Thames Water (Oxfordshire)

Part of the debate – in the House of Commons at 6:12 pm on 13 November 2008.

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Photo of Jane Kennedy Jane Kennedy Minister of State (Farming and the Environment), Department for Environment, Food and Rural Affairs 6:12, 13 November 2008

I congratulate Mr. Vaizey on securing a debate about this important issue. Despite the rain that we experienced in the summer, the drought that lasted from 2004 to 2006 is still fresh in our memories, as is the knowledge that a third dry winter after 2006 could have caused serious problems in some areas of the south-east. How we manage this precious resource to ensure a sustainable supply is important, and I am grateful for the opportunity to show what the Government are doing about the matter.

The hon. Gentleman has spoken passionately and made his case robustly. He questioned the rigour of the appraisal process. I am somewhat more constrained than I like to be in Adjournment debates because of the process that will be carried forward. I should take a moment to explain what that will be. It is for each water company to justify any proposals for reservoirs or other new water supply resources. That must be on grounds of need, taking account of economic and environmental considerations.

A fundamental element of that process is that the plans are subject to public consultation, and that was at the heart of the case for making the plans statutory. The water companies produced their draft plans earlier this year and consulted on them over the summer. That consultation period is now closed, and the companies are preparing their responses to the comments that they received about their plans. Those responses will then be published; they will show the consideration given to the comments received and whether any changes have been made to the plans.

In the case of Thames Water, more than 300 stakeholders and other interested parties responded to the public consultation with views on the draft plan. Thames Water is now preparing its statement of response to the representations that it received and has until next February in which to publish its response. At that point, my right hon. Friend the Secretary of State will determine whether to call for an inquiry or a hearing on the plans or to issue directions on changes to be made to the draft plans before publication. In deciding whether to hold a hearing or an inquiry on a water company's plan, he will consider whether they have complied with the legislation on process and content, including robust appraisal of the options to determine the proposed way forward.

I will therefore speak in general terms and will be unable to deal with some of the hon. Gentleman's specific questions, although in other circumstances I prefer in debates of this nature to respond as closely as I can. I hope that he will understand the constraints under which I am working.

We face a serious challenge when it comes to water management. Our population is growing and using more water as a result of our changing lifestyles, and we have a changing pattern of land use. That is putting more demand pressure on the water available, especially in areas where the supply of water is under stress; the hon. Gentleman says that his constituency is located in precisely such an area. Climate change, which will lead to hotter, drier summers—although I cannot remember many of those recently—and milder winters with more intense and sporadic rain will worsen the situation.

Protecting our water resources is therefore essential. In 1997, the Government set up the UK climate impacts programme to encourage private and public sector organisations to assess their vulnerability to climate change so that they can plan their own adaptation strategies. Their research is invaluable in helping us to understand and adapt to these pressures. New forecasts on the impacts of climate change are expected next year. Our new water strategy, "Future Water", sets out the Government's plans for water in the future and the practical steps that will be taken to ensure a sustainable supply of water for people and businesses. I will return to "Future Water" in a moment when I deal with the hon. Gentleman's point about consumption at 130 litres per person. The steps include measures to reduce the demand for water, as well as to improve the supply—for example, through the abstraction licensing regime or, where the case is well made, by agreeing the need for new infrastructure. The overarching message of the new strategy is the need for everyone to value water and to take responsibility for protecting this unique resource.

The Environment Agency plays a vital role in that protection. It is the statutory body with a duty to manage water resources in England and Wales, and its aim is to ensure that the management and future development of our water resources is carried out in a sustainable manner. It achieves that by regulating such activities as the abstraction of water through a licensing system, and it has also provided guidance to the water companies on drafting their water resources management plans.

Ofwat is the independent economic regulator for the water industry, and it sets water price limits. As the hon. Gentleman knows, in August, as part of the 2009 review of water prices, water companies submitted to Ofwat their draft business plans for the period 2010-2015. Those plans set out each company's initial view of what it needs to do to maintain its assets, improve services to customers and deal with its impact on the environment. As part of this review process, DEFRA has submitted to Ofwat key documents that cover how it might contribute to wider social and environmental matters. Additionally, we will look to the Environment Agency to ensure that important environmental objectives can be achieved through the plans.

