

Wednesday 15th January 2025 Commons Chamber

[Mr Speaker]

I call the Liberal Democrat spokesperson.

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

I confess that all of us in Westmorland and across rural Britain feel a sense of terror at this news, as we recall the devastation and horror of the 2001 outbreak. I will never forget the looming sense of dread and threat as the disease got closer to our farms, or the dread when the disease was diagnosed and whole herds and flocks were slaughtered by those who had cared for them; nor will I forget the burning fires on the hillsides of the bodies of slaughtered animals, or the deep trauma that affected all our communities, but especially our children. We must do everything to avoid a repeat.

Can the Minister explain why this outbreak was notified on Friday, yet DEFRA issued instructions to prevent imports from the affected areas only yesterday, when countries such as Mexico and South Korea were able to act over the weekend? Does he now acknowledge the urgent need to invest in the APHA and the new laboratory, and undo the delay of the previous Government? Does he accept that the failure of the previous Government—and, so far, of his Government—to sign a veterinary and phytosanitary agreement with the EU increases the risks to biosecurity and to British farmers, and will he act swiftly to put that right? Finally, will he meet urgently the noble Lord Curry, who headed the inquiry after the 2001 outbreak, so that we are ready and have learned all the lessons of previous failures, and so that our farms, rural communities and animal welfare are protected at all costs?

[Mr Speaker]

Order. This matter is very important. My area had the first case of foot and mouth detected in that year, so I know all about it. However, we must stick to the times that have been allocated.

Rivers, Lakes and Seas: Water Quality

Tim Farron Excerpts

Wednesday 15th January 2025 Westminster Hall

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

It is a genuine pleasure to serve under your stewardship, Mr Dowd. I pay tribute to the hon. Member for Monmouthshire (Catherine Fookes), who made a great speech, and has introduced this important issue to this place this morning. I pay tribute to all Members who made remarks during this debate, including, of course, the references they made to the issues that they face in their communities. This is a nationwide issue, which the Liberal Democrats have chosen to champion—we are so committed to cleaning up our waters that our leader refuses to stop falling into our waterways until this matter is resolved.

We are talking about lakes, rivers and seas, and I have them all in my patch—well, not all of them, but a large chunk of them, as the Member of Parliament for the English lake district. I will not list off all the lakes and rivers, as I have been known to in the past, because we only have so much time. We are all proud of our constituencies, and it is a huge privilege to represent mine, but we recognise that in our communities we are there to be stewards of, and to preserve, the lakes, rivers, becks and tarns, and Morecambe bay in my constituency —not just for us, but for everybody else.

Those are national parks, and the lake district is even a world heritage site, so while what happens in our waterways is deeply personal to us, we also recognise it is of great significance to the future of our country and indeed even of our planet. The impact on our ecology, biodiversity and water quality is important, but let us not forget—as has been mentioned by other Members—the importance to our tourism economy. Some 20 million people visit the lakes every year and they deserve to visit a place that is as pristine as it should be.

I will run through some of the issues affecting our communities. Just last year, the Shap pumping station released sewage for 1,000 hours into Docker beck and sewage was dumped into the river Lowther at Askham water treatment works for 414 hours. In November last year, we found that the number of poor bathing waters had risen to the highest level since the introduction of the four-tier classification system. That shamefully included Coniston Water. Windermere had sewage dumped into it 345 times, totalling 5,259 hours over the course of 2023.

I will say a quick word about pollution in lakes. A drop of water that enters Windermere at the north end takes nine months to work its way through, so the impact of sewage on bodies of water such as lakes and tarns is even greater than it is on our rivers and seas. The impact on Morecambe bay is hugely significant as well. We saw 757 sewage dumps there just in 2023. One of the things that is so grievous is the impunity with which those things take place. In 2021, there were 500,000 sewage dumps across the United Kingdom, and a grand total of 16 of them were deemed liable for prosecution. Of those, eight attracted fines of less than £50,000. In other words, it was worth the water company’s while to dump that sewage, because there was no way of holding it to account.

I have said this before, and it is so important: we speak with such passion on all sides about this issue, yet thousands of people are working in our water industries—for the water companies, for Ofwat, for the Environment Agency and for various other bodies—and I pay tribute to them. The temperature of this debate can often be high, and I want them to know that they are valued, and that we do not blame them; we blame the system within which they work. Radical change is needed.

It is a privilege to serve alongside the Minister and others in this place on the Water (Special Measures) Bill Committee. Alongside my hon. Friend the Member for Witney (Charlie Maynard), we have tabled 44 amendments to that Bill; not one of them has been accepted so far, but we have one more day to go, so here’s hoping. That demonstrates our commitment to trying to engage proactively with this issue. We think it seriously matters. The issues we have sought to highlight through that Committee include the need to create a new clean water authority, to have special priority for waterways in national parks and for chalk streams, to protect our rivers and drinking water from forever chemicals and to put environmental experts on the boards of water companies.

The Government—I praise them for this—are rightly putting citizen science at the heart of monitoring. They need to do two things if they are serious about that, and one is to make sure that they equip, support and resource those citizen scientists. I pay tribute to Save Windermere, the Clean River Kent campaign, the South Cumbria Rivers Trust, the Eden Rivers Trust and many others in our communities, but those people need to be on the boards and committees so that they can influence decisions, as well as being equipped to hold people to account. We need radical change, and I fear that this Government are not quite proposing it.

We have a real problem when it comes to regulation. In the end, we have a fragmented regulatory framework. Ofwat, the EA and other bodies are under-resourced and underpowered and the system is fragmented, so the water companies simply run rings around them. The evidence of that is that Ofwat levied £168 million of fines nearly four years ago against three water companies, and it has collected a precise total of zero pounds and zero pence from them, because it simply does not have the culture and powers it needs. Before Christmas, it sanctioned a more than 30% increase in our water bills. In the north-west alone, 11% of all our water bills is going to service the £8.9 billion debt of United Utilities, and it is far worse with Thames Water and in other parts of our country.

People have mentioned farmers and farm run-off. One of the major problems with the agricultural impact on pollution is the past Government’s and this Government’s botching of the transition to the new farm payment scheme. This Government taking 76% out of the basic payment this year will push a load of farmers to move away from environmental action altogether. It will be massively counterproductive. Back our farmers and they will help us to clean up our environment.

In short, we in the Liberal Democrat corner of the Chamber—well represented this morning, as always—are impatient for change. We welcome and support the Bill. As a bit of an old-timer, I neutrally observe that Labour Governments tend to fall into one particular trap: they always assume they will be in power for longer than they actually will be, and they drag their feet and do not do the radical things they should. I say to them: “You’re already at least 10% of the way through this Parliament—get on with it!”

Water (Special Measures) Bill [ Lords ] (Fourth sitting)

Tim Farron Excerpts

Committee stage
Tuesday 14th January 2025 Public Bill Committees

Brought up, and read the First time.

[Tim Farron]

I beg to move, That the clause be read a Second time.

[The Chair]

With this it will be convenient to discuss new clause 20—Review of the water industry—

“(1) The Secretary of State must consider as part of any review into the water industry the following—

(a) the functions and performance of the Water Services Regulation Authority, and the case for its abolition;

(b) whether a public benefit company could better perform the role of current undertakers.

(2) The consideration under subsection (1)(a) must analyse the case for replacing the Water Services Regulation Authority with a new corporate body known as the Clean Water Authority, with the following general duties—

(a) to issue guidance to undertakers, and enforce the implementation of that guidance, requiring undertakers to meet excellent standards concerning—

(i) the provision of clean drinking water,

(ii) the maintenance of bathing waters of excellent quality,

(iii) the maintenance of lakes, rivers and beaches of high ecological status,

(iv) the conservation of water resources, and

(v) the charging of reasonable water bills;

(b) to issue rules prohibiting a relevant undertaker from giving to persons holding senior roles performance-related pay in respect of any financial year in which the undertaker has failed to meet any relevant targets set by the Authority;

(c) to swiftly revoke the licence of water companies that have performed poorly, as defined by the Authority, with particular regard to the standards set out in paragraph (a);

(d) to require relevant undertakers to have arrangements in place for environmental experts to be members of a board, committee or panel of the undertaker;

(e) to issue stringent and legally-binding targets concerning sewage discharges affecting bathing waters and highly sensitive nature sites;

(f) to mandate that undertakers publish publicly-accessible live time data on the recorded volume, duration and number of sewage spills on a single site maintained by the Authority;

(g) to perform unannounced inspections with regard to the duties under this subsection.”

--- Later in debate ---

[Tim Farron]

I will try to be brief and speak to both new clauses. For the Committee’s information, we will not seek to press new clause 7 to a vote, but we will seek to press new clause 20.

I know that the Minister will talk about the Cunliffe review as the time when these things will be considered. Nevertheless, we have all spent enough time in opposition to have come to some conclusions before this Parliament. Even if nothing else had happened beforehand, there was Ofwat’s signing off of the bill increases last December. This is a 21% increase in bills, and that is 14 times larger than the current inflation rate. In my part of the world, it is a 25% price rise. As I said earlier, 11% of the bills being paid by my constituents will go to finance company debt.

We have seen bonuses signed off regularly despite shocking performance. We see Ofwat as a failed regulator with a culture and presumption of non-intervention. Nearly four years on, Ofwat still has not collected £168 million-worth of fines. We see a culture of weakness and an organisation that the water companies consider to be weak and for which they do not have respect. It is partly the fault of Ofwat and its leadership, but it is also that the powers given to it are not sufficient.

--- Later in debate ---

[Catherine Fookes (Monmouthshire) (Lab)]

I think we can safely say that Ofwat is already under review. In my mind, it has until 2030 to deliver everything that we want. We have an independent commission coming up, so I would say that the hon. Member’s new clause is not necessary. We should let the commission report and say what extra steps are necessary.

[Tim Farron]

I thank the hon. Member for her very reasonable intervention. In the extremely unlikely event that the Committee rejects my new clause today, we will of course submit our ideas to Sir Jon Cunliffe and take part in the review, which we welcome. Nevertheless, my point is that the division of responsibility and division of attention, particularly in the Environment Agency as a regulator dealing with flooding and so on, means that it does not have the resource; I know that we will talk about that later. Also, the fact that the regulatory set-up is so fragmented means that the water companies simply run rings around the various regulators.

One final point arising from new clause 20 is that we must outline a potential way forward. We are not convinced at this stage that renationalisation would be affordable or wise. I am not saying that I am opposed to it in principle; it just does not seem wise at this stage to do something that will cost the taxpayer a vast amount and put money in the hands of people who have fleeced us once already. Unless people can come up with a different model, that does not feel like the right way of doing it.

At the same time, the current model of ownership has clearly failed. We suggest a not-for-profit, a community benefit company model or looking at mutuals, but there may be a way of migrating the system towards that model of ownership via what happens at the end of the administration.

[Jerome Mayhew]

The hon. Member says that privatisation has demonstrably failed. I challenge him on that. There are elements of privatisation that have failed: the refinancing, the imposition of debt and the removal of money through dividends in the noughties and, I am sorry to say, between 2010 and 2015. That is a failure, but I hope that the hon. Member accepts that privatisation as a whole has delivered more than £160 billion of capex investment into the industry, which simply would not have happened if it had been up against schools, hospitals and the other calls on the public purse.

I know that I am straying too far, but subsection (1)(b) of the new clause refers to

“whether a public benefit company could better perform the role of current undertakers.”

As I am sure the hon. Member will know, we have an example of that: Welsh Water. Is he able to point to a single metric by which Welsh Water has outperformed its private sector comparators?

[Tim Farron]

I am not wedded to one model or another. Having said all that, water is blindingly obviously a natural monopoly and should not have been privatised in the first place. Can I give one metric? Yes. Of the 16 water companies, Welsh Water is among the minority that are financially sound. Performance is not necessarily and always a function of ownership absolutely: it is a combination of ownership, culture and regulation.

We are simply saying that we should look at migrating the system to this model. Let us bear in mind that for all the additional money we can say we leverage in through private investment, a vast amount of money leaks out of the system to shareholders, often through holding companies overseas and in bonuses, which could otherwise have been spent internally.

New clause 7 is an attempt to come up with a constructive alternative. We would abolish Ofwat, take the water regulatory powers off the Environment Agency, create a single regulator in the form of the clean water authority and seek to migrate ownership within the water industry towards a mutual and community benefit model. As I say, we will not push new clause 7 to a vote, but we will seek a vote on new clause 20.

--- Later in debate ---

[Tim Farron]

As I said earlier, we will not press the new clause to a vote at this stage, but we will press new clause 20 later. Notwithstanding all that has been said about Sir Jon Cunliffe’s review—we want to proactively engage with it, and believe it has great potential to do good—there is no harm in proposing solutions at this stage, and that is what we seek to do. I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 8

Duties of water regulators for clean water

“(1) The Water Industry Act 1991 is amended as follows.

(2) In section 2 (General duties with respect to water industry)—

(a) omit paragraph (2A)(c);

(b) in subsection (2B), omit from ‘by’ to the end of the subsection and insert—

‘ensuring—

(a) clean drinking water,

(b) bathing waters of excellent quality,

(c) lakes, rivers and beaches of high ecological status,

(d) the conservation of water resources, and

(e) reasonable water bills.’

(3) In section 3 (General environmental and recreational duties), in subsection (2), before paragraph (a) insert—

‘(aa) a requirement to achieve excellent quality of all bathing waters, lakes, rivers and beaches of high ecological status, and elimination of sewage, waste and other pollution so far as reasonably practicable from all waterways;’”.—(Tim Farron.)

This new clause would amend Ofwat’s consumer duty to prioritise clean water and bill levels instead of commercial competition.

Brought up, and read the First time.

[Tim Farron]

I beg to move, That the clause be read a Second time.

The new clause is similar in scope to the last one, and I do not want to detain the Committee long. The clause refers to the duties of the water regulator under the Water Industry Act 1991, and lists duties against which the regulator would be able to mark water companies to see whether they perform. The duties would be to ensure,

“clean drinking water…bathing waters of excellent quality…lakes, rivers and beaches of high ecological status…the conservation of water resources, and…reasonable water bills.”

Interestingly, those are significantly more detailed than the 1991 Act currently provides. We are seeking to beef up Ofwat’s powers so that water companies are marked against these higher and more comprehensive standards. We do not think the clause should be controversial, and will seek to push it to a vote.

[The Chair]

The Clerk keeps reminding me that—I think because we have a lot of new Members in the room; Tim Farron is not guilty of this—people keep saying “you”, which is a cardinal sin. You have to say “the hon. Member”, because “you” is me, and I am not doing anything except sitting here saying the “Unlock the doors” stuff.

[Emma Hardy]

May I say—often said, not always meant—that it is indeed a pleasure to serve under your chairwomanship, Dr Huq? I thank the hon. Member for Westmorland and Lonsdale for the intention behind new clause 8. Ofwat has a range of primary duties, including protecting the interests of consumers, ensuring that companies properly carry out their functions and ensuring that companies can finance the delivery of their statutory duties. Removing Ofwat’s duty to ensure that companies are appropriately financed would put at risk companies’ ability to deliver for customers and the environment. The new clause also seems to contradict the others tabled by the hon. Member. For example, new clauses 19 and 23 seek to increase regulation around water company financial resilience, but new clause 8 seems to aim to reduce it.

Ofwat must continue to ensure that water companies can finance the proper carrying out of their statutory obligations, in line with the outcome the new clause seeks. Ofwat already has a primary duty to seek to ensure that companies deliver their statutory obligations, including environmental obligations. Ofwat’s existing duties, combined with the strengthened power for regulators provided by the Bill, will therefore drive the desired outcome sought by the new clause and ensure that the environment is at the heart of water companies’ activities. That is something on which we all agree.

In addition, the independent commission on the water sector will look at wider long-term reform of the water sector, including considering and clarifying the role of regulators, and we do not wish to prejudice the outcome of the commission by implementing the new clause. I hope that the hon. Member is reassured that Ofwat’s existing core duties capture the intent behind it, and that the independent commission will consider the duties of Ofwat more broadly. For those reasons, we will not accept the new clause.

[Tim Farron]

I thank the Minister for her response. The new clause aims not to replace the business side of Ofwat’s regulatory framework and powers, but to supplement it. As I said earlier, it is odd that in the broadest sense—I know that this is not entirely true—Ofwat looks at the business side of the water industry and the EA looks at the environmental side. They are clearly one and the same, or they ought to be. We are simply trying to draw these things together. This is not about reducing Ofwat’s powers on one side in order to beef them up on the other; this is about additionality. We think it is entirely consistent.

I hear the Minister—if I were at that crease, my straight bat would be “Sir Jon Cunliffe” every single time. I get that, but surely, there has to be some point to this water Bill, and we are trying to push the Government to strengthen the regulators. We debated earlier the extent to which Ofwat should exist or not, but if we take it that the Government have a majority and therefore that Ofwat is likely to overcome my time on this Committee, what can we do to make it a more holistic regulator with more power and scope? We therefore think there is a very strong case for new clause 8.

Question put, That the clause be read a Second time.

--- Later in debate ---

Brought up, and read the First time.

[Tim Farron]

I beg to move, That the clause be read a Second time.

The Environment Agency will have more powers as a consequence of the Bill. There will be greater regulation and there will be an impact on the Environment Agency as an organisation. It is my privilege to represent large chunks of the English Lake district. We have an agency full of really good people—dedicated and qualified professionals, many of whom are from and love the area, and yet they already find themselves overwhelmed with their responsibilities. I made an allusion earlier, but it might help to give a sense of how the organisation copes with its challenges.

We are still in the process of having walls built around the River Kent to protect the town of Kendal and its businesses from a repeat of the devastation in December 2015, when something like 6,000 of my residents lost their homes and we saw just under 1,000 businesses devastated. The Environment Agency is looking after that, and just up the road are Windermere, Coniston, Ullswater and the other lakes, rivers and coastal areas of our beautiful part of the world. We are already stretching the capacity of those people, to say the least, and we are beginning to see that in real time, as we try to deal with sewage spills in the tributaries that lead into Windermere. We see many such failures, and although the Environment Agency is trying to find the time to regulate, observe and scrutinise them, it is understandably distracted by the huge civil engineering project that it is overseeing in Kendal to protect the town from flooding.

