Considered in Grand Committee
My Lords, I welcome the opportunity to introduce these draft regulations to your Lordships. Their purpose is to effect the transfer of private sewers and lateral drains to the statutory water and sewerage companies. Under similar arrangements, sewers constructed prior to October 1937 were, under the Public Health Act 1936, automatically adopted as public sewers and are maintained by the water and sewerage companies. However, since then adoption has been undertaken on a voluntary basis. While it was the likely intention of the 1936 Act and subsequent legislation that sewers should be adopted, for various reasons that has not happened on a universal basis. Even where adoption agreements were reached and new sewers constructed to the requisite standards, the adoption process was not always followed through.
The result is a legacy of unadopted private sewers and drains that has accumulated since 1937. Very often, the owners of these assets—typically householders—are unaware of their responsibilities and liabilities. The repair and maintenance of private sewers can be very expensive for individual householders. Where drainage arrangements are shared, it can be difficult to recover costs from those who use the sewers but are unaffected by any problems. Private sewers may run beneath a neighbour’s land or a highway, such that access is both difficult and costly.
While many private sewers function satisfactorily, the disparate ownership of these assets, which are essential to everyday life and important to public health, means that they are not always maintained in an economic and integrated way to a consistent, high standard. Many of us are aware of examples of persistent sewerage problems that require attention. In addition, there is the inequity that private sewer owners pay not only for the maintenance of their sewers but also, through their sewerage charges, for the upkeep of pre-1937 sewers, which are maintained by the water and sewerage companies. The transfer proposed in the regulations will place the owners of post-1937 private sewers on a similar footing to those with pre-1937 sewers. Successive consultations have concluded that an overnight transfer to the water and sewerage companies is the preferred approach.
Not all sewers will be transferred. Those which carry only surface water and do not discharge to a public sewer will not be transferred. The same will apply to sewerage systems that serve a single, centrally managed site or cartilage, as for example might be the case with a shopping mall or industrial estate. Systems that drain to private treatment facilities or to septic tanks and the like are also excluded.
Action is necessary to redress the failures of the 1936 Act. The objective is to ensure better maintenance of what are currently private sewers, resulting in less environmental pollution, the minimising of threats to public health, fewer complaints from householders and businesses about what is perceived to be a costly and unfair burden, and fewer disputes requiring local authority intervention. In the longer term, an integrated approach will achieve a better managed sewerage system that will have lower maintenance costs and will be more resilient and effective. The water and sewerage companies which already have a sewer maintenance capability are well placed to take this on.
The impact assessment estimates that additional costs will add to water bills an average of £5 per annum from 2011, rising to £8 per annum by 2019, with a range from £3 to £14 across the companies. While increases in charges can never be welcome, at up to a little over £1 a month, these relatively modest annual increases are to be preferred to a system in which costs fall unequally across water charge payers or unfairly on individuals. Overall, they represent a sound investment in the future maintenance of essential assets. The transfer exercise does not itself trigger major expenditure on those parts of the system that are currently working satisfactorily; it will be for the water and sewerage companies to assess and prioritise what is essential short-term maintenance, repair or replacement.
The draft regulations provide, at Regulation 3, for the Secretary of State and Welsh Ministers to make schemes for the transfer of private sewers and private lateral drains to the statutory water and sewerage undertakers. Sewers are defined as all drains that are shared. Lateral drains are those which serve a single property but lie outside the boundary of that property. Pumping stations which form part of the system will also be transferred. In order to qualify for transfer, private sewers and lateral drains must be connected to the public system on 1 July 2011. The transfer itself will take place on 1 October 2011, with the exception of pumping stations, which may be transferred individually or in groups at any time before 1 October 2016. As I have said, sewers and related equipment that carry surface water only and do not discharge to a public sewer will not be transferred. Sewers constructed after 1 October will be the subject of separate proposals for mandatory adoption arrangements that are not under consideration today, but which should be the subject of consultation shortly.