Water companies themselves have statutory duties to maintain adequate supplies of wholesome water. Central to the long-term planning for water supply are the water companies' 25-year resource management plans. Those became a statutory requirement for the first time in 2007 and describe how each company aims to secure a sustainable demand-supply balance over the next 25 years. In their plans, water companies should look at the full range of options for reducing water demand, and where those are insufficient or unjustified in cost terms, they should proceed with developing sustainable new supply-side measures, which is why we are debating such proposals this afternoon.

The hon. Gentleman raised the option of effluent reuse and asked what the Government's view was on such technology. We accept that it is one of many options that water companies may consider to achieve a demand-supply balance as part of their water resources management plans. It is for Thames Water to consider the options, and to undertake a robust options appraisal. It must justify its preferred options as the most cost-effective way forward. I understand that Thames Water has received representations on how that is addressed in its draft plan, but it is for the company to respond to those representations.

The demand-side management options that water companies have to consider include leakage management—the hon. Gentleman raised that point. Controlling leakage is a vital component in the management of supply and demand for water. Since 1994, Thames Water has reduced leakage by a third, and I am grateful to him for acknowledging that. It has achieved that progress in part through its commitment to replace more than 1,500 km of mains by 2010, and the programme will continue with increased mains replacement up to 2020. It has also achieved the leakage targets set by Ofwat in each of the past two years. Those targets are set to reduce the leakage of each water company to the economic level of leakage below which it would cost more to address the leak than to produce water from an alternative source. Thames Water is on track to reduce leakage to that economic level by 2009-10.

The water saving group, of which I will be the chair, has made significant progress in the development of a programme of measures to promote water efficiency in households. That includes a project led by Waterwise, working with water companies, to update the evidence base of the cost-effectiveness of water efficiency measures. We have amended regulations to allow water companies in areas of serious water stress, including Thames Water, to consider compulsory metering as part of their water resources management plans. I welcome the hon. Gentleman's comments on that. Ofwat has also consulted on proposals for water efficiency targets for water companies and an independent review of charging will look at options for metering water supplies.

The hon. Gentleman referred to the figure of 130 litres per person per day. That is an aspiration within "Future Water", not a target that must be met. It represents our view of what could be achievable by 2030, through cost-effective measures, if all stakeholders—water companies, manufacturers, retailers, plumbers, consumers and others—acted together in a concerted way to manage demand. Water resources management plans contain a water company's view of future per capita demand based on its own assumptions and modelling.

I am unable to comment, while the statutory process is ongoing, on the contents or merits of Thames Water's plans, although the hon. Gentleman is obviously free to do so, as he has done. Water companies need to consider all these options to ensure that the most cost-effective option is chosen, so that customers' bills are not higher than they need to be. In the cases where demand management by itself does not achieve a sustainable supply-demand balance, or is not cost-effective, new or enhanced supply needs to be considered.

I am sure that the hon. Gentleman will understand that while those plans are following the statutory process, it would be inappropriate for me to prejudge any decisions that my right hon. Friend the Secretary of State might make on the evidence presented. Should Thames Water's final water resources management plan include a proposal for a reservoir near Abingdon, the water company would nevertheless still need to obtain development consent. Under the terms of the Planning Bill that is making progress through Parliament, that scheme would be a nationally significant water infrastructure project, as the hon. Gentleman acknowledged, and as such, Thames Water would need to apply to the infrastructure planning commission for development consent. However, if Thames Water sought development approval before the Planning Bill proposals reached the statute book, it could apply to the Secretary of State for a compulsory works order under section 167 of the Water Industry Act 1991 or to the local planning authority for planning permission. Again, I will not comment on the merits of any application or prejudge the outcome, because that might fetter the Secretary of State's discretion in making decisions about any proposals that come before him.

As I said to the hon. Gentleman, I would normally like to respond in greater detail to some of the questions that he rightly asked on behalf of his constituents. I know that he will continue to raise their concerns as the process develops. I undertake to draw his comments to the attention of my right hon. Friend the Secretary of State.

Question put and agreed to.

Adjourned accordingly at twenty- five minutes past Six o'clock.