This is about paying tribute to people in the EA, but also recognising that they are already under enormous pressure. The Minister has said that there will be 500 new members of staff at the Environment Agency. That is one answer to the question. We are trying to recognise that that is still only one person per English constituency. We need to therefore test the extent to which the Environment Agency has the capacity to do its job, because part of the problem is insufficient regulatory powers, and the other is agencies without the resource to police the powers that they already have. This aims to be a helpful new clause. It recognises that the Government seek to and will do good through the Bill, but we need to ensure that the agencies there to deliver that good have the capability to do so.

[Emma Hardy]

I thank the hon. Member for suggesting new clause 10 and agree it is important to understand the impacts of the Bill on the Environment Agency. I echo remarks made by all Members on the wonderful work that the Environment Agency does, particularly those who are working in the frontline and those who were working on new year’s day trying to support communities that had been flooded. I also pay tribute to the Wildlife and Countryside Link and to all the environmental groups, organisations and charities that have shown an interest in the Bill. Their tireless campaigning is probably what has led to many of us being here to discuss it today.

I reassure the hon. Member for Westmorland and Lonsdale that the current provisions in the Bill are sufficient to do what he wants. Through clause 10, the Environment Agency will be able to recover costs for the full extent of their water company enforcement activities, including for new provisions in the Bill. This will allow the Environment Agency to fully fund their water industry enforcement functions and meet the requirements of the Act, ensuring that polluters can be held to account for breaches of their obligations.

Environment Agency funding will continue to be closely monitored by DEFRA as a sponsoring Department, ensuring that the regulator is fully equipped to carry out its duties and functions effectively and to deliver for the public and the environment. The Environment Agency is already recruiting up to 500 additional staff for inspections, enforcement and stronger regulation of the water industry, increasing compliance checks and quadrupling the number of water company inspections by March. This increased capacity is funded by £55 million a year through increased grant in aid funding from DEFRA and additional funding from water quality permit charges levied on water companies.

I hope the hon. Gentleman is reassured that these measures will ensure that the Environment Agency consistently has the resources it needs to fund its regulatory activities. As such, the proposed new clause is unnecessary and therefore I ask him to withdraw it.

--- Later in debate ---

[Tim Farron]

I am not entirely reassured but I am partially at least and we have no desire to push this new clause a vote. I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 11

Duty to publish maps of sewage catchment networks

After section 205 of the Water Industry Act 1991 insert—

“205ZA Duty to publish maps of sewage catchment networks

(1) Each relevant undertaker must publish a map of its sewage catchment network.

(2) A map published under this section must illustrate any relevant pumping stations, pipes, and other works constituting part of the undertaker’s sewerage network.

(3) Maps published under this section must be published within 12 months of the passing of this Act, and must be updated whenever changes are made to the sewage catchment network or the components listed in subsection (2).

(4) Maps published under this section must be made publicly accessible on the undertaker’s website.”—(Charlie Maynard.)

Brought up, and read the First time.

[Charlie Maynard]

I beg to move, That the clause be read a Second time.

This is a very nuts and bolts thing. I believe we are here to try to make a better water sector. I will rattle through the clause, which would mean that each relevant undertaker

“must publish a map of its sewage catchment networks”,

and that maps published under the provision

“must illustrate…pumping stations, pipes and other works constituting part of the undertaker’s sewerage network…must be published within 12 months of the passing of this Act…must be made publicly accessible on the undertaker’s website.”

I am a district councillor as well as an MP and in my ward of Standlake Aston and Stanton Harcourt, parish councillors, members of the public and campaigners have grappled for information and failed to find it. Many people do not know how to do a freedom of information request. This means that people do not know where the sewage is going from and to, and that leads to confusion and means that the problems are further away from us.

Putting these maps in the public domain, making them easily accessible and making sure that not only the pumping stations and the treatment works but the pipes connecting them all—which are not automatically clear —are always in the public domain and always easily accessible means that we are getting to a solution quicker. That is all this new clause is about. I am probably going to get a response saying, “We have to wait for the water commission”, in which case I would express some disappointment, because these things do not cost any money and they mean we move quicker to solve problems. I would really like a culture of, “If that’s a good idea, let’s do it”.

--- Later in debate ---

[Charlie Maynard]

Frankly, it is pretty worrying that we do not have maps of sewer networks around the country. That is a pretty fundamental thing that we would want a water utility company to have. I acknowledge that they do not, though, and nowhere in the new clause am I proposing that the network is mapped. I am simply saying that we should take the existing maps and get them into the public domain by default. Currently, it is necessary to make a freedom of information request to access them.

I suggest that the Minister might be being a little disingenuous in saying, “We’re just being asked to monitor, but we want to act.” The Government can do both. It is not the case that if we are monitoring, we are not acting; there is plenty to be acting on and plenty to be monitoring. Also, when I hear, “If we put in flow monitors then we would need to cover the quality,” I think, “Yes—all of it. Let’s do it now.” It is not an either/or, and I do not like the occasional suggestion that there may be an either/or.

Having said all that, I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 12

Environmental duties with respect to chalk streams

“(1) The Water Industry Act 1991 is amended as follows.

(2) After section 4, insert—

‘4A Environmental duties with respect to chalk streams

(1) Where a relevant undertaker operates, or has any effect on chalk streams, that undertaker must—

(a) secure and maintain high ecological status of such chalk streams, and

(b) clearly mark chalk streams which are of high ecological status.

(2) In this section “high ecological status” relates to the classification of water bodies in The Environment (Water Framework Directive) (England and Wales) Regulations 2017.””—(Tim Farron.)

Brought up, and read the First time.

[Tim Farron]

I beg to move, That the clause be read a Second time.

[The Chair]

With this it will be convenient to discuss new clause 27—Environmental duties with respect to national parks—

“After section 4 of the Water Industry Act 1991 insert—

‘4A Environmental duties with respect to national parks

(1) Where a relevant undertaker operates, or has any effect, on land within national parks or the Broads, that undertaker must—

(a) Secure and maintain “high ecological status” in the water in these areas by 2028;

(b) further the conservation and enhancement of wildlife and natural beauty;

(c) improve every storm overflow that discharges within these areas by 2028;

(d) reduce the load of total phosphorus discharged into freshwaters within these areas from relevant discharges by 2028 to at least 90% lower than the baseline as defined in Regulation 13(1) of the Waste Water Targets set under the Environment Targets (Water) (England) Regulations 2023.

(2) A relevant undertaker must be put into special administration, and not be eligible for a further licence, if it fails to—

(a) demonstrate adequate progress each year;

(b) meet the targets in subsection (1).

(3) Within one year of the day on which the Water (Special Measures) Act 2025 is passed, the Secretary of State must lay a report on the undertakers’ implementation of the environmental duties in subsections (1) and (2) before Parliament.

(4) Following the first report being published under subsection (3), a progress report on implementation must be included in the annual environment improvement plan, issued under section 8 of the Environment Act 2021.

(5) The Secretary of State must by regulations make provision requiring an undertaker to achieve bespoke objectives for specific iconic and the most culturally and ecologically significant waterways, including, where appropriate, complete removal of sewage discharge from the undertaker’s infrastructure.

(6) A statutory instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.

(7) In this section—

“the Broads” has the same meaning as in the Norfolk and Suffolk Broads Act 1988;

“land” includes rivers, lakes, streams, estuarine and other waterways;

“High Ecological Status” means the classification of water bodies defined in Regulation 6 of The Water Environment (Water Framework Directive) (England and Wales) Regulations 2017.””

This new clause would require water companies to adhere to and deliver stronger environmental objectives and duties within National Parks and the Broads, so as to protect waters across National Parks from sewage. The new clause would give the Secretary of State regulation-making power to extend protections to specific bodies of water, such as Lake Windermere.

[Tim Farron]

New clause 12 is a short, and I hope consensual, measure relating to chalk streams, which we have already discussed, and new clause 27 deals more widely with the powers of national parks.

Some 85% of all the chalk streams on planet Earth are in the south of England. The impact that that has on the biodiversity of this part of the world—and more broadly—is hugely significant, creating pure, clean water from underground chalk aquifers and springs, which is ideal for wildlife to breed and thrive. They make a vital contribution to global biodiversity, providing natural habitats for many plants and animals. They will exist in many Members’ constituencies—not in mine, but, as a resident of planet Earth, I still reckon they are very important. I therefore think that they are worthy of specific attention and regulation in this Bill, so I commend new clause 12 to the Committee.

New clause 27 makes specific reference to powers regarding—and the importance of—national parks. It is my great privilege to represent a constituency with two of them: the dales and the lakes. We recognise the importance of natural national landscapes, which, of course, include areas of outstanding natural beauty, as they were known until relatively recently. We recognise many of the worthy inclusions and mentions in the Glover review for reform within our national parks—I remember meeting Julian Glover as he began that review. I agreed with much that he recommended, and was disappointed that the previous Government did so little with his recommendations.

[Jerome Mayhew]

To save everyone’s time, I will not make a speech on this, but I am concerned about new clause 12 because it confers an absolute duty regarding chalk streams. I represent a constituency with several chalk streams, including the Stiffkey, which goes through Walsingham. The new clause says:

“Where a relevant undertaker operates, or has any effect on chalk streams, that undertaker must—”

so it is a direction—

“secure and maintain high ecological status of such chalk streams”.

We all want that outcome, but the problem is that water undertakers are not the only ones with negative impacts on chalk streams, yet the new clause gives them the requirement, which is absolute in its terms. We know that farming, and increasingly road detritus, also affects chalk streams, so how does the hon. Member square that circle?

[Tim Farron]

The hon. Member makes a very good point, and we will later come to a new clause that we tabled about planning, because undoubtedly development and industrial activity also have an impact. However, this goes back to my original comment about the importance of singularity in regulation; while we recognise that the water companies may not be entirely responsible, we think that the regulator should have a responsibility across the piece.

However, the hon. Member makes a good point. We are not planning to push new clause 12 to a vote, but we are keen for the Minister to look at what we have said—and indeed what the hon. Member and his colleagues have said previously in Committee—about the importance of chalk streams, and for them to be included on the face of the Bill.

New clause 27 relates particularly to national parks. Every single lake, river and stream in England’s national parks—every single one—is polluted in one way or another. There has been no regard by water companies for national park status in this process. It is not that the lakes, rivers and waterways outside national parks do not matter—they absolutely do, and a vast part of my constituency is not in either of the national parks—but nevertheless, the lack of a higher bar for those in our national parks demands the question: what is the point in the national parks? We need to make sure that that stipulation is included. New clause 27 would therefore force water companies to specifically reduce pollution in those precious places.

To talk about my own community, United Utilities’ negligent treatment of Lake Windermere has been a standout example. Over the two years between 2021 and 2023, 165 hours of illegal sewage was pumped into Windermere, England’s largest lake and the centre of our hospitality and tourism economy, with 7 million visitors every year to that part of the Lake district alone, out of the 20 million who visit the lakes overall.

For the record, I should say that I still swim in Windermere and I do not think I am a complete lunatic, so it is not an open sewer by any means. Nevertheless, for many people, the reality is that so many of the 14—I think—assets that United Utilities owns on or around the tributaries of Windermere, or its connecting lakes, are not fit for purpose. I am thinking about the pumping station at Sawrey, for example, or the water treatment works at Ambleside. It is unconscionable that we have these assets, many of which are ageing and under-invested in, and the water company, United Utilities, failing to take action. Windermere is known globally and is part of Britain’s national brand. If its reputation becomes unfairly sullied, it will hit my constituents’ revenues.

[Jerome Mayhew]

I am afraid I have to make the same point about new clause 27. Proposed new section 4A(1)(a) contains an absolute duty on the undertaker, which “must”—so this is a direction—secure and maintain high ecological status, and that has to be achieved within three years. I question the practicality of that.

I am also keen to highlight the fact that proposed new section 4A(7) includes the broads, which I am lucky enough to represent. The broads are affected by all sorts of factors: we have a high degree of recreational use, with boating as well as angling, and it is a farming environment, with grazing in the marshes, particularly down in the Halvergate marshes. Yes, Anglian Water has affected water quality negatively—as well as in some positive ways, to give it credit—but it would be a travesty to place an absolute duty on Anglian Water when it has only partial control of the answer, and over a three- year timeframe. Does the hon. Gentleman agree that that is unrealistic?

[Tim Farron]

I do not think it is unrealistic—we need to be ambitious—but I absolutely accept that there are multiple sources of pollution.

I promise to be brief in talking about my patch, which is not of interest to everybody. It is key to point out that pollution in Windermere generally comes from three sources. It is true that agricultural run-off is an issue but, sadly, the policies of this Government and the previous one, over a period of time, have effectively destocked the fells, meaning run-off has a massively reducing impact on Windermere and the broader catchment.

The bigger two problems are the 14 assets that United Utilities has either on or around the lake or its tributaries. There is also the best part of 2,000 septic tanks around the lake or its tributaries. Unlike septic tanks and, indeed, package treatment works in many rural communities, these are not scattered all over in the middle of nowhere; they are in a ring around the lake, most of them within yards of a mainline sewer. It is, then, entirely possible for the water companies, while gaining significant income benefit as a consequence, to mainline a massive proportion of the sources of sewage spillage into the lake, via the septic tanks and the package treatment works being brought into the system.

The new clause is of course slightly selfish, but it is really important that we seek to maintain national parks right across the country at the highest possible bar, and therefore make sure they set an example for others to follow. We will seek to press new clause 27 to a vote.

[Emma Hardy]

I thank the hon. Member for Westmorland and Lonsdale for tabling the new clauses. It is always nice to have a conversation about the beautiful chalk streams and national parks in our country.

New clause 12 would have significant implications for existing legal frameworks and operational delivery, and would not necessarily result in environmental improvements for chalk streams, for which there are already established objectives to conserve and restore their ecological health. Under the water environment regulations, the default objective is to achieve good ecological status for all chalk streams in England. Good ecological status is a high standard that represents a thriving aquatic environment with only minor disturbances from natural conditions.

High ecological status equates to water that is almost entirely undisturbed from its natural conditions. If we set high ecological status as the objective for all chalk streams, overriding cost-benefit assessments, it would have wide-ranging impacts on future planning developments and human interaction with chalk streams, including by restricting farming and fishing. Any planning for housing developments that would have even a minor impact on the water quality of chalk streams would be restricted without impractical and disproportionately costly mitigation measures. The new clause would place achieving that demanding objective on water companies only, as the hon. Member for Broadland and Fakenham highlighted, regardless of the pressures that are actually impacting chalk streams. This would not allow for the consideration of technical feasibility or costs, which would ultimately be borne by water bill payers. The new clause would necessitate amendments to the water environment regulations and habitat regulations, creating complexity and difficult delivery implications.

--- Later in debate ---

[Emma Hardy]

The hon. Gentleman is right to highlight that the pollution caused in the Norfolk broads and in many other areas does not come from water companies alone. As has been discussed, it comes from the environment, road run-off and various other places. “High ecological status”, as we have stated, could involve not being able to fish in those waters at all, which I know is a recreational activity in his area. It may also restrict planning for housing developments with any minor effects on the water quality of water bodies in national parks. The Government therefore cannot accept either new clause, although I recognise the intention behind them. I hope that the hon. Gentleman feels able not to press both.

[Tim Farron]

In short, I am happy not to push new clause 12 to a vote now, nor will I seek to push new clause 27 to a vote when we get to that stage. I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 13

Guidance on poly- and perfluorinated alkyl substances

“After section 86ZA of the Water Industry Act 1991, insert—

‘86ZB Guidance on poly- and perfluorinated alkyl substances

(1) The Secretary of State must by regulations made by statutory instrument make provision for the regulation of poly- and perfluorinated alkyl substances in drinking water based on guidance issued by the Drinking Water Inspectorate.

(2) Until the Secretary of State makes provision for the regulation of poly- and perfluorinated alkyl substances, water and sewerage companies must implement any relevant guidance issued by the Drinking Water Inspectorate.

(3) A statutory instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament.’”—(Tim Farron.)

This new clause would require the Secretary of State to make regulations relating to the presence of poly- and perfluorinated alkyl substances in drinking water based on guidance issued by the Drinking Water Inspectorate, and require water companies to follow the Inspectorate’s guidance in the interim.

Brought up, and read the First time.

[Tim Farron]

I beg to move, That the clause be read a Second time.

New clauses 13 and 14 are connected, so with the Chair’s permission, I might speak to both of them.

[The Chair]

Yes, that would be fine.

[Tim Farron]

Thank you—I do not want to detain the Committee any longer than I need to. The new clauses are about a vexing and serious issue: the presence of polyfluorinated and perfluorinated alkyl substances in our waterways and in our drinking water, in particular. I pay tribute to my hon. Friend the Member for Twickenham (Munira Wilson) for championing this issue in this place and outside it.

The new clause attempts to raise the existing guidance from the Drinking Water Inspectorate on PFAS levels in drinking water to a statutory level; that is the key point. The Bill seeks to increase regulatory power over water companies, and the new clause will increase the Drinking Water Inspectorate’s power to enforce the guidance regarding PFAS. There is currently no legal limit on the amount of PFAS present in our drinking water. There is only guidance, even though the Environment Agency and the Health and Safety Executive have both recommended that there should be a legal limit.

New clause 13 would require water companies to prioritise and take a proactive stance on limiting PFAS in drinking water. Currently, if a water company were to breach PFAS guidance, its regulatory compliance score would not be affected as it would if, for example, lead was found in its water. This would encourage them to invest in treating water to remove PFAS. This is an important first step in prompting the Government to create a fully-fledged chemical strategy to deal with chemical pollutions of all kinds, starting with the most direct threat to human health, which is the direct consumption of PFAS through drinking water. PFAS are toxic, they are forever and they are very pervasive. Links have been found between PFAS chemicals and a host of health issues, such as, but not limited to, cancer, thyroid disease, fertility issues, lowered birth weight, weakened bones in children and immune resistance to vaccinations.

New clause 14 would put the duty on the water companies to take responsibility for the reduction and prevention of PFAS chemicals in water systems, ensuring that each water company is responsible.

