Water Companies: Regulation and Financial Stability

Debate between Tim Farron and Sarah Dyke

Wednesday 23rd October 2024 Westminster Hall

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

I beg to move,

That this House has considered the regulation and financial stability of water companies.

It is an absolute pleasure to serve under your guidance this afternoon, Mr Pritchard. It is a real honour and privilege to have secured this debate on a matter of enormous importance to my constituents in Westmorland and Lonsdale and, quite clearly, to many around the room and beyond.

I wonder whether, in the aftermath of the 2019 general election, many pundits or politicians would have predicted that by the 2024 election water quality would be one of the top three doorstep issues, and a subject of discussion here and in the main Chamber within an hour or two of each other, and indeed within the same week as in the other place. That is exactly what has happened, and there are a number of reasons why.

First, leaving the EU meant that we needed to introduce our own legislation to replace what went before. In doing so, people, including MPs, looked under the bonnet, so to speak, for the first time and were horrified to see what was there: the sewage outflows into our rivers, lakes and coastal areas that had been long permitted.

Secondly, the last Government failed to take effective action to limit those outflows, allowing excessive dividends and bonuses on the one hand and inadequate infrastructure investment on the other.

Thirdly, the situation is objectively getting worse. Climate change, higher rainfall, inadequate regulation and failure to invest in infrastructure renewal means that 2023 saw a 54% increase in sewage spills compared to the year before.

Fourthly, and just as importantly, this issue has emerged because community campaigners across the country have resolved that they will not accept this appalling situation and have led the way in holding water companies, regulators and the Government to account. Organisations in our Westmorland communities, such as the Clean River Kent Campaign, Save Windermere and the Eden Rivers Trust—and many more, both in my communities and around the whole UK—have engaged in citizen science, heightened awareness and galvanised public opinion.

The Liberal Democrats have made this issue a priority, too. Water is so important to us that my right hon. Friend the Member for Kingston and Surbiton (Ed Davey) spent most of the general election campaigning about it—and, indeed, spent quite a lot of time in it! Having led my party through a previous general election, I know exactly how it feels to spend one’s campaign in deep water, and even, on occasions, up to one’s neck in poop.

I have the immense privilege of serving Westmorland and Lonsdale and being MP for, among others, Windermere, Ullswater, Coniston Water, Haweswater, Rydal Water, Grasmere, Brothers Water, the River Kent, the River Eden, the River Lune, many other rivers, and much of Morecambe bay. For us, water is deeply personal; it is precious to our biodiversity, our heritage and our tourism economy.

Failure to tackle the issue rightly raises passions, but the fault lies in the system. We have an industry financing model and a regulatory framework that are simply not fit for purpose. However, I do not want to demonise the people who work for water companies. Good, competent and decent people work for United Utilities in my community and for other companies across the rest of the country, on the ground and indeed underground. The same applies for those who work for the Environment Agency and Ofwat. They are good, hard-working and professional people working within a system that is badly broken, and that broken system has an appalling impact on communities in the lakes and dales of Westmorland.

I have a few figures to demonstrate the situation, courtesy of the Rivers Trust. Last year in Appleby, combined sewer outflows into the River Eden saw 46 spills. At Kirkby Stephen on the River Eden, there were 135 spills. At Staveley on the River Kent, there were 283 spills. At Tebay on the River Lune, there were 124 spills.

[Sarah Dyke (Glastonbury and Somerton) (LD)]

Will my hon. Friend give way?

[Tim Farron]

In one second. At Greystoke on the River North Petteril, there were 146 spills. I could go on, but I will give way to my hon. Friend.

[Sarah Dyke]

I congratulate my hon. Friend on his excellent speech. Data from Thames Water shows that Glastonbury and Somerton was the 16th worst constituency in England and Wales for sewage overflows. Does my hon. Friend agree that the commission should consider establishing pollution baselines and reduction targets?

[Tim Farron]

I absolutely agree. That reminds us that, of the over 464,000-plus spills that took place in 2023, most were legal and permitted—and most of them should not have been. We juxtapose this failure with the reality of money leaking out of the sector in the form of dividends and bonuses. Since privatisation, £78 billion has been paid out in dividends and, in the last four years, we saw £62 million paid out to company executives in bonuses.

UK Food Security

Debate between Tim Farron and Sarah Dyke

Tuesday 19th March 2024 Westminster Hall

[Sarah Dyke]

Fine Shetland sheep, indeed. I do understand the challenges of accessing a local abattoir, not only a local one but one able to help with the services that small producers require. I will cover that in a minute, but I would like to make some progress.

I want to see changes in the public procurement system that provides schools, such as King Arthur’s School in Wincanton or Ansford Academy in Castle Cary, Frome College or Huish Episcopi Academy with the flexibility to source local produce, whether that be food or drink, and ensure that local provenance. Many schools do not have the flexibility to do that. That particularly resonates with regard to the 800,000 children living in poverty who are not eligible for free school meals as their households are in receipt of universal credit and have in excess of a £7,400 post-tax income.