Regulation 4 makes provision for the Secretary of State and Welsh Ministers to make supplementary schemes for transfer. Private sewers and lateral drains which are connected to a public sewer between 1 July and the commencement of Section 42 of the Floods and Water Management Act 2010, currently planned for 1 October 2011, will neither qualify for transfer on 1 July nor be subject to new-build arrangements for adoption which will be effective upon commencement of Section 42. Unfortunately, it was not possible to synchronise the dates: therefore it is necessary to introduce a supplementary transfer scheme to cater for sewers connected between these dates. Supplementary transfer is planned for 1 April 2012.
Regulation 5 makes provision for certain exemptions, including for railway land which would present operational difficulties for water and sewerage companies, and for Crown land, where the arrangement is for sewers to be transferred unless relevant land is “opted out” of transfer. Regulation 6 makes provision for sewerage undertakers to make a declaration to vest private sewers by publishing notice in the London Gazette and the local press, and by sending individual notices to the owners of private sewers. Regulation 7 provides that where there are existing declarations, the provisions of the regulations shall not apply. Regulations 8 and 9 provide that outstanding appeals will be discontinued and that Section 104 adoption agreements that have been executed will cease. Where a sewer remains to be built or connected, a Section 104 agreement will remain valid. Existing legislation provides for a right of appeal to Ofwat against transfer of assets for both the owners of private sewers and third parties through whose land a drain may pass or who may be disadvantaged by the transfer.
Finally, the regulations are relatively short-lived in that they are subject to a sunset clause effective in 2016. They provide for a once-and-for-all transfer of private sewers, lateral drains and associated private pumping stations. Once the transfer is complete, by 2016 for pumping stations, the regulations will serve no further purpose and will be repealed automatically. I hope that noble Lords will accept them.
My Lords, I apologise that I was not here for the opening of the Minister’s speech. I had not been made aware that today’s running order had changed, and I worked off the business papers rather than today’s list. It is just one of those things.
I should say at the outset that we very much welcome the regulations. They reflect the work that we did in government. If you are one of those people who live on an estate with private sewers and you are impatient for them to be adopted by the sewerage undertaker, you might be asking why it has taken so long. We had a consultation in 2003, another one in 2007, a third one in August last year, and now finally we have the legislation needed for this to take effect from October this year.
Certainly some of my former constituents in Shepherd’s Croft in Portland will be delighted. They live in former prison officers’ accommodation where the Crown used to be the owner of the estate and the housing. They are responsible for the sewerage, which was never brought up to the standard at which the water company was willing to take it on. There remained a whole series of problems about who would pay, the Crown or the residents, when sewage was bubbling up in people’s gardens. I do not think any of us wants to see that. It will be a relief to them and to many others around the country that a way forward has now been found. That very much informs my fulsome support for what is being done here.
I have a couple of questions for the Minister. I have read the accompanying papers, which are very helpful and complete. Indeed, the completeness is probably the reason why I might not have grasped some of the detail. Once I got on to the latter pages, the details might have passed me by, and I can only apologise if my questions are answered in the detail. It appears that over the long term there are good net benefits to be had from making this change. My reading was that after 32 years the net benefit would start to accrue. Obviously that is welcome, but it is important to ask about the short-term costs being borne by the sewerage undertakers. If my reading of the notes is right, the costs are around £1 billion which then has to be absorbed by customers because ultimately the sewerage undertakers, the water companies, will seek to recoup those costs from their customers. The analysis shows that the cost to individual customers of recouping them would be between £3 and £14 per annum.
I am interested in finding out more about how that might break down. I know that this is difficult to anticipate, but I am sure that the department will be in communication with Ofwat about how this is going to be regulated to ensure that customers are treated fairly. For example, it will be interesting to know the difference between business customers and domestic customers. In the announcements that have been made about South West Water customers, and how their situation might be improved given the high water bills paid by domestic users in that region, there is a proposal that business customers should pay more so that domestic customers pay less. That raises a legitimate question not only for the water companies, the sewerage undertakers, but also for businesses across the country about whether they will be the ones asked to pay the bulk of the costs of dealing with the legacy of private sewerage and drainage systems. Alternatively, will they be applied evenly across domestic customers as well?