[Emma Hardy]

I thank the hon. Member for proposing new clauses 13 and 14 on this incredibly important issue, and for highlighting the importance of PFAS monitoring. I want to reassure everybody that the quality of drinking water in England is exceptionally high and among the best in the world. It is important to me that it remains that way.

Across Government, we are working to assess PFAS levels occurring in the environment, as well as their sources and potential risks, to inform future policy and regulatory approaches, safeguard the current high drinking water quality and ensure our regulations remain fit for purpose. Water companies have a statutory obligation under the Water Supply (Water Quality) Regulations 2016 to carry out risk assessments to identify anything that could pose a risk to health or cause the water supplier to be unwholesome. That includes the risk of PFAS.

I will explain which PFAS are tested for in drinking water. The Drinking Water Inspectorate issued a series of information letters to water companies to set out a risk-assessment methodology and associated monitoring strategies for up to 48 individual PFAS compounds. The guideline values of PFOS, or perfluorooctane sulfonic acid, and PFOA, or perfluorooctanoic acid, are agreed with the UK Health Security Agency, and have been applied to 48 individual PFAS. The DWI guidance will be reviewed and updated where necessary.

The Drinking Water Inspectorate has provided guidance on PFAS to water companies since 2007 and, as I explained, that is regularly updated as new research emerges. In July 2024, DEFRA announced a rapid review of the environmental improvement plan to deliver on our legally binding targets to save nature. That includes how best to manage chemicals, including the risks posed by PFAS, and we are working closely with the DWI on all matters, including PFAS.

I reassure the hon. Member for Westmorland and Lonsdale that the Water Industry Act 1991 already provides the necessary powers to amend existing regulations to deal expressly with PFAS, should the Government wish to do so. I will have a meeting with his hon. Friend, the hon. Member for Twickenham (Munira Wilson), on this issue. I hope that the hon. Gentleman is reassured that this new clause is not suitable for the Bill, so I ask him to withdraw it.

New clause 14 focuses on chemical contaminants entering our waterways. I agree with the hon. Member for Westmorland and Lonsdale about the importance of the issue, which is why, as I announced, we will have the rapid review of the environmental improvement plan to deliver on our targets to restore nature. That includes looking carefully at the risks posed by PFAS. The review will consider and set out effective measures to mitigate harmful chemical substances entering our water through the environment. Through the chemical investigations programme, we are working with the water industry to understand how levels of contaminants in treated waste water affect our water environment. The programme will provide valuable information to understand the effectiveness of different measures to tackle chemical contamination of our rivers.

Significant costs are associated with end-of-pipe technologies at sewage treatment works to manage the more challenging chemicals, such as PFAS. We therefore need to prevent contaminants entering the water system in the first place, before they get to the waste water treatment works, where the cost for treatment will be unfairly borne by water customers, rather than the polluters. Work continues across Government to help us to assess the levels of PFAS occurring in the environment, their sources and the potential risks, so that those can inform future policy and regulatory approaches to safeguard our high drinking water quality and to ensure that regulations remain fit for purpose.

The DWI expects water companies to plan to reduce PFAS concentrations in treated water progressively by implementing a reactive and systematic risk-reduction strategy. That is why we need to need to prevent them entering the water in the first place. I hope that the hon. Member is reassured by the actions that we are taking and will not press new clause 14.

[Tim Farron]

I am substantially reassured that the Minister is taking this issue seriously, and I am grateful that she is to meet my hon. Friend the Member for Twickenham, who has championed it so well. All the same, while I do not agree, I accept the Minister’s point about the way in which we are doing this—which, I guess, is contained in new clause 14, so I will not press that to a vote—but new clause 13 simply says what the Health and Safety Executive and the Environment Agency are already saying, which is that those chemicals are deeply dangerous and that the restrictions on them should therefore be moved from guidance to a statutory level. That ought to be a no-brainer, so we will press that new clause to a vote.

Question put, That the clause be read a Second time.

--- Later in debate ---

[Tim Farron]

I beg to move, That the clause be read a Second time.

I will try to be brief, I promise. The new clause is based on the fact that we seriously approve of the Government’s approach to monitoring. We want the regulatory bodies to be well equipped and resourced to be able to hold water companies and other potential polluters to account. But the Government have made a clear decision, of which I totally approve, to lionise and put front and centre citizen science and voluntary groups around the country—groups such as Windrush Against Sewage Pollution, Save Windermere in my constituency, the Clean River Kent group and the Rivers Trusts in Eden and South Lakeland. These are wonderful people, pretty much all of them acting in a voluntary capacity. The groups contain lots of incredibly clever, bright people who are passionate about our environment.

The Government are doing something we approve of by seeking to deploy and mobilise people in their communities. The new clause is about trying to make sure that we equip them, underpin what they do and provide resource to support them, and that the Government use some resource to proactively look to fill in the gaps. We are simply saying that we approve of the mobilisation of citizen science across the country to hold water companies to account through use of the real-time database and a variety of other tools. But if we are going to rely on a group of people, let us support them. We will seek to push this to a vote, because we think it is a central part of what the Bill should aim to achieve.

[Emma Hardy]

I thank the hon. Gentleman for tabling new clause 15. We fully support greater involvement of citizen science to hold water companies to account. I thank them for all the work that they have done in this area up and down our country. Local people know their rivers best, and their campaigns on pollution issues have been crucial in bringing the scale of the issues to light.

The Bill already includes several amendments to support transparency to make it easier to scrutinise water companies. Clause 2 will enable the public to scrutinise the measures that water companies are taking to reduce pollution incidents. Clause 3 will make information on discharges from emergency overflows available in near real time. This data, in addition to the near real-time information already available on storm overflow discharges, will be provided in a way that will enable citizens to identify trends and key issues. That will supplement the significant information that the Environment Agency already publishes.

The Environment Agency also operates a 24-hour environmental incident hotline to enable the public to report incidents that they observe in their local area. The Environment Agency shares the enthusiasm and values the expertise and local knowledge of citizen scientists. It has recently funded an internal project supporting citizen science, which will run until March 2025.

I welcome the hon. Gentleman’s approval of the Government’s work on this issue. The question is whether we require primary legislation to continue doing something we are already doing successfully. This project, along with many others that are being supported by the Government or the Environment Agency, is considering how to facilitate better engagement with citizen scientists. The Government believe that the existing measures are more effective for supporting citizen science than creating a fixed legislative duty on the Secretary of State. We are already doing work in this area, so we will not support the new clause.

--- Later in debate ---

[Tim Farron]

I am grateful for the Minister’s remarks, but we think that seeking to mobilise thousands of people around the country is so central to the ethos of the Bill that we should also seek to resource them and proactively seek to fill in the gaps, where they exist, so that every community has this level of scrutiny. We will press the new clause to a vote.

Question put, That the clause be read a Second time.

--- Later in debate ---

Brought up, and read the First time.

[Tim Farron]

I beg to move, That the clause be read a Second time.

Water bill poverty is a reality, and many people will require greater water use because of disability, age or health conditions. Although WaterSure benefits exist, they are patchy and are something of a postcode lottery. Which benefits a person may receive under WaterSure depends on supplier and catchment, and whether someone qualifies depends on which water company they get water from. That is not right. There should be a single social tariff that is applicable and understandable for everyone. A postcode lottery should not dictate whether a person gets the support they may need, and which water company someone lives under should not dictate whether they can afford their bills.

Some water companies require three or four pieces of evidence and some just a quick assessment of finances, and the savings range from 15% to 90% off a bill. We would bring that under one simple tariff. We have certainly heard Government Members regularly talk about the value and importance of such a measure, and we simply want to put it on the face of the Bill. A unified and universal social tariff is about basic social justice. It would help those people for whom paying water bills is most difficult, for a variety of reasons—health and disability reasons, as well as financial ones. This is something that the Government should accept, or else we will seek to press it to a vote.

[Emma Hardy]

I thank the hon. Member for tabling new clause 17. It is clear that consumers are concerned about their bills, and this Government want to do everything they can to help and support people who are struggling, particularly given that water bills are due to rise following Ofwat’s final determinations. Although this Government do not consider it suitable to adopt the new clause at this time, we will continue to consider all measures available to best support vulnerable customers, and we are exploring options to improve social tariff arrangements and improve fairness and consistency in who is eligible for support and in the levels of assistance provided.

There are already customer assistance schemes in place. WaterSure caps water and sewerage bills for vulnerable customers who have the higher essential water use requirement for family or health reasons. Under the scheme, £66 million of support was provided to 230,000 households in ’23-24, with an average bill discount of £286. That sits alongside debt measures, water efficiency measures and company social tariffs, which are all targeted at supporting customers who are struggling to pay. Company social tariffs, which water companies design themselves and offer to customers who are struggling to afford their water bills, are forecast to provide an average of £640 million a year in support between 2025 and 2030.

Prior to the introduction of any new support scheme, in-depth research and analysis must be completed to ensure a properly designed policy. Therefore, the Government are continuing to work with the water industry to explore options to improve affordability arrangements, including by holding the sector accountable for its public commitment to end water poverty by 2030. For that reason, I ask the hon. Member for Westmorland and Lonsdale to withdraw new clause 17.

[Tim Farron]

In-depth analysis is not going to tell us anything other than that there is massive inconsistency across the country. Of course, WaterSure provides benefits, but it is different depending on where someone lives. The benefits received by someone living in a Yorkshire Water area, United Utilities or Northumbrian Water area will differ, as will the qualifying criteria. That means that some people in poverty, and some people with serious disabilities or health needs, who therefore have higher water usage requirements, will be hit by higher bills simply because of the lack of a single social tariff. We think that the new clause is important to ensuring social justice and helping those most in need in our communities, and therefore that it is very important to put it to the vote.

Question put, That the clause be read a Second time.

--- Later in debate ---

[Charlie Maynard]

I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 26

Rules about performance-related pay

“(1) The Water Industry Act 1991 is amended as follows.

(2) After section 35D (inserted by section 1 of this Act) insert—

‘35E Rules about performance-related pay

(1) The Authority must issue rules prohibiting a relevant undertaker from giving to persons holding senior roles performance-related pay in respect of any financial year in which the undertaker has failed to prevent all sewage discharges, spills, or leaks.

(2) The rules issued under subsection (1) must include—

(a) provision designed to secure that performance-related pay which, if given by a relevant undertaker, would contravene the pay prohibition on the part of the undertaker, is not given by another person;

(b) that any provision of an agreement (whether made before or after the issuing of the rules) is void to the extent that it contravenes the pay prohibition;

(c) provision for a relevant undertaker to recover any payment made, or other property transferred, in breach of the pay prohibition.

(3) For the purposes of subsection (1)—

(a) “performance-related pay” means any payment, consideration or other benefit (including pension benefit) the giving of which results from the meeting of any targets or performance standards on the part of the relevant undertaker or the person to whom such payment, consideration or benefit is given;

(b) a person holds a “senior role” with a relevant undertaker if the person—

(i) is a chief executive of the undertaker,

(ii) is a director of the undertaker, or

(iii) holds such other description of role with the undertaker as may be specified.’”—(Tim Farron.)

This new clause creates a new section in the Water Industry Act 1991 to require Ofwat to ban bonuses for water company bosses if they fail to prevent sewage discharges, spills, or leaks.

Brought up, and read the First time.

[Tim Farron]

I beg to move, That the clause be read a Second time.

I do not really want to press this new clause to a vote, but we tabled it because my noble Friend Lady Bakewell withdrew it in the Lords after being given assurances by the noble Baroness, Lady Hayman, for whom I have enormous respect and of whom I think very highly. It seeks to ban bonuses for senior company executives who have been found guilty of a category 1 or 2 discharge. It would prevent any loopholes such as pay rises and share options that might enable bonuses to be paid under those circumstances.

From the Dispatch Box in the other place, Baroness Hayman said:

“However, we are very aware that water companies need to attract investment so, as outlined in Ofwat’s consultation, the circumstances under which performance-related pay bans are being proposed represent very serious failures by a company. I reassure the noble Baroness, Lady Bakewell of Hardington Mandeville, that this includes instances of criminal convictions, credit ratings falling below investment grade and Ofwat’s proposed metric for bonuses to be prohibited if a company has had a serious category 1 or 2 pollution incident in the preceding calendar year…I would like to be clear with all noble Lords that we are not asking companies to meet any higher or new standard than that which is already expected of them.”—[Official Report, House of Lords, 20 November 2024; Vol. 841, c. 247.]

We were grateful for that assurance, but nothing of that sort has appeared in the Bill since. Will the Minister give me some reassurance as to why we should not press the new clause to a vote? I do not see anything in writing that gives us confidence, other than the words of the noble Baroness.

[Emma Hardy]

I thank the hon. Gentleman for tabling new clause 26. The Government agree that we need to rebuild trust in the water sector and that executives should be firmly held to account for companies’ serious failures to meet environmental standards. That is why clause 1 will give Ofwat new powers to issue rules on remuneration and governance. The legislation requires Ofwat to set rules that make the payment of bonuses contingent on companies achieving high environmental standards. It is more appropriate for Ofwat, as the independent regulator, to determine the performance metrics to be applied when setting the rules for performance-related pay.

As outlined in the initial policy consultation, Ofwat is currently considering prohibiting bonuses where companies have had a serious category 1 or 2 pollution incident in the preceding calendar year. That is not on the face of the Bill, but it is very clearly in Ofwat’s consultation. It is looking to consult on prohibiting bonuses after a category 1 or 2 pollution incident, as my noble Friend outlined. That provides an early indication of the direction of travel on the environment metric.

Ofwat would be able to use its direction-giving power and wider enforcement framework to hold companies to account where it has reason to believe that they are in breach of the rules. However, banning bonuses, even in cases of unwanted but legal spills, would effectively ban bonuses for all companies. That could unnecessarily threaten the sector’s ability to attract and retain talent. I refer the hon. Member for Westmorland and Lonsdale to the consultation that Ofwat has launched so that he can see for himself the pollution metric that I have mentioned. On that basis, I hope that he feels able to withdraw new clause 26.

[Tim Farron]

I am reassured to a large degree by what the Minister says, but I am concerned that it is not on the face of the Bill. Simply handing this over to Ofwat, given its track record, does not fill me with confidence. We will reserve our position on this one—we may potentially talk about it further on Report—but we will not press new clause 26 to a vote. I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

Ordered, That further consideration be now adjourned. —(Jeff Smith.)

Water (Special Measures) Bill [ Lords ] (Third sitting)

Tim Farron Excerpts

Committee stage
Tuesday 14th January 2025 Public Bill Committees

[Dr Neil Hudson (Epping Forest) (Con)]

It is a privilege to serve under your chairship today, Dr Huq. We have no formal objection to clause 7, which imposes a duty on environmental regulators to impose penalties for offences by water company that the clause specifies. Offences have of course increased, and water bosses have been banned from receiving bonuses if a company has committed serious criminal breaches. Regulators have more powers than they used to in being able to impose larger fines for polluters without needing to go to court. The clause focuses on exactly the same principle and we therefore have no formal objections.

I raised in an earlier Bill Committee sitting—this is relevant here—that there has been an increase in the number of inspections that water companies can expect, from 4,000 a year by April this year to 10,000 a year by April of next year. In other words, what has been addressed in the past is not just regulation, but the whole pathway of the enforcement of regulations, so that regulations are not merely blunt instruments but active ones that water companies can expect to have to deal with if they do not act responsibly to their customers, the environment and the wider public.

On that last point, will the Minister clarify and ensure that these offences are and will be enforced and commit to making further amendments to the law, not only regarding the offences themselves, but also on their enforcement, if the Government believe that things need to be tightened up moving forward? Aside from those clarifications, we have no formal objections to the clause.

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

It is a great privilege to serve under your guidance this morning, Dr Huq. We also have no objection to the clause and, in fact, we consider automatic penalties to be a positive move.

My concern is that we see water companies not paying the fines that are levied against them. We talk about minor to moderate offences, but water companies wriggle out of paying fines for much larger offences, too. I just want to probe the extent to which the automatic penalties might stretch to what are considered more serious breaches.

I mentioned an example last week in Committee. In November 2021, Ofwat launched an inquiry into sewage discharges and how water companies manage their treatment centres and networks. It found three water companies in particular to be in breach: Thames, Northumbrian and Yorkshire. It imposed fines on those three companies—a £17 million fine against Northumbrian Water, a £47.15 million fine against Yorkshire Water and a £104.5 million fine against Thames Water—but as of autumn last year, not a single penny of that has been collected. It is understood that Ofwat allocated a grand total of eight and a half people to pursuing that particular line of inquiry.

Large fines, which there is no doubt that these companies rightly face, make no difference if they are never collected. That underpins the failure of our regulatory framework—water companies clearly feel they can just run rings around Ofwat and the other regulators. We very much welcome the automatic penalties, but we remain a bit concerned and would like the Minister to clarify whether those automatic penalties would have covered fines of that size as well. Otherwise, we are very supportive of the clause.

[Emma Hardy]

It is good to start the day off with a bit of unity in the Committee Room and everyone agreeing. In terms of which offences the automatic penalties will apply to, we are looking at targeting minor to moderate offending. The purpose behind the clause, and much of the Bill, is to change the culture of the water industry.

As I said in my opening remarks, one of the concerns about how the water industry operates at the moment is that the standard of proof needed to impose fines for minor to moderate offending is often seen as not being worth the cost. Companies are therefore getting away with minor to moderate offences because of the cost of trying to prosecute them. These penalties will apply to those offences. If the offence turns out to be more significant—not minor to moderate, but more of a major pollution incident—obviously, penalties will apply in the usual way.

For an offence to be suitable for an automatic penalty, we consider that the Environment Agency must be able to quickly identify and impose the penalty and the offence must cause no or limited environmental harm. I describe it to colleagues as similar to speeding ticket offences. Everybody knows that if they go over 30 mph in a 30 mph zone where there is a camera, they will get caught and fined. That is the idea behind the fixed penalty notice. If someone commits an offence that they are not meant to do, they are automatically fined.

The proposed offences will cover information requests. The details will be dealt with in secondary legislation, on which colleagues across the House will vote. My thinking on information requests is that a situation where someone has to comply with a request for information and is given a timeframe, but does not deal with it in the timeframe, is the kind of thing we are looking at for automatic fines. As for reporting offences, pollution offences and water resource offences, we will consult on where the penalties can be used, and Parliament will debate and vote on them before any changes are made.