Building awareness among children of where their food comes from now can sow the seeds of good food habits for life. The Liberal Democrats believe it is crucial that we extend free school meals to all children in primary education and all secondary school children whose families receive universal credit, but there is a threat to that. There has been a 12% increase in the number of large-scale industrial farms in the UK from 2016 to 2023. The intensive nature of those farms means that accessibility to local food and drink is likely to be diminished. Environmental standards will decline and the custodians of our countryside—the small family farm—will disappear.

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

I am sorry to interrupt and am grateful to my hon. Friend for giving way in her excellent speech. Does she agree that one of the threats to the family farm is the fact that we have a range of new schemes being put out by the Government, many of which are commendable in themselves under the environmental land management schemes heading but which fail to protect tenant farmers? Baroness Rock’s review includes 70 excellent recommendations, including that of a tenant farmer commissioner, which should be put in place to protect tenant farmers before many of them are kicked off their land by landlords exploiting new schemes. Is that not just morally wrong but extremely stupid because it reduces our ability to feed ourselves as a country?

[Sarah Dyke]

I thank my hon. Friend for his intervention, which I wholeheartedly support.

It is critical for long-term UK food security that we employ sustainable agricultural practices, which focus on appropriate food production that helps protect the environment, conserve natural resources and reduce greenhouse gas emissions, while ensuring an adequate and reliable food supply to meet the demands of the population. The Government’s food strategy was described as “a waste of trees” by Professor Tim Lang. The Government should now not baulk at producing a robust land use strategy, which has been promised for more than a year but has yet to be seen. Can the Minister provide an update on that this morning? The Liberal Democrats will develop a comprehensive national land strategy, including a horticulture strategy to encourage the growth of the horticulture sector and effectively manage the competing demands on land.

I thank the Environment, Food and Rural Affairs Committee for its recent report on insect decline and food security, which raised an important issue. The loss of biodiversity and pollinators will have a heavy impact on our ability to grow food in future. Around 40% of all insects are at risk of extinction. They are an integral part of our ecosystem and without them, we simply would not survive. Dung beetles, for example, fertilise and aerate soils, helping to maintain pasture that livestock is fed on. Indeed, it is estimated that dung beetles may save the UK cattle industry a whopping £367 million a year through the provision of ecosystem services.

One of the many things for which Somerset is famous is our cider. Pollinators are crucial to apple production, yet we have already witnessed their decline. Buglife’s South West Bees Project report in 2013 focused on 23 bee species considered most at risk in the south-west. Twelve of the target species are found in Somerset. Sadly, however, six target species have already been lost.

The national pollinator strategy is due for renewal this year, and the Government must take the opportunity to redress our biodiversity losses. However, I do not have confidence that they will do so, because this is the fourth year in a row that the Government have authorised the emergency use of neonic pesticides, despite knowing the harmful effects on our wildlife. The Liberal Democrats oppose the use of these damaging pesticides and recognise how important it is to protect our wild pollinators, to stop further damage to our biodiversity and to protect UK food security in the long term.

That point brings me on to UK household food security. A resilient food system can help to stabilise food prices and minimise market volatility. According to the Food Foundation, the poorest 20% of households would need to spend half of their disposable income on food in order to afford the NHS’s recommended healthy diet. That is clearly impossible for those people.

Food-related ill health is a growing issue in our society. Unless we take action to improve our food system, it is estimated that 40% of British adults will have obesity issues by 2035. That would mean increased costs, not just for our NHS but for our economy as a whole, given that we already have 3 million people out of work due to long-term sickness. We must therefore stem the tide of junk food, unhealthy food and processed food that is currently flooding our supermarkets, our screens and our high streets. Instead, we must actively work to promote locally grown whole foods such as fruits and vegetables. That is best for our health, for our economy and for our planet, but also for our farmers, who want to sell their produce to local people. That is how we can create a thriving food culture of which we can all be proud.

Household food security can be a particularly prevalent issue in rural areas such as my constituency. Rural communities are less likely than urban areas to have a glut of supermarket choices. They are therefore more reliant on smaller local supermarket stores. Research by Which? has found that those stores almost never stock essential budget-line items, which may result in higher food costs and household food insecurity. The major unfairness is that these communities are often side by side with those that are growing food.

As I have pointed out, farmers want to sell their food to local residents, but the food system prevents that. We must act now to make that a reality, as we will soon face a time when climate change disrupts our system with increasing regularity. If we are not prepared and ready to adapt, our farmers will suffer, and as consumers we will all suffer. By taking a holistic view of UK food security, we can ensure that we have a sustainable future that supports British farmers, supports our environment and biodiversity, and supports the growth of a healthy nation.

Sustainable Farming Initiative

Debate between Tim Farron and Sarah Dyke

Tuesday 19th December 2023 Westminster Hall

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

I beg to move,

That this House has considered the matter of transitioning to the Sustainable Farming Initiative.

It is an ongoing pleasure to continue serving under your guidance this morning, Dame Maria. I welcome hon. Members to their seats and the Minister to his. I start by wishing everyone merry Christmas, in the spirit of the debate we have just had.