There is a also question about whether the geographic distribution of these costs will be evenly spread or whether, because of regional variation—in the case of the south-west, the large extent of the coast and the cost of sewerage treatment in that area is high—each undertaker will have effectively to wash their face. Questions will be raised with regard to South West Water in particular, which I know has been very active given the Walker report and other things. Will South West Water’s customers end up losing the benefit of the announcement made by the Chancellor in the Budget if they have to pay extra costs because of the particular liabilities in that region?
My only other question concerns the exemption in Clause 5 of the statutory instrument for private sewers and exempt private lateral drains on Crown land. This goes back to my experience as a constituency MP in Dorset, where prison officers’ houses were built on Crown Estate land and subsequently have been sold on. Where the lease to such properties has been passed on but the freehold remains in Crown ownership, will homes in those circumstances be exempt from this transfer because they are on Crown land or will the transfer go ahead, allowing them to benefit from the sewers being maintained and the possibility of the roads then being adopted as well? I know that this is a big issue for some residents. Having made those comments, I am happy to support the regulations.
My Lords, on behalf of the Liberal Democrats I, too, am very happy to support the regulations, which are long overdue and welcome. The Explanatory Memorandum suggests that up to 50 per cent of properties are connected to private sewers in one form or other—which is a very large number. Under the regulations, 220,000 kilometres of private lateral drains and sewers will become the responsibility of the water and sewerage companies. At a guess, that is five times the circumference of the earth. I do not know how far it is to the moon, but 220,000 kilometres is a long distance. Therefore, this is not a trivial measure; it is extremely important and welcome.
I share some of the concerns of the noble Lord, Lord Knight, about the impact of the costs. It is clear that they will impact mainly on property owners whose drains and sewers are already the responsibility of the water and sewerage companies under the 1936 Act. I would like a reassurance that the regulations being discussed today will solve the problem once and for all and that the problem will not start again after the regulations lapse in 2018. This must be a permanent solution. Future regulations that apply to new developments through the other Act, which we discussed before the election, will sort this out. We should not need to come back in 30 years’ time to try and solve another 30 years’ worth of problems. I think I know the answer, but it would be helpful to have that reassurance on the record.
I am not sure—clearly I have missed something or perhaps I have not understood it—what the relationship is between the lapsing of the regulations at the end of June 2018 and the date of 2016 to which the Minister referred. Perhaps he will explain that. In particular, in the years between 2011 and 2016 or 2018, what is Government’s timetable for bringing in the schemes for each of the water and sewerage companies? Will they all come in at the same time or will they differ? How long will it take? Clearly, the quicker this can be done, the better.
The other questions I want to ask are complicated but crucial. How will the new schemes apply to local properties? I have before me a plan of some properties which it would be nice to distribute to Members of the Grand Committee, but I am not allowed to do that, so I shall have to try to explain it. I apologise to the Minister for not giving him advance notice of these questions, but I have only just received this submission from an interested party.
How will property boundaries be defined? If you buy a property which is served by an adopted highway and the lateral drain of what is at the moment a private sewer goes into the adopted highway, I presume that anything under the adopted highway will be assumed not to be within the property boundary, even though the deeds of that property may state that the property owner owns that part of the adopted highway. Because it is a highway maintainable at public expense, I assume that it would not be included. Therefore, if a private lateral drain goes straight out of a property on to a public highway and then joins the public sewer—the sewer that is already vested in the sewerage undertaker, say, along the middle of the road—the section of the lateral drain which is under the highway will now be vested in the water and sewerage company, whereas the section in the front garden will not. I assume that that is fairly straightforward.
What is the position if the public highway is unadopted? A section of it is likely to belong to the property from which the drain comes out. It may well have a sewer along it which is the responsibility of the sewerage undertaker. Will sewers under unadopted highways now be the responsibility of the undertaker? I assume that they will, because they will be in the same position as private sewers which serve more than one property. What is the position in relation to the lateral drain coming out of the property? Will it still be the responsibility of the property owner until it plumbs the sewer, which may go down the centre of the road?