The Regulatory Enforcement and Sanctions Act 2008 provides for the enforcement of penalties if a company refuses to pay a penalty. That includes allowing regulators to use the same enforcement mechanisms available to a court. The Act also allows for interest charges in the event of late payment. Parliament will debate and vote on the details in secondary legislation.

I thank all hon. Members for their invaluable contributions to the debate on clause 7. The clause will fundamentally drive improved compliance across the water sector through introducing automatic penalties for specific offences, allowing the regulators to impose penalties more quickly.

Question put and agreed to.

Clause 7 accordingly ordered to stand part of the Bill.

Clause 8

Abstraction and impounding: power to impose general conditions

Question proposed, That the clause stand part of the Bill.

--- Later in debate ---

[Emma Hardy]

I thank the hon. Gentleman for his comments. Modifying the licences individually is both expensive and time consuming, which is why we are hoping to modernise and harmonise the process under this clause. It is crucial that automatic penalties under clause 7 can be applied to abstraction and impounding offences, so this power is needed to improve the water industry’s regulatory framework. For that reason, I commend the clause to the Committee.

Question put and agreed to.

Clause 8 accordingly ordered to stand part of the Bill.

Clause 9

Requirement for Ofwat to have regard to climate change etc

[Tim Farron]

I beg to move amendment 27, in clause 9, page 14, line 11, leave out from duties to end of line 13.

[The Chair]

With this it will be convenient to discuss clause stand part.

[Tim Farron]

Let me clarify what we mean with this amendment. Among the myriad problems in the water industry, perhaps the greatest is the failure of the regulatory systems. We are concerned, particularly in relation to the Climate Change Act 2008, that the obligations placed on water companies via the regulator are not sufficiently clear. Let us look at the wording of clause 9:

“In exercising or performing any such power or duty in accordance with those provisions, the Authority must also have regard to the need to contribute towards achieving compliance by the Secretary of State with the relevant environmental target duties”,

and we are happy with that, but then it states

“where the Authority considers that exercise or performance to be relevant to the making of such a contribution.”

Basically, we are giving Ofwat wriggle room to do nowt if it wants to. As we saw earlier on clause 7, Ofwat has a track record of not even imposing the colossal fines due from water companies, and I am not filled with confidence that if we give it wriggle room, it will not use it.

My concern is that the clause is building in a qualification, an opportunity for the regulator to step back and the possibility—dare I say, the probability—that measures against water companies will not be enforced. If we care about tackling climate change and about a stronger and robust regulatory framework—and we surely do—we should remove these words to remove the wriggle room and to make sure that regulation is fit for purpose.

--- Later in debate ---

[Emma Hardy]

As I am sure the hon. Member for Westmorland and Lonsdale will agree, the Government heard the strong support in the other place for adding a further environmental duty to Ofwat’s core duties to support the Government in making progress against our environmental targets. I pay tribute to Baroness Hayman for her work on this.

We understand that there are concerns around the current core environmental performance of the water industry and around the role and responsibilities of the water industry regulators. It is for this reason that the Government tabled an amendment in the other place that will require Ofwat to have regard to the need to contribute to achieving targets set under the Environment Act 2021 and Climate Change Act 2008 when carrying out its functions.

This amendment will further ensure that Ofwat’s work to contribute to the achievement of environmental targets complements the work of Government, who are ultimately responsible for the 2021 Act and the 2008 Act targets. It is important to note that the independent commission announced by the Government will take a full view of the roles and responsibilities of the water industry regulators. Any changes made now to Ofwat’s duties may therefore be superseded by the outcomes of the commission. I hope the Committee agrees that this power is needed to ensure that the environment is considered in regulatory decision making.

Amendment 27 seeks to remove Ofwat’s discretion to exercise its duty to have regard to environmental targets where it feels this as relevant. It will be for Ofwat as the independent regulator to determine how it applies the Government’s new obligation to its regulatory decision making, and how this new duty will not take precedence over other duties. It is for this reason that flexibility has been built into the drafting of this duty, ensuring that Ofwat has discretion to exercise the duty where it feels it is relevant.

Mechanically applying a duty in circumstances where it is not relevant to a particular matter would be a waste of resource. That discretion is in line with similar duties for other regulators. For example, the Financial Services and Markets Act 2000 was recently amended to provide an environmental duty for the financial regulators. It is right that as the independent regulator, Ofwat has the discretion to balance its duties and determine when it is appropriate that they are applied. The new duty introduced by the Government can be only a stopgap before more fundamental reforms are brought forward. For those reasons, we will not accept the amendment from the hon. Member for Westmorland and Lonsdale, and I hope he feels able to withdraw it.

[Tim Farron]

I am not reassured that removing this discretion means that a mechanical duty is placed upon Ofwat. I think that removing discretion is actually very important. It will only be applied where it is relevant by definition. I feel that by building in wriggle room, we are creating vagueness in the process. Nevertheless, we will not seek to push this amendment to a vote today. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 9 ordered to stand part of the Bill.

Clause 10

Charges in respect of Environment Agency and NRBW functions

Question proposed, That the clause stand part of the Bill.

[Emma Hardy]

Thank you, Dr Huq, for giving me the opportunity to speak on clause 10, which is one of my favourites. The costs for Environment Agency and Natural Resources Wales enforcement activities are paid by the taxpayer via grant in aid. The clause broadens existing charge-making powers, allowing the Environment Agency and Natural Resources Wales to recover costs for enforcement from water companies instead of taxpayers. Failure to introduce the clause would result in the burden of funding water industry enforcement continuing to fall on the taxpayer. It could also result in the regulators being unable to scale up their water industry enforcement activities due to wider budgetary pressures.

The Secretary of State, or the Welsh Minister in Wales, and HM Treasury are required to approve charging schemes in consultation with affected parties. Those safeguards ensure that environmental regulatory powers are proportionate and support sustained improvements in environmental performance in the water industry. I hope the Committee agrees that this power is essential for environmental regulators to become more self-sufficient and less reliant on the taxpayer. I commend the clause to the Committee.

--- Later in debate ---

[Dr Hudson]

Clause 11 extends the purposes for which water quality inspectors may be appointed to include functions relating to national security directions under section 208 of the Water Industry Act 1991, and it provides flexibility for the charging of fees for regulatory work. This is a straightforward clause to which we raise no formal objection, but once again we would be grateful for a couple of clarification points from the Minister. How will the Government increase the Drinking Water Inspectorate’s ability to monitor and audit water supplies? Does the Minister feel that the clause will improve the inspectorate’s functions? Will the Minister please explain how the Government intend to support the powers of the Drinking Water Inspectorate, beyond this clause? She praised the inspectorate, and I echo that praise, but how do the Government intend to support its capabilities?

Once again, we wish to raise no formal objections to the clause. I would be grateful for clarity on the points I have highlighted.

[Tim Farron]

We also have no objections to the clause, but I want to probe it a bit. The Minister rightly praised the Drinking Water Inspectorate. I think most of us would say that its performance as a regulator is significantly better than Ofwat’s, but one of the biggest problems that we face within regulation is the fragmented regulatory framework. We have the DWI, Ofwat, the Environment Agency and others too. What consideration has the Minister given to the efficacy of continuing that fragmentation?

The Minister may argue, in relation to the DWI, that if it ain’t broke, don’t fix it. I take that point, but regulation of the water industry is absolutely broke. It is very clear, particularly when it comes to the Environment Agency and Ofwat, that large water companies run rings around the regulators because of their heft, their weight, their capability and the volume of their staffing, which is larger than that of the regulators. The culture of the regulators is sometimes not aimed at pursuing those they are meant to regulate.

Although the DWI is broadly a successful regulator, do we not face the ongoing problem that having so many regulators gives water companies the ability to avoid their responsibilities? Will the Minister give that some further consideration?

--- Later in debate ---

[Dr Hudson]

On clauses 12 and 13, the Opposition tabled amendments 7 and 8 to remove them. They provide the Government with the power to issue special administration orders to water companies that face financial difficulties.

I put on record my thanks to my Conservative colleagues in the other place for sounding the alarm on this issue when the Bill came forward. They made the case that the measures in clauses 12 and 13 could put the very people we want to protect in such legislation, namely the consumers, at risk. The moral hazard has been explicitly set out by my colleagues in the other place, but I will attempt to summarise it so that we are clear what the problem is. As it stands, the clauses will give the Government the power to recover any losses they make through placing a company in special administration by raising consumer bills.

The problem seems self-evident. If water companies, through their own failure, require the Government to place them under special administration, why should consumers be expected to foot the bill for those failures when they had no particular responsibility for them? It runs contrary to the nature of all the action that has been taken in recent years to try to improve our water quality, and companies that have failed to get their affairs in order must take responsibility.

I was on the Environment, Food and Rural Affairs Committee in the last Parliament, and we spent a lot of time looking at the financial resilience and behaviour of the water sector in close detail. I know that the current iteration is continuing that work. It was concerning to hear about the financial resilience of the sector at first hand in our hearings and meetings. As I said in a sitting of this Committee last week, the financial resilience of the water industry is not a hypothetical issue, but one of paramount concern right now.

We are all starkly aware of concerns surrounding the financial resilience of companies such as Thames Water. We heard about that in detail on the Environment, Food and Rural Affairs Committee in the last Parliament. In November, Ofwat’s “Monitoring Financial Resilience” report identified 10 companies that needed an increased level of monitoring and/or engagement concerning financial resilience. Three were placed in the highest category of “action required”, which means that action must be taken or is being taken to strengthen a company’s financial resilience challenges and that there is a requirement to publish additional information and reporting on improvements at a more senior level with Ofwat.

As well as sending out the opposite message to the companies that Ofwat is working so hard to scrutinise and regulate to protect consumers, clauses 12 and 13 send out the wrong message to consumers themselves. Consumers were recently told that they can expect their average bills to rise by a minimum of about £86, at a time when no doubt some of them have concerns about how to afford their existing bills, along with wider cost concerns. I say gently to the Government that the recent Budget did not help the situation for people’s household budgets. How can it be fair that as a result of these clauses the Government may lead consumers to pay more at a time when many are finding it difficult to pay their bills and do not feel that they are getting the clean water that they deserve? It will potentially add insult to injury when many people are all too aware that they could face higher prices on their water bills because of the Government’s moves.

Shareholders and water company bosses used to be able to receive dividends and bonuses despite polluting our rivers and seas and failing to do the right thing to tackle it. Although reforms have been made to ensure that water company bosses who are not doing their duty with regard to our waterways are forbidden from claiming excessive bonuses, the sting will remain for many people when they keep in mind the prospect of paying higher bills to bail out companies for their poor financial performance.

To water companies, these clauses will send out a signal that they do not have to worry about incurring the consequences of financial irresponsibility, as the Government will have a mechanism to bail them out and consumers may indirectly have to fork out the costs. Nobody is being required to take accountability or face the consequences of the decisions that have caused the failure, but those who have no responsibility or influence are being forced to pay an unfair price increase.

Worse still, the clauses fail completely to specify how much they can require companies to raise from consumers or how much consumers could have to pay in increased costs as a result of the Government’s imposition of these conditions on water companies. That means that any announcements of price changes to water bills, such as those announced by Ofwat, could give no indication at all of how much consumers could end up paying on their water bills. To compound the higher prices even further, consumers may end up facing higher bills to solve special administration financial issues for companies by which they are not even served.

Under clause 12, proposed new section 12J(4) of the Water Industry Act states that “relevant financial assistance” in subsection (3) can include

“any other company which holds or held an appointment under this Chapter and whose area is or was wholly or mainly in England.”

Companies that do the right thing could be forced to pay up, or make their consumers pay up, for the mistakes of those who have failed to do the right thing. As my noble Friend Lord Remnant put it:

“It is the debt and equity investors”

in a company that has failed to do the right thing

“who should pay for these losses in the form of lower proceeds from any eventual sale. Why should a retired police officer in Yorkshire or a hard-working nurse in Cornwall lose out to a hedge fund owner in New York trying to make a quick return?”—[Official Report, House of Lords, 20 November 2024; Vol. 841, c. 293.]

Although in the other place the Government attempted to explain away concerns by suggesting that they do not think that they will have to use the power except as a last resort, and that the bar for special administration would be extremely high, the fact that on more than one occasion the Government could have accepted amendments to remove proposed new subsection (4) must mean that they expect that on at least some occasions they will require its use. The time taken to defend the measure and oppose reforms suggests that this is no mere formality in the wording of the Bill, but something that the Government may put in place.

The Minister in the other place said that the Government would seek to exercise the power in proposed new subsection (4) only if Government bail-outs to water companies could not be financed for the duration for which a company is in special administration—that is, during the shortfall. If that is the condition the Government are setting for the measure—if we have to have the measure at all—could they not have set it out explicitly within the Bill? At the very least, that would have provided clarity about how far the power should be permitted to go.

Clause 13 will provide the Welsh Government with the same powers as those in clause 12. Although the powers in clause 13 are independent of who occupies the offices of the Welsh Government, it should be noted that the Welsh Government who would currently be expected to exercise the powers do not have the most brilliant track record on the water industry, to say the least. Under the Welsh Labour Administration, the average number of spills from storm overflows in 2022 was two thirds higher than in England. That record suggests that the Government in Wales leave much to be desired when it comes to the competence of the water industry, and there is evidence for concern when it comes to exercising the clause’s powers.

Regardless of the specifics of the subsections and of who holds the powers contained in clauses 12 and 13, they are, as they stand, completely against the principles of improving the water industry. I urge the Minister to consider those points and to remove the clauses. Accordingly, we will seek a vote to remove clauses 12 and 13 from the Bill.

[Tim Farron]

I back my hon. Friend the Member for Witney, who has made an excellent case for our amendment to clauses 12 and 13. We are deeply concerned about the issue. There are two aspects to the public’s reaction to the scandal in our water industry. First, there is revulsion about sewage being dumped in our lakes, rivers, streams and coastal areas, which is obviously appalling. Secondly, there is a deep sense of injustice that people are making vast amounts of money while not providing basic services.

For a day or two last week, the coldest place in the country was Shap, in my constituency. I had the pleasure of being there over the weekend. All water was frozen. However, that is not always the case. Last year alone, at Shap pumping station, 1,000 hours’ worth of sewage was pumped into Docker beck. Just along the way at Askham waste water treatment works, 414 hours’ worth of sewage were dumped into the beautiful River Lowther just last year. I make that point because the water bill payers who have to deal with that know that of every £9 they spend on their water bills, £1 is going to serve United Utilities’ debt. That is at the low end of the scale: until the change announced just before Christmas, 46% from Thames Water’s bills was used to service debt.

Over the lifetime of our privatised system in this country, the water companies have collectively racked up £70 billion of debt. That means that all bill payers are paying between 11% and 46% of their bills simply to service those companies’ debt. Our amendment would simply tackle the fact that if investors choose to take risks, hoping to make gains, but fail, they should accept the consequences of those risks, which they chose to take, rather than passing on the cost to my constituents and everybody else’s. It is not for the public to carry the can for corporate failure.

[Emma Hardy]

I will speak to amendments 11 and 12, both of which were tabled by the hon. Member for Westmorland and Lonsdale. I welcome the opportunity to bust some myths and add some facts to the debate. Speaking of facts, following the debate that we had at our last sitting, we have produced a fact sheet relating to storm and other overflows, which has been circulated to all members of the Committee. I recognise that we are not discussing that now, but I thought I might mention that my promise to provide the evidence has been fulfilled. For this debate, perhaps it would be helpful to produce a fact sheet that explains exactly what this is and what it is not, because there has been an awful lot of confusion already.

On the subject of facts, I am not quite sure where the shadow Minister’s number on average bill increases of over £80 a year comes from. The fact is that the average bill increase is £31 a year.

--- Later in debate ---

[Emma Hardy]

To be clear, this is literally just a point of process. The provision, which is not currently available in law, says that in the event of an application to the court for a SAR, the Government will be notified at the same time. The reason, as I outlined in my opening remarks, is that we do not believe that creditors are likely to protect the public interest as comprehensively as the Government. It is a mere process clause that provides that in the event of an application to the court for special administration, the Government and Ofwat need to be informed at the same time. The Government maintain the importance of ensuring that the Government and Ofwat are notified in the event of a winding-up petition. For that reason, I urge that the clause stand part of the Bill.

Question put and agreed to.

Clause 14 accordingly ordered to stand part of the Bill.

Clause 15

Extent, commencement, transitional provision and short title

[Tim Farron]

I beg to move amendment 20, in clause 15, page 21, line 22, leave out subsections (2) to (8) and insert—

“(2) The provisions of this Act come into force on the day on which this Act is passed.”

[The Chair]

With this it will be convenient to discuss the following:

Government amendment 5.

Clause stand part.

[Tim Farron]

We recognise and, indeed, strongly believe that patience is a virtue, but on these Benches we are also a bit impatient. Our concern regarding this clause is simply about implementation. There are two categories of things to be delivered. Some are to be done straightaway, and with others it looks like we are preparing to drag our heels. Therefore our amendment seeks to simplify implementation with one clear and immediate deadline for all provisions of the Bill.

Clause 15 provides that issues to do with remuneration and governance, pollution incident reduction plans, emergency overflows and nature-based solutions, for example, will come into force

“on such day as the Secretary of State may by regulations appoint”—

in other words, not right now. That troubles us, given that there is this great sense that there has been a lot of talk about reform of the water industry and we run the risk, at least when it comes to those provisions, of getting just more talk. Making things subject to consultation, further navel contemplation, does not feel like the way to radically reform our industry. Our single deadline would cut through all that and bring the urgent change that the water industry desperately needs, so we commend amendment 20 to the Committee.

[Dr Hudson]

I support Government amendment 5, as it is a privilege amendment in accordance with the procedure for the passage of Bills between the other place and this place. We wish to raise no formal objections to this and we have no opposition to the amendment.

[Emma Hardy]

I thank all hon. Members for their contributions. Amendment 20, tabled by the hon. Member for Westmorland and Lonsdale, seeks to make all provisions in the Bill come into force on the day it receives Royal Assent. I share his urge to get on with things, which is why I am a little confused by the desire elsewhere for another water review, but we will get to that when we get to it. First and foremost, I would like to reassure the hon. Member that the Government have carefully considered the appropriate method and timing for the commencement of each clause and have made provision accordingly in clause 15. A one-size-fits-all approach cannot be justified.

