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Water Industry Reform

Volume 818: debated on Tuesday 25 January 2022


Asked by

To ask Her Majesty’s Government what steps they are taking to reform the United Kingdom’s water industry.

My Lords, this Government have made improving water quality a priority and have introduced reforms to enable that. The Environment Act has modernised water resource planning, introduced new duties to reduce storm overflow discharges, and made drainage planning statutory. The draft strategic policy statement to Ofwat has set a new course so that the industry can deliver more for the environment, customers and the climate. If we do not see improvements, we will take further action.

My Lords, the Minister mentioned the Environment Act. This Act is ineffective because it has no set timetable or targets to clean up our water. There has been a stream of reports calling for action, all of which call for infrastructure investment by the water companies and for more action and less complacency from the regulator. But, after increasing dividends and company debt, most water companies are in no position to carry out the necessary investment. Indeed, one industry executive said that the water companies were spending more on maintaining their assets, which are deteriorating, rather than replacing them. Does the Minister agree that this situation is a danger to public health and risks creating our very own homegrown pandemic?

Water companies have invested £160 billion in a modernised infrastructure. I disagree with the noble Lord about the Environment Act; it sets out a very clear direction of travel for water companies and others to clean up our waterways. But I refer him to the strategic policy statement to Ofwat. It has been released in draft and will be laid before the House in the next few weeks, and it will add to it targets for improvement.

My Lords, our basement flat in Westminster has twice been flooded seriously with sewage-contaminated water as a result of the water companies opening their sluice gates at times of heavy rainfall. The cost of renovating the flat and its contents has been expensive. Going forward, surely property owners need to have renovation costs financed by the relevant water companies.

I am sorry to hear about the noble Lord’s problems. The overflows into the Thames are activated by relatively small amounts of rainfall. That is why £1.4 billion is being spent on a new super-sewer, which will deal with those sewage overflows and, I hope, limit the problems to Thames Water bill payers.

I apologise to the noble Lord. The noble Lord, Lord Jones of Cheltenham, has indicated his wish to speak virtually, and I think this might be a convenient time.

My Lords, Seven Trent and Wessex Water told Gloucestershire county councillors that they had no plans to ever stop dumping sewage, while Thames Water said it intended to stop only by 2050. None of the companies believes that the Government’s Environment Act will change their behaviour. Is this another example of how arrogance, indolence and ignorance freeze the government machine, while our rivers are polluted with raw sewage and water companies rake in the profits? Should we not freeze water bills and directors’ pay and ban dividends until the problem is stopped once and for all?

I believe the noble Lord will find that, if these water companies think that the provisions of the Environment Act and in the statutory policy statement by Ofwat mean that they will be able to carry on releasing sewage at the current level, they have a very serious other think coming.

My Lords, the Minister will be aware that the Question relates to the United Kingdom dimension. He will also be aware that water is largely devolved as far as Wales is concerned. In fact, the main provider in Wales is a not-for-profit company. In these circumstances, will he ensure that any new policy initiatives he might be contemplating will be undertaken only after full discussion with the Welsh Government to ensure that there is co-ordination, particularly along an open border, where there is responsibility on both sides by both authorities?

The noble Lord makes a very good point. Many water issues cross the border, not least the polluting of rivers on either side of the border. They require a very joined-up approach, not just between Governments but between water companies and farming interests.

My Lords, is it not the case that our rivers are an absolute disgrace and the worst in Europe? Do we not need to sack the regulator and his group, introduce new legislation and have a Government who back the regulator?

This Government and the regulator are absolutely determined to see an improvement to the situation of sewage being released into rivers. Part of that problem is releases of sewage from water companies, part of it is from farming and part of it is from point-source pollution. It requires a holistic approach. I refer the noble Lord to the statutory policy statement, which has been released in draft and will be laid before Parliament in the next few weeks. It will give him the assurance I think he requires.

My Lords, there also needs to be proper enforcement regarding water quality. The Environment Agency has seen its funding cut by 60% in recent years, reducing its capacity to carry out monitoring and enforcement activity. Prosecutions for environmental crime in England plummeted by 86% between 2000 and 2019 and the number of charges also fell by 84%. Does the Minister recognise that, if the Government truly are serious about tackling pollution in our rivers, they must fund the Environment Agency properly so that it can do the job it was set up to do?

Defra and its agencies received an extra £4.3 billion in the latest spending review in October 2021. We have made extra budget available to the Environment Agency for 50 extra inspectors to be recruited in this financial year to visit farms and other sources of water pollution to ensure that action is taken.

My Lords, what has come of the proposal for a national water grid, which seems to have been pending for a very long time?

The noble Lord raises an important point. Under the way we economically value water, it is extremely expensive to move it around the country, from areas that have a lot of rain to those that do not. That economic modelling will change very quickly if we continue to have serious droughts, and we have to remain open to moving water between water company areas in a much more joined-up way.

My Lords, will my noble friend pay tribute to Yorkshire Water, which has invested in such a grid for the region? Will he also ensure that, where appropriate, water companies and drainage authorities will be part of the catchment management system?

There is a sort of grid, which allows you to move water from Yorkshire as far down as Ipswich, using a variety of different means. Following the disastrous situation in the early 2000s, Yorkshire Water created a much more balanced infrastructure, which has worked for it and needs to be copied by others.

My Lords, this Government seem to be suffering from inaction in many departments at the moment, for various reasons. This subject has cropped up on numerous occasions in your Lordships’ House. Are the Government really serious about doing something about it, or are they simply going through the motions?

I have heard that one before. This is a very important matter for my department. I can assure the noble Lord that I and my fellow Ministers talk to each other about this on a weekly basis. A whole range of measures is being brought forward, and together these measures will continue to make a difference. What we need most of all is continued investment in the infrastructure, some of which goes back to Edwardian times and does not reflect the fact that large numbers of new houses and businesses now exist and require that infrastructure to service them.

My Lords, I declare my interests as a farmer, as set out in the register. Can the Minister please confirm that any measures to reform the UK water industry are taken after full consultation with all the interested parties in that industry? The Environment Agency’s interpretation of the 2018 farming rules for water did not do that, and as a result farming companies, water companies and microbiologists all witnessed damage to the environment, their businesses and so on. Please can there be consultation?

I entirely understand the point the noble Lord makes; that measure was brought in in a less than perfect way. But we have a problem; we have rivers that need to be cleaned up. Government tries to sit between, on the one hand, requiring business to do something and, on the other, supporting the regulator. We hope we get it right, but we do not always.