The sustainable farming incentive is a cornerstone of the Government’s environmental land management schemes. The hallmark of SFI in particular, and ELMS in general, is that public money should support our farmers for delivering public goods. The principles underlying that transition are supported by farmers across the country, by environmental groups and, for what it is worth, by me. The point of this debate is to issue a plea to the Minister, the Secretary of State and the Prime Minister that they start listening to farmers and acknowledge the damage they are doing to farmers, food production and our environment by the way they are managing the transition from the old scheme to the new.

The Conservative manifesto promised £2.4 billion to English farming, yet in the past year the Government spent only £2.23 billion on various schemes and, crucially, only £1.956 billion of that went into farming. The Government have, therefore, broken their promise to farmers to the tune of £444 million last year and, with the phasing out of the basic payment scheme stepping up, they are set to break their promise to farmers to an even greater degree next year.

[Sarah Dyke (Somerton and Frome) (LD)]

I congratulate my hon. Friend on securing this important debate. Recent figures show a remarkably low uptake of the sustainable farming incentive. Does my hon. Friend agree that it simply does not have enough incentive for farmers to join?

[Tim Farron]

My hon. Friend makes an excellent point; I will come to that in a little while, because I think that does explain a lot of why that underspend has happened. It is easy to see how it has happened; it is not a mystery. It is down to two things: first, the Conservative Government have been very good at phasing out the old BPS, and secondly, they have been relentlessly incompetent at bringing in the new schemes, including for the reason that my hon. Friend set out.

Department for Environment, Food and Rural Affairs figures show that around £460 million has been removed from farmers’ pockets in the form of the BPS phase-out, which eclipses the increase in environmental payments of around £155 million. Much of that has not even gone to farmers. It has instead found its way into the very deep pockets of large landowners, including new entrant corporate landowners, looking to do a bit of greenwashing at the taxpayer’s expense.

In the spring of 2021, the Government promised to spend £275 million on SFI schemes in the 2022-23 financial year. Yet, in reality, excluding the pilots, they spent literally nothing—zero pounds, zero pence. This year, the Government plan to spend just shy of £290 million on SFIs. One question for the Minister is: how much of that money will actually go to farmers in this current financial year?

--- Later in debate ---

[Tim Farron]

My hon. Friend makes a really good point, and that also happens in my constituency. Accidentally, the Government are acting in a counterproductive way when it comes to the environment.

Others at that meeting in South Westmorland near Kendal told me that they are putting off investing in capital equipment because the loss of BPS and the lack of replacement income means that they do not have the cash flow to invest in a long-overdue new dairy parlour, a covered slurry tank or other things that would increase productivity and improve environmental outcomes. The Minister will say that many grants are available to farmers to help them in that respect, and in some cases they absolutely can, but not if contractors need to be paid up front as DEFRA expects farmers to demonstrate that they have the money in the bank to do that before releasing those grants.

DEFRA’s own figures show that upland livestock farmers have lost 41% of their income during this Parliament, and that lowland livestock farmers have lost 44%. One famer near Keswick told me, tongue in cheek, that he had calculated that the fines he would receive for committing a string of pretty terrible crimes would not amount to what he lost in farm income thanks to this Government.

[Sarah Dyke]

My hon. Friend is making a very good point. Does he agree that financially aware farms help make financially secure farms, which build food security for the country?

[Tim Farron]

Absolutely. If we do not give people stability of income and certainty, how can we expect them to provide the food and the environmental gains that we need?

I challenge the Minister to come up with any industry that has been penalised as badly by the Government over the past four years as our farmers. To be fair, I do not think the Government actually intended to do so much harm to farming and farmers. I do not believe they sat down and decided to break their promise to farmers and make a net cut of more than a sixth in farm spending, but those cuts have happened all the same because of flaws built into the system either by accident or by design, which have led to predictable and ever-increasing sums of money being taken out of farming, while smaller and less predictable amounts have been introduced.

Let me set out some of the flaws, in the hope that the Minister will address them. First, the system has built-in perverse incentives, as my hon. Friend the Member for North Shropshire (Helen Morgan) said, which mean that farmers at the forefront of environmental work are penalised. Farmers who are in an existing higher level stewardship or uplands entry level stewardship scheme lose their BPS—by the end of this month, they will have lost between 35% and 50%—yet they cannot fully access SFI. In other words, farmers already doing good environmental work can only lose income from this process. That is especially so in the Lake district, the Cartmel peninsula, the dales and the Eden valley—some of our most treasured and picturesque landscapes. In upland areas, basic payments typically make up 60% of financial support. Farmers in those beautiful places, which are so essential to our heritage, our environment and our tourism economy are stuck. They are already in stewardship schemes, but their BPS is being removed and they cannot meaningfully access SFI.

The Lake district is a world heritage site. If the landscape changes dramatically for the worse in the next few years because of the Government’s failure to understand the impact of their error, that world heritage site status is at risk, and its loss would cause huge damage to our vital hospitality and tourism economy in Cumbria, which serves 20 million visitors a year and sustains 60,000 jobs.

The Government’s failure to allow farmers to stack schemes to deliver more for nature is foolish and bureaucratic, and it means that they were always going to be taking more away from farmers than they could ever give back.