For example, the emergency overflows provision will be implemented over the course of two price review periods to protect bill payers from sudden cost increases. Therefore, the commencement provision for clause 3 has been designed to allow for a staged implementation where it is needed. The Government have already committed in clause 15 to the immediate commencement of the civil penalties provisions on Royal Assent. I assure the Committee that the Government and the water industry regulators are dedicated to ensuring that all measures in the Bill are commenced and implemented as soon as possible and appropriate, to drive rapid improvements in the performance and culture of the water industry.

The hon. Member for Westmorland and Lonsdale tempts me to read through a list of every provision and when they will be enacted, but I am going to save that treat for another time and instead list the clauses, rather than going through them in detail. The provisions in clauses 5 to 8, and in 10 to 15, will all come into force automatically either on Royal Assent or two months later. Clauses 1 to 4 and clause 9 will not commence immediately after Royal Assent and will require secondary legislation to come into force, which is due to the need for regulations required to commence the powers. I am sure that the hon. Member will have thoughts to share on those provisions involving statutory instruments after Royal Assent.

I trust that the hon. Member for Westmorland and Lonsdale is reassured by the Government’s careful consideration of the commencement of each clause, which has the best interests of bill payers in mind and recognises the need to debate and discuss some of the exact details under secondary legislation. I therefore ask the hon. Member to withdraw his amendment.

Government amendment 5 removes the privilege amendment made in the other place. I like this amendment, because one of the quirks of how British politics has evolved is that we have the amendment in the Bill—I found it quite amusing. The privilege amendment is a declaration from the other place that nothing in the Bill involves a charge on the people or on public funds. It is because the Bill started in the Lords that we have to have the amendment to remove that. It recognises the primacy of the Commons, and I think it is quite fun. It is standard process for that text to be removed from the Bill through an amendment at Committee Stage.

Clause 15 sets out the extent of the Bill, when and how its provisions are to be commenced and its short title. The Bill extends to England and Wales only. As set out in the clause, the provisions of the Bill will variously come into force on Royal Assent, two months following Royal Assent, or in accordance with regulations made by the Secretary of State or Welsh Ministers. The clause makes specific provisions, such as that the commencement of clause 3 may make reference to matters to be determined by the environmental regulators.

[Tim Farron]

I am happy to accept many of the assurances that the Minister gave, particularly on the role of Government amendment 5—I learn something new every day. The Liberal Democrats retain concerns about the delay in implementation of some of the good things in the Bill. All the same, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendment made: 5, in clause 15, page 22, line 40, leave out subsection (11).—(Emma Hardy.)

This amendment reverses the “privilege amendment” made in the Lords.

Clause 15, as amended, ordered to stand part of the Bill.

New Clause 1

Special administration for breach of environmental and other obligations

“(1) Section 24 of the Water Industry Act 1991 (special administration orders made on special petitions) is amended as follows.

(2) After subsection (2)(a) insert—

“(aa) that there have been failures resulting in enforcement action from the Authority or the Environment Agency on three or more occasions to—

(i) maintain efficient and economical water supply,

(ii) improve mains for the flow of clean water,

(iii) provide sewerage systems that are effectually drained,

(iv) comply with the terms of its licence, or

(v) abide by anti-pollution duties in the Environmental Protection Act 1990, Water Resources Act 1991, or the Environmental Permitting (England and Wales) Regulations 2016 (SI 2016/1154);”

(3) After subsection (2) insert—

“(2A) In support of an application made by virtue of subsection (1)(a) in relation to subsection (2)(aa), the Secretary of State must compile and present to the High Court records of—

(a) water pipe leaks,

(b) sewage spilled into waterways, bathing waters, and private properties, and

(c) falling below international standards of effective water management.”—(Adrian Ramsay.)

This new clause aims to require the Secretary of State to place a water company into special administration arrangements if they breach certain environmental or other conditions.

Brought up, and read the First time.

[Adrian Ramsay (Waveney Valley) (Green)]

I beg to move, That the clause be read a Second time.

--- Later in debate ---

[Dr Hudson]

Good. We are all for talking about and raising the issue of chalk streams, but it is clear that we wanted to include that in our amendment. Our amendment will therefore be a chance to give chalk streams the attention they need from this Government. The previous Government were ready to deliver that and hand the baton over to the new Government, so that they could follow through on the explicit requirement that chalk streams be considered.

The amendment is a chance for the Government to reconsider their stance on the water restoration fund. I would be grateful for clarity from the Minister about what they are planning to do. If they are serious about improving our waterways and if the money from penalised water companies is allowed to go back into the local area to improve those waterways, we could agree about that. If the Government do not face up to this, that might be a negation of the various promises they made to the electorate when in opposition and send a message that their words are merely soundbites. I hope that the Minister will consider the points I have made and support this amendment to restore the water restoration fund—for the sake of not only our waters, but the democratic and local accountability on which they rely. We will seek to push new clause 2 to a vote.

[Tim Farron]

I rise briefly to support the new clause. Among many other reasons, it bears great similarity to one proposed by my noble Friend Baroness Bakewell. We consider everything in it to be right. As the hon. Member for Epping Forest has said, we should be deeply concerned about the Treasury seeking to hang on to money that, if there is any justice, ought to be invested back into the waterways that have been polluted by those who have been fined for that very offence.

I talked earlier about the deep sense of injustice felt across the country about those who pollute, who are getting away with polluting and who even—far from being found guilty—are getting benefits from that pollution. The measure would simply codify a move towards the establishment of a water restoration fund, supported, at least in part, by the fines gathered from those guilty in the first place. There would be a great sense of justice being done for folks concerned about how Windermere is cleaned up, how we make sure that Coniston’s bathing water standards remain high and how we deal with some of the issues I mentioned earlier on the River Lowther, River Eden and River Kent.

The water restoration fund should in part be supported by funds gained from those who are guilty: that is basic justice. We strongly support the new clause and will be voting for it if it is put to a vote.

[Emma Hardy]

I thank the hon. Member for Epping Forest for tabling new clause 2, which seeks to establish a water restoration fund in legislation. I accept his invitation to do better than the previous Government when it comes to pollution in the waterways, and welcome the low bar that they have set me.

A water restoration fund is already being established to direct water company fines into water environment improvement projects. This arrangement does not require legislation, because it exists. Defining a water restoration fund in legislation would create an inflexible and rigid funding mechanism, with the amendment requiring specific detail on the scope, operation and management of fines and money. We need to maintain flexibility in how water company fines are spent, to ensure that Government spending is delivering value for money.

The hon. Member can already see from the Bill and the discussions we have had that the cost recovery powers that we have introduced for the Environment Agency are an example of how we can ensure that water companies pay for enforcement. It is continuing to work with His Majesty’s Treasury regarding continued reinvestment of water company fines and penalties, and water environment improvement. A final decision on that will be made when the spending review concludes later this year. On that basis, I ask the hon. Member to withdraw his amendment.

Water (Special Measures) Bill [ Lords ] (First sitting)

Tim Farron Excerpts

Committee stage
Thursday 9th January 2025 Public Bill Committees

[The Chair]

We shall now begin line-by-line consideration of the Bill. The selection and grouping list for today’s sittings is available in the room. It shows how the clauses and selected amendments have been grouped together for debate. Amendments grouped together are generally on the same or similar issue. Please note that decisions on amendments do not take place in the order in which they are debated, but in the order in which they appear on the amendment paper. The selection and grouping list show the order of debates. The decision on each amendment, and on whether each clause should stand part of the Bill, is taken when we come to the relevant clause.

A Member who has put their name to the leading amendment in a group is called first. Other Members are then free to catch my eye to speak on all or any of the amendments within that group. A Member may speak more than once in a single debate. At the end of a debate on a group of amendments, I shall call the Member who moved the leading amendment again. Before they sit down, they will need to indicate if they wish to withdraw the amendment or seek a decision. If any Member wishes to press any other amendment in a group to a vote, they will need to let me know in advance. I am sure that is clear to everyone.

Clause 1

Rules about remuneration and governance

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

I beg to move amendment 22, in clause 1, page 1, line 11, at end insert—

“(1A) The Authority must use its power under subsection (1) to issue rules which require—

(a) the interests of customers, and

(b) the environment,

to be listed as primary objectives in a relevant undertaker’s Articles of Association.”

[The Chair]

With this it will be convenient to discuss the following:

Amendment 18, in clause 1, page 2, line 3, at end insert—

“(ca) requiring the management board of a relevant undertaker to include at least one representative of each of the following—

(i) groups for the benefit and interests of consumers;

(ii) groups for the benefit and interests of residents of the areas in which the undertaker is operational;

(iii) experts in water and sewerage policy and management; and

(iv) environmental interest groups.”

Government amendment 1.

Amendment 19, in clause 1, page 2, line 8, at end insert—

“(e) preventing a relevant undertaker from employing any individual who has been employed by the Authority in the preceding three years.”

Government amendment 2.

Amendment 21, in clause 1, page 4, line 35, leave out from “force” to the end of line 40.

Clause stand part.

[Tim Farron]

Happy new year to all colleagues. It is good to be in this place and it is a great pleasure to serve under your guidance as Chair, Mr Vickers. I put on the record my thanks to the Minister for her engagement, and to the Committee Clerks and the Minister’s team for being immensely constructive throughout this process.

My hon. Friend the Member for Witney will speak to amendment 22, and I will make remarks on amendment 18, which, with your permission, Mr Vickers, I will press to a vote if the Government are not minded to accept it. I will also voice my concerns about amendment 2 and I give notice that we will vote against it.

Among the challenges that we face is the complete and utterly justified lack of trust in the water sector—water companies in particular, but also the regulatory framework. Amendment 18 was tabled to ensure that some of the people appointed to the boards of water companies, whatever their structure otherwise, have a connection to the benefit and interests of the consumers within the region; will benefit the residents within the areas in which the undertaker—the water company—is operational; and are experts and campaigners on environmental and sewage policy matters.

I am sure that Members on both sides of the House have people in their communities equivalent to the ones I will briefly mention. People from groups such as the Clean River Kent campaign, the Eden Rivers Trust, the South Cumbria Rivers Trust and the Save Windermere campaign, in addition to citizen scientists and others who represent local interests and have great expertise, ought to be on the boards of the outfits that run our waterways in future, and that should be in the Bill.

The amendment would bring the expertise and accountability that we are seriously lacking, and it would build trust, which our water companies are also lacking. We think that the case for it is self-evident, because those bodies and others around the country self-evidently have the expertise, authority and tenacity to add huge value and to ensure that our water companies deliver for the communities they are meant to serve, not just their shareholders.

Government amendment 1 seeks to undo an amendment added by my hon. Friends in the other place. Our concern is that if the Government insist on it and we do not have a much tighter timescale, that will basically undermine the regulation and leave it open-ended so that we cannot be certain that we would be able to enforce the things that the Bill seeks to do in a timely fashion. To ensure that the Bill does what it is supposed to do, we should not cut the water companies any slack.

[Charlie Maynard (Witney) (LD)]

I rise to explain amendment 22. On 11 July, the Environment Secretary issued a press release on the reform of the water industry that stated:

“Water companies will place customers and the environment at the heart of their objectives. Companies have agreed to change their ‘Articles of Association’—the rules governing each company—to make the interests of customers and the environment a primary objective.”

However, that commitment is not currently in the Bill. The amendment simply seeks to bring that commitment into this legislation.

--- Later in debate ---

[Helena Dollimore]

Will the hon. Gentleman give way?

[Tim Farron]

Will the hon. Gentleman give way?

[Dr Hudson]

I will make some progress, if I may.

[Tim Farron]

The hon. Gentleman has just referred to me—

[Dr Hudson]

I was referring to the hon. Gentleman’s colleague.

It is therefore worrying that although the previous Administration went to great lengths to ensure that water companies were financially resilient, this Government are doing quite the opposite with Government amendment 1. That amendment, which will leave out lines 4 to 8 of clause 1, would amend the requirement for rules made by Ofwat under the clause to specifically include rules on financial reporting. That could not more clearly delineate the Conservative approach that the Labour party so derided—it promised the British people that it would do things differently—from the actual approach that Labour has taken in power.

Government amendment 1 undermines not only the hard efforts of the previous Conservative Government in taking the issue seriously, but the efforts of the cross-party consensus that secured the commitment to having financial reporting rules made by Ofwat in the Bill. That cross-party coalition, which included my Conservative colleagues in the other place, forced the Government to ensure that the original commitment would be in place in the Bill. Labour voted against the commitment and is simply seeking to overturn a clear cross-party consensus for Ofwat to be given powers to set rules on financial reporting.

Ensuring that Ofwat can view a water company’s financial structuring will help it to scrutinise and have an understanding of how the company is operating. It will also ensure that the consumers who have been let down by the water industry for far too long are protected. With close financial monitoring, water companies will face the necessary scrutiny to reduce the risk that ordinary consumers are left without a supplier. Financial mismanagement poses great risks, so every sinew must be strained to prevent it; financial reporting is key to ensuring that that takes place. The financial resilience of the water companies is not a hypothetical issue, but a paramount concern right now.

As recently as November, Ofwat’s monitoring financial responsibility report identified 10 companies that needed an increased level of monitoring and/or engagement concerning financial resilience. Seven of those companies were placed in the elevated concern category, meaning that some concerns or potential concerns with their financial resilience have been identified. Three companies were placed in the highest category of action required, meaning that action must be taken or is being taken to strengthen the company’s challenges with financial resilience, and therefore they need to publish additional information and report on improvements at a more senior level with Ofwat.

--- Later in debate ---

[Tim Farron]

I will just have a quick canter through three things that I should have talked about earlier. My apologies, Mr Vickers, and thank you for your indulgence. I will speak to amendments 21 and 19 and new clause 26 briefly.

I reiterate the comments by my hon. Friend the Member for Witney about amendment 21. I have great respect for the hon. Member for Epping Forest, but I think he has misunderstood. As my hon. Friend said, our amendment seeks to ensure that we do not run the risk of kicking into the long grass the taking of action against bonuses by sticking that provision anywhere other than in the Bill. We were not planning to divide on it, but we will be happy to be the ones voting in favour of immediate action rather than kicking it into the long grass, if that is what he wishes to do.

I do not want to bore anybody about the coalition, but it has been mentioned—give me 20 seconds on it, Mr Vickers. The privatisation of the water industry was where all this went wrong. All the parties that have been in government in the 35 years since then share some responsibility. Just for the record, it is worth stating that DEFRA had no Liberal Democrat Minister in it at all for the majority of the coalition period. For 18 months, my great friend Dan Rogerson served in that position. That was the time during the coalition, by the way, in which we undid some of the foolish capital costs that were made at the beginning of the coalition. It is the opposite of the truth to say that we did nothing; we actually did the only thing that did happen during that time. It is also worth bearing in mind—people might remember—that we were in the EU then and properly regulated, and things were different. That is the end of that defence.

[Dr Hudson]

Will the hon. Gentleman give way?

[Tim Farron]

Oh, go on.

[Dr Hudson]

His recollection is perhaps different from many people and the public at large regarding the Liberal Democrat record on water. His party seemed to jump on this bandwagon once the Conservatives were the party that actually started measuring the scale of the problem.

Returning to amendment 21, the hon. Gentleman has the word “Democrat” in the name of his party. I do not know why they are so scared of having democratic and ministerial accountability by having a very simple clause in the Bill that would provide for a statutory instrument being laid so that the Secretary of State for DEFRA would have some accountability for that. I take on board the point about the first part of paragraph 5 in terms of the first six months of the Bill, but with the amendment would remove two thirds of that clause, which was put in with cross-party consensus in the other place. I am surprised that they are scared of democratic accountability.

[Tim Farron]

Well, that is bizarre. With total respect for the hon. Gentleman, he completely misunderstands. We are seeking to put this on the face of the Bill and not kick it off to a statutory instrument. That seems the opposite of anti-democratic—or, indeed, democratic.

Let us move on to the other issues I would like to briefly mention. New clause 26, which is in this group—

[The Chair]

Order. We have agreed to discuss new clause 26 separately.

[Tim Farron]

In that case, I will speak to amendment 19, which is about revolving doors. Amendment 19 seeks to prevent a revolving door between water companies and the regulator. In July 2023, the chief executive of Ofwat stepped down to very swiftly pick up the role of interim chief executive of Thames Water. An analysis by The Observer in 2023 found 27 former Ofwat directors, managers and consultants working in the industry they helped to regulate until shortly beforehand, with about half of them in very senior posts.

Some work that the Liberal Democrats did in the last 18 months found that the director for regulatory strategy at the country’s largest water firm, Thames Water, was previously an Ofwat employee. Meanwhile, a senior principal at Ofwat moved directly from Thames Water, where they worked on market development. We also found links between Ofwat and Southern Water, Northumbrian Water and South West Water, including directors who work on regulation. The amendment tries to prevent that revolving door, which clearly brings in a potential conflict of interest. It also builds the quite justified absence of trust. I can feel an intervention brewing—go for it.

[Jerome Mayhew]

I am not against the principle of this—in fact, I am strongly in favour of it—but I have some practical questions. I wonder whether this would bump up against individuals’ human rights and restraint of trade arguments in the courts. I must confess that I was previously a barrister. That was a long time ago, so I have dangerously little knowledge now, but it was certainly the case that the courts would habitually not enforce a restraint of trade clause on a contractual basis that was in excess of 12 months. I know that this would be legislation, but to have such a wide-ranging blanket prohibition for such a long period against all employees, irrespective of the role they undertook and the role that they might in future undertake with a water company, might be challenged successfully under human rights legislation. I wonder whether the hon. Gentleman has considered that in his drafting.

[The Chair]

I remind Members that interventions should be short—much shorter than the last two. I have been very generous.

[Tim Farron]

I appreciate that, Mr Vickers. I am very grateful for the helpful and constructive intervention the hon. Gentleman just made. Look, this is not an amendment we are seeking to press to a vote, but it is an issue that is clearly very serious in terms of the quality and safety of regulation. We are perfectly happy for the Government to use all the legal might they have available to find a way of amending the Bill on Report to deal with the issue in a way that builds confidence and prevents obvious conflicts of interest.