I hope that what I am asking is clear. I think it is, but I am looking at a plan which makes it all very clear. This is a question about unadopted public highways—not their relationship to a sewer that serves more than one property, which will now be the responsibility of the undertaker—but what happens if it is a lateral drain serving only one house? I have been involved in these things at the local level in the past, and I am afraid that it lives with me. That is my basic question, because I think I understand how the rest of it will work at the local level. Having asked these technical questions, once again I would like to say that the regulations are extremely welcome in general. A lot of people around the country will be grateful that the Government are bringing them in.
My Lords, I thank the noble Lord, Lord Knight, and my noble friend Lord Greaves for taking part in this debate and for the warm welcome they have given these regulations. I acknowledge the work of the previous Government in getting us a long way down the track towards them. The principal issues raised were as follows. The noble Lord, Lord Knight, referred to the lengthy time spent in consultation before the regulations were produced, and no one can disagree with that. One can only hope that as a result, as my noble friend asked, the regulations will indeed be effective and stand the test of time.
The noble Lord, Lord Knight, raised a question about the recovery of costs, how much they will be and who they will affect. Before he arrived for the debate, I had explained that the water and sewerage companies will obviously recover their costs through charges to customers for sewerage services. I indicated that it is estimated that transfer will add an average of £5 to £8 per annum to water bills up to 2018, in a range from £3 to £14. While increases in charges are never welcome, they will be up to or a little over £1 a month. Those are relatively modest annual increases, which is to be preferred to a system in which the costs fall unequally across water charge payers or unfairly on individuals. Overall, they represent a sound investment in the future maintenance of essential assets.
The transfer exercise does not itself trigger major expenditure on those parts of the system that are working satisfactorily, and it is for the water and sewerage companies to assess and prioritise what is essential short-term maintenance, repair or replacement. I understand that everyone will pay within the range of £3 to £14, and that there is no difference between business and domestic customers.
The noble Lord, Lord Knight, raised the issue of the south-west, which is of course particularly important. We are looking at the somewhat complex issues around affordability in the region. The particular issues regarding private sewers have not affected our thinking in this respect, and the Government are committed to supporting households facing water affordability pressures. On 5 April, we published our consultation on water affordability, including recommendations in relation to the south-west region. It invites views on options to reduce the bills of all household customers of South West Water as well as options for providing additional assistance to low-income households. As pledged in the Budget, additional assistance will be provided through public expenditure and our proposals will be set out in the water White Paper due in the autumn. The noble Lord asked about Crown leasehold land and transfer there. Leasehold arrangements in respect of Crown land will not result in exclusion from transfer.
My noble friend Lord Greaves made some important points. I certainly agree with him that this is not by any means a trivial matter. He asked whether the regulations will solve the problem once and for all. We believe them to be a permanent solution; that is the basis on which we are going into this. He also asked about conflicting dates and was quite right to do so. The correct date is 2018.
My noble friend also asked a couple of questions about boundaries. Guidance on the regulations is being prepared and is expected to be published during the summer, in time for transfer on 1 October. I take to heart his comments, which will be considered in the preparation of that guidance. It is intended that property boundaries should be at the junction with the street—the back edge of the pavement. I can also tell him that sewers under unadopted roads will be transferred.
Where points have been raised in the debate to which I have not responded, I will of course write to noble Lords. To conclude, the transfer is intended to put right the anomaly that, subsequent to the Public Health Act 1936, even where adoption agreements were reached, the adoption process was not concluded. Transfer will relieve individuals of the burden and expense of maintaining private sewers where access and cost recovery can be difficult. It will achieve a better integrated and more consistently managed sewerage system that is more resilient and better able to adapt to future challenges—for example, climate change.
With regard to costs, the relatively modest annual increases that are estimated to arise from the transfer, fairly shared among water charge payers, are, as I have said, a sound investment in the maintenance of vital assets. Transfer will remove the unfair cost subsidy whereby pre-1937 drains are maintained by statutory sewerage undertakers while the owners of post-1937 drains are obliged to contribute to this upkeep through sewerage charges but, in addition, are responsible for the upkeep of their own private sewers. It will place those with post-1937 sewers on a similar footing to those with pre-1937 sewers.
The regulations will provide the reassurance that companies will work to minimum standards of service and costs, regulated by Ofwat. Parliamentary approval of these transfer regulations will mean that transfer can go ahead as planned on 1 October. I beg to move.