[Tom Hayes (Bournemouth East) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Vickers. This is an important topic and Committee, but before I talk about that, I wish gently to remind the hon. Member for Epping Forest that the Conservative party was in power for 14 years. I know the general election defeat was historic—quite enormous—but I do not think the bump to the head should have caused such an enormous loss of memory about what was achieved, or not achieved, over the past 14 years. Residents of Bournemouth East are incandescent about the state of water infrastructure and the sewage that they are enduring as a seaside town. It is no surprise that as a consequence, when I was campaigning in the general election and knocking on doors since, people raised this hot topic with me.

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[Emma Hardy]

I thank the hon. Gentleman for his helpful question. Yes, we obviously have regular conversations with Ofwat to ensure that it is capable of delivering everything here. There is an impact assessment on the table in the room, if the hon. Member would like to look at exactly how that all works out.

Amendment 18, also tabled by the hon. Member for Westmorland and Lonsdale, speaks to the representation of customer views and those of wider groups. The Government are clear on the importance of elevating the voice of consumers in water company governance and decision making. That is why—as I have mentioned—under the Bill, Ofwat will set rules requiring water companies to have arrangements in place for including consumers in company decision making.

In October last year, Ofwat published a public consultation on the rules on remuneration and governance and how they will apply. The proposed options put forward by Ofwat include giving a non-executive director the responsibility for oversight of consumer interests on the board and providing opportunities for consumer panel representatives to meet with the CEO on a regular basis. Furthermore, companies already have a range of environmental obligations that they should be meeting, and experts in water and sewage policy should already be considering those obligations to inform board-level decision making. I trust the hon. Member for Westmorland and Lonsdale is therefore reassured by the Government and Ofwat’s approach and is content that amendment 18 is not needed.

I will now take a little time to discuss clause 1 itself and the importance of it standing part of the Bill. As hon. Members know, clause 1 provides Ofwat with new powers to set rules on pay and governance in the water sector and requires that Ofwat make rules on four topics. I have already spoken about one of these, consumer representation. The legislation also provides Ofwat with new powers to issue rules on remuneration and governance, and requires that Ofwat set rules that make the payment of bonuses contingent on companies achieving high environmental standards. As the independent regulator, it is more appropriate for Ofwat to determine the performance metrics to be applied when setting the rules for performance-related pay.

In addition, Ofwat must also make rules covering the fitness and propriety of chief executives and directors. That means that it will be required to set standards of fitness and propriety that chief executives and directors must meet in order to be appointed by water companies or stay in post. People holding those senior roles will be held accountable against those standards and, if they fail to meet them, companies may need to take corrective action or ultimately remove executives from post if necessary. Ofwat’s initial policy consultation outlined some proposed standards of fitness and propriety that included ensuring that individuals have sufficient knowledge of the duties of water companies, are financially sound and have not been the subject of regulatory investigation. Collectively, those rules on remuneration and governance will help to drive meaningful improvements in the performance and culture of the water industry and form a central part of the Bill.

To pick up on the point made by my hon. Friend the Member for Hastings and Rye about whether the rules go further than the previous Government’s, the short answer is yes. The legislation will provide Ofwat with legal powers to ban bonuses, whereas currently it can only set expectations, and it will require Ofwat to set rules prohibiting the payment of bonuses in certain circumstances. Executives will no longer be able to take home eye-watering bonuses where companies fail to meet standards on environmental performance, financial resilience, customer outcomes or criminal liability. We will go further by requiring Ofwat to set rules requiring water companies to ensure that directors and executives meet the highest standards of fitness and propriety, and that customers are involved in company decision making that impacts consumers.

Finally, turning to amendment 19, also tabled by the hon. Member for Westmorland and Lonsdale, I would like to reassure the hon. Member that both the Government and Ofwat take the handling of actual or potential conflicts of interest very seriously. Ofwat employees are already bound by a range of robust rules and processes that support the management of conflicts of interest, including when leaving the organisation. Failure to comply can result in disciplinary action. That includes the civil service business appointment rules, duties of confidentiality and the Official Secrets Acts.

[Tim Farron]

The underlying issue here is a cultural one—I do not think I am alleging corruption. For example, one can look at fines outstanding. Ofwat set fines for, I think, four water companies; at the last check just before Christmas, many months later on, not a penny of the fines had actually been collected. There is a sense of a lack of urgency and a lack of understanding of the anger felt towards the water industry. When we have this revolving door, there may be no corruption at all, but there is a kind of watering down—no pun intended—of the culture of being a watchdog. There is a level of compliance, and it is apparent.

[Emma Hardy]

I understand the hon. Gentleman’s intention, which fits within the bigger picture of how we change the culture and improve trust in the industry. On these specific points, there is already legislation in place. However, I take his wider point that there is no trust and a lot of anger, and we need to do something around the culture of how these organisations work.

Given that existing measures are already place and Ofwat’s forthcoming fit and proper person rules should encompass conflicts of interest, the amendment is unnecessary. I ask the hon. Member to withdraw it. I hope that hon. Members will support the Government’s amendments and that all members of the Committee are satisfied that clause 1 should stand part.

[Tim Farron]

We would be content not to press any of the amendments bar amendment 18, which we will seek to push to a vote. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendment proposed: 18, in clause 1, page 2, line 3, at end insert—

“(ca) requiring the management board of a relevant undertaker to include at least one representative of each of the following—

(i) groups for the benefit and interests of consumers;

(ii) groups for the benefit and interests of residents of the areas in which the undertaker is operational;

(iii) experts in water and sewerage policy and management; and

(iv) environmental interest groups.”.—(Tim Farron.)

Question put, That the amendment be made.

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Pollution incident reduction plans

[Tim Farron]

I beg to move amendment 23, in clause 2, page 5, line 9, after “occurrence” insert “and impact”.

[The Chair]

With this it will be convenient to discuss the following:

Amendment 9, in clause 2, page 5, line 10, at end insert—

“(2A) A pollution incident reduction plan must, in particular, state how the undertaker intends to reduce the occurrence of pollution incidents in national parks that are attributable to its system.”

Amendment 25, in clause 2, page 5, line 27, after “occurrence” insert “and impact”.

Amendment 24, in clause 2, page 5, line 29, at end insert—

“(ea) the use the undertaker plans to make of nature-based solutions for reducing the occurrence and impact of pollution incidents,”.

Amendment 6, in clause 2, page 7, line 14, at end insert—

“(5) An implementation report must be published on the relevant undertaker’s website in a form which is publicly accessible.”

Clause stand part.

[Tim Farron]

I will speak to amendments 23 and 25 first, as they are connected, then amendment 24, and then amendments 9 and 6, which were tabled by those on the Conservative Front Bench. I think amendments 9 and 6 are both fine and helpful, and we would be supportive of them.

In amendments 23 and 25, tabled in my name and that of my hon. Friend the Member for Witney, we are referring to impact. There is reference in the Bill to an incident reduction plan, to reduce occurrences and to have reports about occurrences. Our concern is about much more than occurrences; it is about impacts. We know, for example, that a spillage into the River Kent, River Eden, Windermere or Coniston may last a certain amount of time, but we do not know about the volume. We may have a trickle over a day or a deluge over a half-hour period.

It is important to understand the impact not only on marine life, fish stocks and biodiversity, but on things such as leisure activities. As an occasional wild swimmer myself, and as somebody who knows a lot of anglers, canoeists and sailors in my constituency, it seems wrong that we should not put front and centre, not just a greater awareness of and action on incidents, but a look at the impact—the measured impacts on biodiversity, wildlife, livestock, farmers and the tourism economy in places like the Lakes, which is the biggest visitor destination in the country after London. I would be very grateful if amendments 23 and 25 were taken on board by the Government.

Amendment 24 relates to nature-based solutions and looks at incident reduction plans. As the Chartered Institution of Water and Environmental Management put it:

“Nature-based solutions…can help address many of the water sector’s challenges while also providing significant benefits for people and planet, such as water quality improvement, flood risk reduction, carbon sequestration, climate resilience, nutrient neutrality, biodiversity enhancement, community engagement, and public health and wellbeing.”

Indeed, nature-based solutions are also a vital source of funding and income for farmers. Examples include natural flood management techniques, such as wetland restoration, tree planting across catchments of areas of unproductive land—not of productive agricultural land, I hasten to add—and building resilience to flooding; the construction of treatment wetlands and reed beds to treat waste water and improve water quality; the creation and restoration of ponds and pondscapes; climate mitigation and adaptation; and the building of resilience to drought.

Finally, the multiple benefits delivered by working with nature also create opportunities for blended finance by drawing in private investors or gaining income from buyers and ecosystem services. That further increases taxpayer value for money at a time when the delivery burden on the water industry, and therefore customer bills, is at a record high. Investment in nature-based solutions will help to ensure that water industry spending supports the delivery of the maximum environmental and social benefits.

Amendments 23, 24 and 25 are about assessing the damaging impact of pollution incidents in our lakes, coastal areas and rivers in my communities and across the country. Through amendment 24, they also try to provide practical solutions that will help to address those issues. They are meant to be helpful amendments and I hope that the Government will take them on board.

[Dr Hudson]

I rise to speak about amendments 6 and 9, proposed by His Majesty’s Opposition. I hope that they are self-explanatory amendments that are quite simply about the core concept of accountability, which was at the heart of the previous Government’s mission to improve our water system. We must remember that at the heart of every failure that damages our waterways, it is the Great British public—those who rely on our waterways as consumers and as members of communities served by them—who are let down and denied the rights to pollution-free water systems to which they are entitled.

Amendment 6, which would require water companies to publish their implementation reports accessibly online, gives the public a tangible and visible sign by which water companies can be held to account for the promises they make and the actions they say they will take. It is a vital step in trying to restore the trust that water companies may be seen to have lost in recent years with the public through their inadequate actions to deal with this issue, as people have seen and as hon. Members have articulated today on both sides of the House. It is very much about having not just words and promises but explicit standards to judge water companies by, and it would form a kind of contract between the companies and their consumers, who would then know what to expect from their individual company.

His Majesty’s Opposition have no objections to the principle of clause 2 and its requirement that water companies publish an implementation report, nor in the specific details that companies would be expected to produce in proposed new section 205B of the Water Industry Act 1991. In fact, we welcome the Government’s willingness to listen to the concerns from Conservative peers, including Lord Roborough, and peers from other parties in the other place to strengthen clause 2, including the requirement for implementation reports to be drafted by water companies in the first place and ensuring that the requirements for pollution incident reduction plans also include water supply system-related incidents, not just sewage-related incidents.

However, we believe that amendment 6 would go even further to strengthen that proposal and advance the accountability that we all want water companies to have. Requiring implementation reports to be published online in an accessible way sets out an explicit and clear definition to water companies of how they are expected to publish any such plans, as the clause requires, and demonstrates how water companies must comply with the law in unequivocal terms.

In stressing accessibility, amendment 6 would end the ambiguity that can sometimes exist for the public, which means that it is often too easy for companies to hide away behind protocol and procedure. By making such information available to consumers, we would ensure that there could be no hiding in murky waters on this vital issue and the concrete commitments to improving our waterways.

Water companies can also benefit from the chance to make reflections on their progress available in full sight of the public. In all walks of life, sometimes people’s efforts to make good on promises cannot come to full fruition for reasons beyond their control. If genuine reasons arise for not meeting targets, there can be full transparency for the public as to why, so they can understand more about the nature of the industry and the issues involved in protecting the quality of our water system. In other words, full transparency is in everyone’s interests.

A 2023 review commissioned by Ofwat about the importance of open data was clear that open data provide great benefits in a range of areas when it comes to the water industry. In terms of the environment, it highlighted that open data from sewage overflow monitoring were beneficial to the creation of the predictive analytics tools used in Wessex Water’s intelligent sewers competition, which helped to identify sewage blockages much earlier than they otherwise would have been. That demonstrates an explicit link between the work of recent years to require data monitoring in the water industry, such as on storm overflows—I reiterate that 100% are monitored thanks to the work of the previous Conservative Government—and improvements in the water industry’s tackling of pollution. That is in addition to the improved accountability and the responsibility that data publication places on water companies to get the issue right.

The report highlighted, however, that at the time there was a trend towards companies sharing data with their key partners, rather than making information completely and clearly available for unrestricted public access. The report therefore explicitly recommended that companies in the water sector should look at the data they had been sharing only with specific groups and partners, and take steps to make available those data where they can.

Amendment 6 would solve the problem of information reports before it could even arise—upstream—by unequivocally stating that water companies must publish implementation reports on their websites that would be accessible to all members of the public, not just those with the time and influence to ask for such data. We talked about citizen science: this will give those data to the people to analyse and hold water companies to account. The Conservatives will therefore be pressing amendment 6 to a Division.

I am conscious of time, Mr Vickers. Are you going to call stumps in about 20 seconds?

Water (Special Measures) Bill [ Lords ] (Second sitting)

Tim Farron Excerpts

Committee stage
Thursday 9th January 2025 Public Bill Committees

[Emma Hardy]

I understand the point that the hon. Gentleman is making, which is that people need to have access, clearly and simply, to as much information as possible. My point is that if we put such details into law in the Bill, the way in which we want people to access such information may change—technology or best practice may evolve—and we will have to resort to altering legislation using statutory instruments. That is why I think it is better that we look to the guidance produced by the Environment Agency as the best way to present that information, while continually evaluating how we do so. I completely understand the essence of what the hon. Gentleman is saying, however, because we all want information to be transparent and clear for everyone, and certainly not buried on a website.

To conclude, I will briefly speak to why clause 2 should stand part of the Bill. The occurrence of pollution incidents is unacceptably high and has not reduced in the last four years. Water companies must reduce pollution incidents as a matter of urgency. Currently, sewage companies in England produce pollution incident reduction plans on a non-statutory basis. These plans vary in standard, content and frequency, and that makes them hard to scrutinise. It is particularly difficult to identify the progress that companies have made on the actions that they committed to in these plans. More transparency and greater accountability are needed.

That is why the clause will require both water supply companies and sewerage companies in England and Wales to publish annual pollution incident reduction plans to address matters such as the seriousness of pollution incidents and their causes. These plans will need to set out the actions that the water companies intend to take to reduce pollution incidents, and an assessment of the impact that those actions will have.

In addition, the Secretary of State will be able to direct water companies to include other matters in the plans as needed. Moreover, companies will be required to produce an accompanying implementation report detailing the progress they have made with the measures to which they committed in the previous year. Companies must clearly explain the reason for any failure to implement their plans and set out the steps they are taking to avoid similar failure in the future. This will create a high level of transparency, enabling the public and regulators to hold water companies accountable for making the improvements that they have committed to.

Chief executives will be personally liable for the production of these plans and must approve them before publication. If a company fails to publish a compliant plan and implementation report by the deadline each year, the company or the chief executive could be prosecuted for the offence. That could result in a fine and a criminal record. This emphasises that taking action to minimise pollution incidents should be at the core of the chief executive’s role.

We believe that this provision will ensure that the right people, with the right incentives, lead water companies through the changes necessary to drive down pollution incidents. Furthermore, regulators will be required to take companies’ compliance records in relation to implementation reports into account when carrying out their enforcement duties.

I hope that all hon. Members agree with me about the importance of clause 2, and I commend it to the Committee.

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

There are no further comments from us, and we do not seek to press to a vote any of the amendments that we have tabled. We are concerned that there is not enough detail in the Bill about the impact of pollution incidents on the wider environment, much as I am grateful to the Minister for many of the comments she has made. All the same, we will not seek to trouble the Committee with a vote at this stage, and I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Dr Neil Hudson (Epping Forest) (Con)]

In the interests of promoting transparency and clarity, we would still like to press our amendment 6 to a vote. To bolster, support and protect the precious integrity of our national parks, we would like to do the same with amendment 9.

Amendment proposed: 9, in clause 2, page 5, line 10, at end insert—

“(2A) A pollution incident reduction plan must, in particular, state how the undertaker intends to reduce the occurrence of pollution incidents in national parks that are attributable to its system.”— (Dr Hudson.)

Question put, That the amendment be made.

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Emergency overflows

[Tim Farron]

I beg to move amendment 13, in clause 3, page 8, line 10, at end insert—

“(e) the volume of discharge.”

[The Chair]

With this it will be convenient to discuss the following:

Amendment 14, in clause 3, page 8, line 13, leave out “subsection (1)(d)” and insert “subsections (1)(d) and (e)”.

Amendment 3, in clause 3, page 8, line 18, at end insert—

“(c) be published on the home page of the undertaker’s website.”

This amendment would ensure that information regarding a discharge from an emergency overflow must be published on the home page of the undertaker’s website.

Amendment 15, in clause 3, page 8, line 18, at end insert—

“(c) be uploaded and updated automatically, where possible; and

(d) be made available on the undertaker’s website alongside searchable and comparable historic data.”

Amendment 16, in clause 3, page 8, line 18, at end insert—

“(3A) The undertaker must ensure that, within 12 months of the passing of this Act, appropriate monitors are installed to collect the information required by subsection (1).”

[Tim Farron]

With your permission, Mr Vickers, I will allow my hon. Friend the Member for Witney to speak to the bulk of these amendments. I will focus on amendment 17, which requests that we insert into the Bill a position of Minister with responsibility for issues relating to the coast. That is something that the all-party group for coastal communities, chaired by the hon. Member for East Thanet (Ms Billington), is fully in favour of.

Coastal communities face a unique set of environmental and economic challenges, which are spread across Departments. It is therefore common sense to have a Minister to bring them together under one portfolio and champion those communities in Government. The specific needs of coastal communities were raised in the annual report of the chief medical officer, Chris Whitty, in 2021, and we particularly highlight those communities. In my own part of the world, we have the Lancashire over the sands part of my constituency and south-west Westmorland, but there are also coastal communities in places such as North Norfolk, Devon, Cornwall and elsewhere. As I said, there is cross-party support, through the APPG for coastal communities, for this proposal.

Let me make a quick reference to my own constituency. Among the challenges that the communities around Morecambe bay face is the pollution of the environment around them. In 2023 alone, one treatment works in Grange-over-Sands pumped sewage into the Kent estuary channel on 79 occasions for 73 hours. Across the water in Arnside, another pumped 42 times for 147 hours.

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[Emma Hardy]

I think that might be really helpful. It has been an interesting but slightly muddled conversation. We were going to produce a factsheet to explain the difference between emergency and storm. Maybe we can include as much information as we can for Committee members by the end of Committee or before Report, if that does not put too much on my hard-working officials.

On the annual data being analysed, the proposed amendments are unnecessary and I ask hon. Members not to press their amendments. On amendment 16, which was also tabled by the hon. Member for Westmorland and Lonsdale, and which is about the speed of delivery, the need to deliver the installation of monitors on emergency overflows must be balanced with practical constraints and with due consideration for the cost of rolling out so many monitors, especially as those costs are ultimately passed to consumers through water bills.

Water companies have been instructed to install monitors at 50% of emergency overflows by 2030. This represents a doubling of the previous Conservative Government’s target of 25% of emergency overflows monitored by 2030. The Environment Agency will agree with water companies which emergency overflows will have monitors installed over the next five years based on priority areas, such as those that impact designated bathing and shellfish waters. As set out in the impact assessment, we expect the roll-out of monitors at emergency overflows to cost £533 million over a 10-year period. We believe that pace of roll-out strikes the right balance of recognising the urgency—this Government are doing double what the previous Government promised—while ensuring that companies have the capacity to progress other improvements and balancing customer bill impacts.

To speak frankly, it is very important to monitor, but it is also very important to fix the causes of some of the problems that we see. There is always a balance between monitoring and fixing the problem, and we believe that we have got that balance right.

Requiring a faster roll-out of monitors could undermine the delivery of other improvements that water companies must make in price review 24—I would not want to be in a situation at the end of the price review where we monitor everything and fix nothing. That includes upgrades to wastewater treatment works and sewerage networks to reduce sewage discharges from storm overflows. Where companies can move further and faster to achieve the roll-out of monitors at emergency overflows, they will of course be encouraged to do so, but we cannot accept this amendment to require water companies to install all monitors within 12 months. I therefore ask the hon. Member to withdraw it.

[Tim Farron]

I am grateful to my hon. Friend the Member for Witney for his detailed points and for the Minister’s replies to them. We will not seek to press the majority of the amendments to the vote. Nevertheless, we stand by all that we have said and we do wish to press amendment 13 to a vote. The reality is that duration monitors only do so much good. Asking for volume to be added to duration is not to the exclusion of quality. In fact, it is part of an attempt to try to get to the bottom of it. Again, off the top of my head, earlier last year there was a sewage overflow into Coniston Water from 22 August, which lasted just over a week, and a sewage overflow around Easter time in Windermere, which lasted a matter of hours. The former was more of a trickle—still unacceptable—and the latter was a deluge. The difference in terms of quality was significant as well as in terms of volume. We therefore ask that the Committee considers amendment 13, which we seek to press to a vote.

Question put, That the amendment be made.

Division 6

Ayes: 2

---

Liberal Democrat: 2

Noes: 11

---

Labour: 11

[Tim Farron]

I beg to move amendment 17, in clause 3, page 9, line 1, leave out from start to “in” and insert—

“a Minister with specific responsibility for issues relating to the coast,”.

I have made my argument in favour of amendment 17, probably at the wrong time. I do not seek to press it to a vote. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Dr Hudson]

I beg to move amendment 4, in clause 3, page 9, line 38, at end insert—

“141H Failure to report discharge from emergency overflows

(1) If a relevant undertaker fails to comply with its duties under section 141F—

(a) the undertaker commits an offence, and

(b) the chief executive of the undertaker commits an offence, subject to subsection (2).

(2) It is a defence for the chief executive to prove that they took all reasonable steps to avoid the failure.

(3) A person who commits an offence under this section is liable, on summary conviction or conviction on indictment, to imprisonment for a term not exceeding 5 years or an unlimited fine, or both.”.

This amendment would make it an offence for an undertaker to fail to comply with its duty to report discharges from emergency overflows.

In my remarks on amendment 3, I highlighted the fact that parity of attention between storm overflows and emergency flows is critical to action in regulating the water industry. With that point in mind, I move amendment 4, in the name of my hon. Friend the Member for Beaconsfield, which would make it a criminal offence for water companies and their chief executives to fail to comply with their duty to report on discharges from emergency overflows.

As I stated earlier, much was done to tackle the issue of storm overflows by the previous Conservative Government, including the passing of the Environment Act 2021, which we have spoken a lot about today. That introduced the statutory duty for water companies to publish storm overflow data in England every year and a storm overflow discharge reduction plan that created strict targets for sewage pollution and demanded water company investment in the necessary infrastructure to resolve issues.

Amendment 4 would address the need to ensure that emergency overflows are subject to the strict enforcement that we have seen exercised towards storm overflows in recent years. We have seen that an emphasis on strict enforcement can work in getting the reform that we all want to see the industry practise, and indeed in improving water quality. I note and welcome the comments from the hon. Member for Witney who welcomed the progress that we have made in that area on monitoring and trying to address these issues.

The Government have set out in the Bill plans to put in place a criminal offence for failing to co-operate with or obstructing regulatory investigations. The amendment seeks to address a gap in those plans in a key area of public concern—a duty to report discharges from emergency overflows.

Despite significant steps, some water companies are not taking their responsibilities to protect our waterways seriously enough. This is a sector where the rewards for success have historically been high for shareholders and, as we have heard a lot about, for executives. It is time now for serious consequences for failure to protect our waterways and the public to sit alongside those rewards for success.

The duty to report discharges from emergency overflows is basic, reasonable and vital to public transparency. I come back to our points about transparency. There can be no defence from any water company that it does not understand that duty or why that duty matters. Given the Bill already puts in place the principle of a criminal offence for failure to fulfil a reasonable duty and establishes a criminal offence for failure to co-operate or to obstruct a regulatory investigation, the amendment would strengthen the Bill’s intent that water companies’ conduct must be subject to criminal sanction and unlimited fines.

Of course, at the same time, however, as human error and technical fault can plague many walks of life and water companies are no exception, there must be a fair and reasonable opportunity for water companies and chief executives accused of violating their duties to show that they have genuinely tried to comply with the duties of reporting emergency overflows. Therefore, subsection (2) of amendment 4 provides explicit criteria that failure to meet the duties of publication for storm overflows does not result in a criminal offence when the company has done all it reasonably could to prevent the incident from occurring.

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[Emma Hardy]

I thank the hon. Member for Beaconsfield for proposing amendment 10, which seeks to make it an offence for sewage undertakers to use an emergency overflow in areas used for aquatic sports. I will mention how much I enjoyed meeting the Clean Water Sports Alliance just last week to hear about its fantastic work to get us all up, out and active, although I have so far resisted the temptation to don a wetsuit and join in.

I agree that it is vital for us to reduce the impact of sewage pollution, so that our children and their children can make the memories that we did enjoying our waterways. However, we do not believe that the amendment is necessary. It risks duplicating existing requirements to limit pollution for emergency overflows, as well as protections for bathers that are already in place. Emergency overflow discharges are permitted only in very strict circumstances and as a last resort, such as in the event of mechanical breakdown or a downstream blockage. That factsheet on the different circumstances might help.

Should an emergency overflow discharge occur outside permit conditions, the Environment Agency is able to take robust enforcement action, including fines and criminal prosecution. The measures in the Bill will increase transparency around emergency overflow discharges, shining a light on where they should not be happening.

[Tim Farron]

I want to point out something that is probably blindingly obvious, because I want to support the hon. Members for Epping Forest and for Beaconsfield. When emergency overflows happen in rivers near places where people may engage in aquatic sports, that is one thing and it is unacceptable, but it is worth bearing the lakes in mind—I will pick Windermere for an example. A drop of water that enters the north end of the lake takes nine months to pass through the River Leven and out into Morecambe bay. The consequences of an overflow in a lake—in the Lake district or elsewhere—are so much greater than in other waterways. I also have 30 outdoor education centres in my constituency, many of them on lakes. They are much more affected by overflows than any other form of spillage, which is why I think the amendment is worth pursuing.

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[Emma Hardy]

I thank all Members for their contributions to the debate on clause 3. I reiterate my promise to provide a factsheet and information about the numbers we have used. We have had an interesting debate about the different types of monitors. To clarify, we have emergency overflows, storm overflows, water quality monitors, event duration monitors and volume monitors, which we have discussed. We will make sure that the factsheet provides clarification so that we are all on the same page and understand the debate clearly.

Putting all that to one side, I think we ultimately all agree that it is important to better understand the frequency and duration of discharges from all the emergency overflows. We all think we need to improve transparency and inform investigations by the regulators into potential non-compliance.

Combined with the equivalent duty for storm overflows, which has just come into force, clause 3 will ensure that all sewage overflows on the network are monitored. That will enable regulators and, importantly, the public to see, in near real time, when a discharge from any overflow has occurred and how long it lasted. Water companies will use that information to prioritise investment to mitigate the impact of the most polluting overflows, as guided by the regulators. We have discussed our concerns about volume monitors being more difficult and costly to install. I gave a rather garbled explanation of the difficulty owing to the pipework in the majority of overflows requiring modification. As I said, I will provide further information on those numbers.

Such a large programme of work would take much longer than 12 months. We do not think that this added cost is proportionate to the additional value that volume information would provide, especially given that volume information alone does not provide a comprehensive account of the impact of a discharge—measurement of the water quality is required for that. To repeat a point, I do not want to be a Minister in a few years’ time who has perfected the art of monitoring and done nothing to deal with the causes. That is why the water companies will begin installing continuous water quality monitors for storm overflows, as set out in the price review ’24, to provide further information on the impact of sewage discharges on water quality.

New clause 25, tabled by the hon. Member for Westmorland and Lonsdale, would require capacities for each sewage treatment works and pumping station to be calculated. That is unnecessary because that information is already included in environmental permits and available from the Environment Agency’s public register. The new clause also proposes a general duty for water companies to collect data relating to their performance operating a sewerage system. We do not believe that that broad duty adds any meaningful requirement on water companies beyond their existing duties through the environmental information regulations.

On that basis, I commend clause 3 to the Committee and ask the hon. Gentleman not to press his new clause.

Question put and agreed to.

Clause 3 accordingly ordered to stand part of the Bill.

Clause 4

Nature-based solutions

[Tim Farron]

I beg to move amendment 26, in clause 4, page 10, line 4, leave out—

“use that is to be made of”

and insert—

“priority that is to be given to”.

[The Chair]

With this it will be convenient to discuss the following:

Clause stand part.

New clause 5—Licence conditions about nature recovery—

“In the Water Industry Act 1991, after section 17FB insert—

‘17FC Nature recovery

(1) It is a condition of all licences granted under section 17A (water supply licences) that relevant undertakers must give due consideration to nature-based solutions targeted at reducing flood risk and pollution incidents, improving water quality and benefiting nature restoration in their catchment area.

(2) The Authority must not take any action that discourages or prevents a relevant undertaker from making an investment in accordance with subsection (1).’”

This new clause would make it a condition of all water companies’ licences to consider nature-based solutions to flood risk, improving water quality and benefiting nature restoration in their catchment area, and prevent the regulator from discouraging or stopping such investments.

[Tim Farron]

You will be delighted to hear that I will not say very much about this, Mr Vickers. Amendment 26 relates to nature-based solutions for these broader issues, and many of my points were covered under amendment 24. I simply want to point out the value of nature-based solutions. They are cheap, they are low input, they provide potential income for farmers and other land managers, they are environmentally friendly in and of themselves, and they involve very light engineering to install and maintain. They are also less complex, not labour-intensive and much quicker to achieve and install, as well as having very clear ecological benefits and alleviating pressure on more conventional forms of sewage treatment. I make those points just to add to the importance of prioritising nature-based solutions to tackling sewage treatment.

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[Emma Hardy]

I thank all hon. Members for their thoughtful contributions during this debate and the careful consideration of the amendments tabled to clause 4. We are in danger of having a bit of a love-in with so much agreement in this room.

I turn first to amendment 26, which was tabled by the hon. Member for Westmorland and Lonsdale. I was genuinely really pleased to see clause 4 added on Report in the Lords, as a result of the collaborative cross-party approach to strengthening the Bill so that it further encourages greater use of nature-based solutions by water companies, and I appreciate the kind comments from the Opposition spokesperson, the hon. Member for Epping Forest. This is why clause 4 requires sewerage undertakers to address, in their drainage and sewerage management plans, the use that is to be made of nature-based solutions in their networks.

Sewerage undertakers already have existing obligations under section 94A of the Water Industry Act to address the sequence and timing for the implementation of measures proposed in their drainage and sewerage management plans. We believe that these obligations sufficiently require sewerage undertakers to address the relative prioritisation of the proposed measures in their plans. Nature-based solutions are one of a diverse range of potential solutions to complex drainage and sewerage issues. Clause 4 will ensure that sewerage undertakers highlight the proposed role of nature-based solutions within their network. It is right that undertakers have due flexibility to consider the full range of solutions available to them and to work with stakeholders to identify the right solutions.

As much as I love nature-based solutions—and so does everyone in the room, it appears—I am sure we all accept that it is not appropriate to prioritise nature-based solutions ahead of other available options in every circumstance. We believe, however, that the provisions in clause 4 will have sufficient positive effect in supporting greater exploration and development of nature-based solutions without posing operational challenges for the sewerage undertakers. On that basis, I ask the hon. Member for Westmorland and Lonsdale to withdraw his amendment.

Moving to new clause 5, which the hon. Member for Epping Forest tabled, I take this opportunity again to agree and emphasise that the Government think that nature-based solutions are critical to ensuring that we have a resilient and sustainable sewerage system. I am therefore delighted to inform the House that we have recently seen the regulator doing just that. In its final determinations for the 2024 price review, Ofwat has set out an allowance of £3 billion for water company investment in nature-based solutions and biodiversity. That includes £2.5 billion to reduce storm overflow spills through green solutions.

However, the Government have noted the concerns and amendments in the other place, which is why we introduced our amendment to place a new requirement on sewerage undertakers to support the greater use of nature-based solutions, which now forms clause 4. Clause 4 will ensure that nature-based solutions are considered from the start of investment planning and decision making as a solution across multiple risks, including pollution, flooding and drainage. I trust that the hon. Member is therefore reassured that his new clause has already been provided for. On that basis, I ask him not to push his new clause to a vote.

Although I have outlined some of the merits of clause 4, I will briefly reiterate why this Government consider the clause to be an essential part of the Bill. Nature-based solutions are vital to protecting the environment and the wider water system, as well as delivering co-benefits including protection from flooding for the public and enhancing the natural environment. I concur with the comments made about flooding by the Opposition spokesperson. Clause 4 will drive further exploration and development of nature-based solutions, and will require undertakers to be transparent as to how they have deployed, or propose to deploy, nature-based solutions within their drainage and sewerage networks. Compliance with that duty will be monitored by Government and regulators.

Sewerage undertakers will also be required to conduct public consultations on their drainage and sewerage management plans, which will allow the public to scrutinise the plans and propose changes. Therefore, to help realise the Government’s desire to see further development of nature-based solutions by sewerage undertakers, I commend clause 4 to the Committee.

[Tim Farron]

I will add to the words I have already said, but not by very many, I promise. The simple bottom line of our proposal is that nature-based solutions offer great value for dealing with sewage. As has been mentioned on both sides of the Committee, they also have a significant impact on flood prevention. I am bound to crowbar this in, but it is a reminder that among the things that we should be enormously grateful to those who work our uplands—our hill farmers—for is that their work, if we support them properly, prevents people who live in towns, villages and cities from being flooded.

Another part of the Department for Environment, Food and Rural Affairs brief is the environmental land management scheme, and how we can look to further support those working in the uplands—our land managers and our upland farmers, both tenants and owners—to be able to deliver those nature-based solutions to protect millions of homes and avoid billions of pounds of damage, as well as being part of the solution to dealing with sewage.

We will not seek to press the Committee to a Division. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 4 ordered to stand part of the Bill.

Clause 5

Impeding investigations: sentencing and liability

Question proposed, That the clause stand part of the Bill.

[Emma Hardy]

Thank you, Mr Vickers, for the opportunity to speak on the importance of clause 5. The clause strengthens the penalty for obstructing the investigations of the Environment Agency, Natural Resources Wales and the Drinking Water Inspectorate. Obstruction of investigations by the regulators is already an offence, but that has not stopped companies blocking the regulators’ investigations.

In 2019, the Environment Agency prosecuted a number of individuals at Southern Water for removing evidence from the possession of officers. I am sure Members will agree that such behaviour is unacceptable. Currently, the offence of obstructing the Environment Agency and Natural Resources Wales’s investigatory powers—under section 108 of the Environment Act 1995—is punishable only by a fine, and can only be heard in the magistrates court. There is also no mechanism for prosecuting executives where obstruction of those powers occurs under their guidance.

The offence of obstructing the Drinking Water Inspectorate is already triable in the Crown court. That too, however, only carries a maximum penalty of a fine. I am sure Members will agree that it should never be preferable to accept a fine rather than face the full consequences of lawbreaking, and where lawbreaking occurs with their involvement, executives should be held accountable. Clause 5 makes the offence of obstructing the Environment Agency and Natural Resources Wales’s powers under section 108 of the 1995 Act triable in the Crown court. It expands the maximum penalty for obstructing Environment Agency, Natural Resources Wales and Drinking Water Inspectorate investigations to be up to two years’ imprisonment for conviction on indictment.

Clause 5 will address a notable justice gap and further deter the offence of obstruction. In turn, it should better enable our regulators to carry out their investigations uninhibited and hold water companies to account accordingly.

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[Dr Hudson]

The Opposition have no formal objections to the clause, but I do have a couple of clarifying questions. I realise I am getting into territory with which I have no familiarity. I am not a lawyer; I am a veterinary surgeon. When we are changing offences to make them more criminal, there are implications for the courts and for individuals. Although expanding the options available to the court when sentencing offenders who have not followed the rules is welcome, how have the Government ensured that the offences are clear, so that those who commit them face the full punishment if and when required?

In terms of modelling the potential impact downstream, what work have the Government done to look at the situation retrospectively? If this provision had been law over the last few years, how many offenders would have been caught by it and potentially imprisoned? I realise that that is quite a technical question, but I wonder if the Government have looked at that at all. When we bring in laws, we need to ensure that we are aware of their implications and know how the legal and judicial system can exercise them. However, we have no formal opposition to the clause.

[Tim Farron]

Likewise, the Liberal Democrats have no objection at all to this clause. I cite from memory that in 2021-22, there were just under half a million spillage incidents in this country: a total of 16 were prosecuted, eight with a fine of more than £50,000. I think what the Minister was getting at before was that very often, it is worth taking the hit. First, organisations get away with it, but even if they do not, they pay a pittance compared to the cost had they invested properly in the infrastructure. It is right to take these things seriously. However, prosecutions with potential imprisonment and loss of liberty may be as few and far between as prosecutions relating to fines, unless we make sure that the whole process is more rigorous than it has been so far.

We are supportive of the clause and I need say nothing further.

[David Reed]

I want to raise one minor point. Public confidence in us restoring our water systems is the reason we are here, scrutinising this Bill. Feargal Sharkey—a main campaigner who many people up and down the country listen to—recently wrote an article saying that no water boss would ever go to prison as a result of this legislation. Will the Minister comment on that to give confidence to people watching this proceeding?

Oral Answers to Questions

Tim Farron Excerpts

Thursday 19th December 2024 Commons Chamber

[Mr Speaker]

I call the Liberal Democrat spokesperson.

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

Merry Christmas to you, Mr Speaker, and to all here and beyond.

Farmers in my communities and across the country are genuinely devastated by the Government’s family farm tax, which will affect many in my patch who are on less than the minimum wage, and by the 76% cut in the basic payment next year. Perhaps what dismays farmers across our country and in Westmorland even more is that the overall agricultural policy of this Government and their Conservative predecessors is to actively disincentivise farmers from producing food, despite the fact that this country produces only 55% of the food we need. That is a dereliction of duty by both main parties, and a threat to national security. What plans does the Secretary of State have to change his policy and back our farmers to produce food?

[Steve Reed]

The hon. Gentleman raises a number of important points. I will repeat my earlier comments about agricultural property relief: the last year for which we have data available shows that the vast majority of claimants will not pay anything. Unlike the previous Government, who thought that farmers were not in it for the money, we want them to succeed, so we are embarking on a farming road map and a new deal for farming that will consider supply chain fairness and stop farmers being undercut in trade deals such as the one the Conservatives agreed with Australia and New Zealand. Our intention is to make farming profitable for the future; the Conservatives’ record is the 12,000 farming businesses that went bust.

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[Daniel Zeichner]

I thank the right hon. Gentleman for his suggestion. I am a great admirer of the Allerton project and have been meaning to visit it for a long time. My officials are working on a visit, and I am really looking forward to engaging with those people, because they do great work.

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

On a point of order, Mr Speaker.

[Mr Speaker]

Presumably it is related to the questions.

[Tim Farron]

It is related to the questions we just had. Thank you for granting the point of order, Mr Speaker. At 7 o’clock this morning, entirely foreseeably, Ofwat announced bill rises of 36% for water bill payers around the country, which is an increase 14 times larger than current inflation. We know that a large proportion of that rise will be spent on paying off the debt of water companies: a debt incurred simply by paying dividends that were unearned and bonuses that were undeserved. Is it in order for the Government to have known that was coming but not to have come to the House to make a statement, which would have allowed us to hold them to account for their failure to ensure that Ofwat has the teeth it needs to hold the water companies to account?

[Mr Speaker]

I thank the hon. Member for his point of order. I have received no notification from the Government of such a statement, but he has certainly put his point on the record and I am sure that it will have been heard by those on the Treasury Bench.

Water (Special Measures) Bill [Lords]

Tim Farron Excerpts

2nd reading
Monday 16th December 2024 Commons Chamber

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

It is a great privilege to speak on this Bill on behalf of my party, and a still greater privilege, I dare say, to speak as the Member for Westmorland and Lonsdale, which includes Windermere, Ullswater, Coniston Water, Haweswater, Rydal Water, Grasmere, Elterwater, Esthwaitewater, Brotherswater, the River Kent, the River Eden and much of Morecambe bay. We are a stunningly beautiful part of the country, and also one of the wettest. For us, water is unavoidable and precious. It is precious to our biodiversity, our heritage and our tourism economy.

As the House may have noticed, the Liberal Democrats chose to make water the centrepiece of our election campaign. So much so that my right hon. Friend the Member for Kingston and Surbiton (Ed Davey) spent much of the campaign in the stuff. We continue to champion a radical restructuring of our water industry, because water is the most vital of resources and because we cannot allow a continuation of the poor regulation, wanton pollution and abuse of power that became hallmarks of the water industry under the Conservative Government.

There is much to welcome in this Bill, including criminal liability for chief executives who are responsible for severe environmental failure—a measure that I remind colleagues was proposed by the Liberal Democrats before the last election, and that Labour refused to support at the time because it believed the measure to be unnecessary. We are pleased that Labour now agrees with us.

We are also encouraged by the proposals to increase some of Ofwat’s powers, to introduce a fit-and-proper-person test for chief executives, to institute an automatic fining system that makes sense, to install real-time monitors, and to create greater data transparency. All these measures are welcome, and they will all help, but they do not yet amount to the radical structural transformation that is so obviously needed.

The recent announcement of Sir Jon Cunliffe’s review is welcome, but it is also kind of frustrating. It suggests that the Government might well be up for a more radical change, just not yet. The review will not conclude until next summer, of course, after which many people, including in the Treasury, will need to go over its proposals before it hopefully makes it into a King’s Speech, running the risk that the more ambitious part 2 might not find its way on to the legislative timetable in this Parliament.

Of course, fixing the entire water industry and sewerage system is not an overnight job, but this feels like an especially ponderous way to solve such an urgent and pressing issue.

[Dave Robertson (Lichfield) (Lab)]

The hon. Gentleman talks about the perils of acting too slowly, but given that a Liberal Democrat was in charge of the water industry when it was privatised, does he not think that we might all be paying the price for the error of acting too quickly in that instance?

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[Tim Farron]

Unless, to my absolute surprise, the Liberal Democrats were in power in the 1980s and early 1990s, I do not think that could have been the case. I was at university with the hon. Member for Carlisle (Ms Minns) when it happened, and neither of us was in government at the time.

The British people rightly believe that they voted for a far more ambitious plan than the one in the Bill, and they believe that they voted for it to be delivered urgently. The biggest mistake that Labour Governments tend to make is not being ambitious enough, presumably under the impression that they will be in power for longer than they perhaps might be, so my friendly advice to the Government is to seize the day and seize the moment. The millions who voted Liberal Democrat at the election absolutely did vote for ambitious and urgent change.

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

Does my hon. Friend agree that the water companies need to be regulated, to protect not profits but the environment? Does he also believe that bathing waters, like the wonderful Tone bathing water in which I was swimming the day before yesterday, should not automatically be de-designated?

[Tim Farron]

I commend my hon. Friend for his swimming activities, and I agree with him. The regulatory framework should be used to improve our waterways, not to strip them of their vital designations. We take the view that it is our job to campaign with energy and passion for a radical clean-up. We are determined to keep our word to the voters by fighting for that action.

I will take a quick moment to say something that I feel is most important. The people who work on the frontline in our water industry, and those who work for the Environment Agency and Ofwat, deserve our thanks and admiration—yet, because of the failings of the system, they end up taking the blame that ought to land here in this place. The legions of people running our water system do a vital job, so I want us to get the tone of this debate right. We can be rightly outraged about how our water industry is allowed to operate, and at the same time be hugely grateful to those who, despite the system, do outstanding work to serve our communities. I want those people to know, and to hear, that we really value them. They are a blessing to us. They are not the problem; the system is. We are determined to fight for a better system for all those people to work in.

[Adam Jogee (Newcastle-under-Lyme) (Lab)]

In a previous life, I drafted many of the amendments to the Environment Act 2021. I am sorry that the shadow Secretary of State would not let me intervene on her, and I am further sorry that she and most of her colleagues voted against every single one of those amendments. The hon. Gentleman was very kind and wisely voted for them. Although Conservative Members now talk about regulation, all the previous Government did was cut the regulator off at its knees, and we are now dealing with the consequences of their inaction and decisions.

[Tim Farron]

I thank the hon. Gentleman for his service in a previous life, as well as in this one. He makes a very important point, to which I will turn in a moment. There is no point having great regulatory powers if we do not have a regulator with the resources to do the job that it needs to do. Nevertheless, regulation could be made better.

Water industry regulation is split between the Environment Agency and Ofwat, and that plainly does not work. We have two inadequately resourced regulators, with inadequate powers, being played off against each other by very powerful water companies that are far better resourced and able to run rings around the very good, but very harassed people whose job it is to hold them to account. I welcome the concession made in the Bill requiring Ofwat to contribute towards meeting the targets of the Environment Act 2021 and the Climate Change Act 2008. That is a step in the right direction because I believe it will be the first time that Ofwat will have proper environmental obligations, alongside its business obligations.

We have received promises, as the Secretary of State set out from the Dispatch Box earlier, that this Government will strengthen Ofwat’s powers in ways that we do not see on the face of the Bill. For instance, Liberal Democrat peers asked the Minister to confirm that the Government would ban water company bosses getting bonuses when their company had had a major category 1 or category 2 sewage incident the year before, and the Minister in the other place said:

“These are the type of circumstances in which it would be highly inappropriate for a bonus to be awarded.”—[Official Report, House of Lords, 20 November 2024; Vol. 841, c. 247.]

That is very welcome, but it is not on the face of the Bill.

I pay tribute to my Liberal Democrat colleagues in the other place, who forensically engaged with the Bill to make it much better. I also pay tribute to the collegiate and constructive manner in which the Minister, Baroness Hayman, worked with them. To be clear, though, the Liberal Democrats would go even further and create a unified and much more powerful regulator, the clean water authority, absorbing the regulatory powers of Ofwat and the Environment Agency, but with many additional powers, including revoking the licence of poorly performing water companies swiftly, forcing water companies to publish the full scale of their sewage spills, reforming water companies to put local environmental experts on their boards, and putting robust, legally binding targets on sewage discharges.

On the issue of discharges, we welcome the change to require data from emergency overflows to be published within an hour of a discharge. That will require companies to monitor all emergency sewage overflows and to ensure that data is reported to the Environment Agency within the hour. To pursue the point made by the hon. Member for Newcastle-under-Lyme (Adam Jogee), my concern is that the Environment Agency is already massively overwhelmed. In my constituency, I see good people working very hard, but with Coniston, Windermere, the River Eden and the River Kent competing for time, attention and resource, as well as the ongoing work of building flood defences in Kendal, it is hard for them to be able to focus.

[Anna Dixon (Shipley) (Lab)]

The hon. Gentleman talks about the Environment Agency being under-powered and under-resourced. With rivers like the River Wharfe, it has clearly failed to address illegal discharges and to enforce the law. Does he, like me, welcome the fact that the Bill will introduce more support for enforcement by allowing the Environment Agency to recover the cost of any enforcement from the offending water companies?

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[Tim Farron]

Yes, to a degree. I thank the hon. Lady for her intervention; it is very welcome, as is the investment that is promised and the way in which it will be provided, but—and I am happy to be put right on this—I think the figure used by the Government is an additional 500 members of staff for the Environment Agency. That is one per constituency in England and Wales. That will not make a noticeable difference. In practice, the Bill could well permit a continuation of the current situation, where water companies will be setting and marking their own homework, with an Environment Agency without the capacity to even manage its current workload, let alone the new duties the Bill will give it to monitor masses of important overflow data. The regulator must be much better funded to do that well. Even then, the regulation rules must be watertight for the Environment Agency to ensure that the water companies cannot pick and choose which information they release or retain.

The Minister indicated that the data will be made publicly available and easy to access. I look forward to hearing more detail about how that will be done. That could be a positive move, allowing citizen scientists and campaign groups—such as the wonderful Clean River Kent Campaign group, the Eden Rivers Trust, the South Cumbria Rivers Trust and the Save Windermere campaign, as well as many others from other communities —to be able to hold the water companies to account to a greater degree. After all, knowledge is power. We are keen to encourage the Government to move forward with that.

We would also like to see water companies publish the volume and concentration of discharge from all emergency overflows, not just their duration and frequency. Will the Minister consider including that duty? And should we really have water companies installing and maintaining their own monitoring equipment? We believe that the Environment Agency or its successor should be doing that, with the full cost of that work paid for by the water companies.

The Bill makes almost no attempt to address the structure of finances and ownership of the water industry. The Minister has indicated that the Bill will seek to change the culture of the industry, which would be welcome, but cultural change will only come with a change to the reckless profiteering that has been the norm. As right hon. and hon. Members on the Conservative Benches have said, Lord Cromwell in the other place tabled an amendment requiring annual updates from water companies on any financial restructuring that they have done or plan to do. It cannot go unacknowledged that financial stability and good governance seriously affect the environmental standards that any water company is able to reach. I am grateful to my hon. Friends the Members for Witney (Charlie Maynard) and for Bicester and Woodstock (Calum Miller) who made those points in relation to Thames Water.

I am grateful to my noble Friend Baroness Bakewell for tabling a Liberal Democrat amendment to the Bill in the Lords to create special status, with special protections, for Windermere as an exemplar of the standards we will expect in our waterways across the whole country. The Campaign for National Parks’ health check report, which was released earlier this year, found that only five out of the 880 bodies of water in the national parks of England and Wales met the highest ecological standards, and that every single one was polluted to some degree. Windermere itself received 140 million litres of pollution in the last two years. Amendments tabled in the Lords, which we will table here also, will seek to tackle that. Water industry leaders must be forced to take responsibility for the care of these world class lakes and waterways, and our amendments to the Bill would ensure that they do so.

Although the privatisation of the water industry was an incredibly bad decision and definitely did not happen on our watch, I am not convinced that renationalisation would be necessary or a good use of public money. I fear it would mean that we would have to buy the assets back, putting taxpayers’ money into the pockets of those who have already made so much money out of them, without a single penny of that money going into improving infrastructure. Instead, it seems wiser to move away from the current model and to ensure that water companies should be community benefit corporations, so that all revenue goes into keeping environmental standards higher and solving the long-term problems of our networks. None of our constituents should have to pay for company debt. These were business decisions, taken by those who took risks to make money, rather than to invest in our sewage systems; they should bear the consequences of those risks.

The current regulatory framework seems to leave water companies immune from the highest penalties, despite their repeated failure to meet their basic obligation to prevent sewage from being dumped in our lakes, rivers and coastal areas. The current rules mean that, under special administration procedures, to remove a water company’s licence to operator would mean the regulator serving a 25-year notice on them. That is why we are disappointed that the Bill does not go as far as we want, or as far as so many water campaigners have asked for it to go.

The Cunliffe review gives us hope of a more radical set of proposals to come later in this Parliament, but our communities are impatient for change—a change more radical than this Government are so far willing to offer us. Although we see nothing in the Bill to disagree with and much in it to commend, we are left frustrated that any radical transformation will be at best delayed until a second instalment, after Sir Jon Cunliffe’s review.

[Robin Swann (South Antrim) (UUP)]

The hon. Gentleman references Sir Jon Cunliffe, and I thank the Secretary of State for commissioning the review. Does the hon. Gentleman agree that Sir Jon’s review should look across the United Kingdom, because Northern Ireland Water is both a Government-owned company and a non-departmental public body and I assure the House that the water quality in Northern Ireland, especially in Lough Neagh, is nothing to be celebrated either. Should not Sir Jon Cunliffe’s review look at how all bodies regulate their water systems, so they serve the public?

[Tim Farron]

I think two things. I respect the devolution settlement and think it is important that we do not overstep what we are called to do today. I also, however, agree that the waterways of all corners of our United Kingdom are precious and must be protected. I thank the hon. Gentleman for raising that point.

To conclude, the job of the Liberal Democrats is to be the constructive opposition in this place, and to now use Committee stage to inject into the Bill the ambition and urgency that we feel is currently lacking. To millions of people out there who care deeply about our waterways, the problems are obvious and so are many of the solutions. We call on the Government to accept the amendments that we will table in Committee in good faith, to act ambitiously and comprehensively, and to do so without delay.

[Madam Deputy Speaker (Ms Nusrat Ghani)]

I call Helena Dollimore, a member of the Environment, Food and Rural Affairs Committee.

Storm Bert

Tim Farron Excerpts

Monday 25th November 2024 Commons Chamber

[Madam Deputy Speaker]

I call the Liberal Democrat spokesperson.

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

I thank the Secretary of State for advance sight of the statement. The financial cost of the devastation caused by Storm Bert will run into many millions, yet that is nothing compared with the heartbreaking loss of life. My prayers are for the loved ones of those who have died and for the communities so horrifically affected. I, too, am grateful to the emergency services of all kinds, council workers, the Environment Agency and the communities who have pulled together and been wonderful neighbours up and down the country. Indeed, I am grateful to the many Members who have got their hands dirty serving their constituencies. That includes my hon. Friend the Member for Chippenham (Sarah Gibson) who, in the absence of any trains, hired a car this morning and left Parliament to get back to her communities to be with those who have been devastated by the flooding.

This storm highlights the foolishness of the Government’s real-terms reduction of 1.9% to the Department for Environment, Food and Rural Affairs’ budget. That is a potential threat to flood-affected communities through its impact on flood management schemes, natural flood management and specific projects such as those in Kendal and Appleby. Will the Secretary of State clarify whether he may seek to reverse those cuts?

Disruption to rail services has been significant, too. Less than a year after the terrifying derailment at Grange-over-Sands, the whole of the Furness line in my constituency is out of action until later this week. Will Ministers put extra resources into ensuring that that vital line and others are upgraded and made more robust?

Storm events also have an impact on our sewerage networks. Research by the Save Windermere campaign estimates that storm overflows discharging untreated sewage into our lake began at 3.21 this morning and by midday could have reached a volume of 7 million litres. Will the Government speed up action to prevent egregious storm overflows like that across our country? Finally, does the Secretary of State understand that given the crucial role that farmers play in natural flood management, his decision to cut 76% of the basic payment scheme from next year could push farmers away from such schemes altogether? Will he revisit that decision?