Pollution in Rivers and Regulation of Private Water Companies - Motion to Take Note

– in the House of Lords at 3:05 pm on 29 February 2024.

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Baroness Bakewell of Hardington Mandeville:

Moved by Baroness Bakewell of Hardington Mandeville

That this House takes note of (1) the state of pollution in rivers, and (2) the case for regulation of private water companies.

Photo of Baroness Bakewell of Hardington Mandeville Baroness Bakewell of Hardington Mandeville Liberal Democrat Lords Spokesperson (Environment, Food and Rural Affairs)

My Lords, the House is sadly becoming used to Questions and debates on sewage overflows, the quality of waterways and water company CEOs’ pay. I do not apologise for raising the issue again.

Water companies continue to discharge sewage into rivers, lakes and coastlines. At the same time, the Government are watering down environmental protections and allowing sewage discharges to continue until 2050. Liberal Democrats are calling for this to end much sooner in order to improve the quality of the water in our rivers, lakes and beaches. England’s sewerage companies have been allowed to get away with discharging sewage into our waterways for far too long.

In England, over the last three years, 2020 to 2023, there have been 1,760,659 overflows, lasting for 7,523,601 hours. Over the summer, beaches across the south-west were closed because of sewage pollution, impacting holidaymakers and tourists alike, while national parks, such as the Lake District, have not been spared spills. Meanwhile, over the same period, water company executives have paid themselves £73 million in remuneration, including £41.2 million in bonuses. In 2022, the then head of the Environment Agency even suggested that executives might deserve to go to prison.

The Conservatives have done nothing to stop water companies dumping sewage into our rivers. They have consistently voted against tougher action to stop sewage overflows, while the water regulator Ofwat said that only three of the 11 sewerage companies were top performers and had met their sewage overflow targets.

The Conservatives’ plan to reduce these sewage discharges is a licence to carry on as normal. Under their plan, water companies will be permitted to continue discharging sewage until 2050 and bill payers will see hikes in their bills to pay for it. The Government are even watering down environmental regulations, such as nutrient neutrality rules, which is likely to make the sewage problem even worse. Liberal Democrats are calling for an end to sewage dumping. Water executives should be banned from paying themselves bonuses until illegal sewage overflows stop on a regular basis.

The Secretary of State is proposing to block payouts to executives of firms that commit criminal acts of water pollution with effect from the financial year beginning this April. Can the Minister say how this information will be collected and monitored? What will be the criteria for preventing payouts?

The Liberal Democrats are calling for four actions. First, England’s water companies should be transformed into public-benefit companies. Secondly, Ofwat should be abolished and replaced by a new regulator which has effective powers to intervene. Thirdly, a sewage tax should be introduced to fund the clean-up of the most polluted lakes, rivers and coastlines. Fourthly, compensation should be introduced for swimmers who fall sick after swimming in dirty waters.

In Wales, things are no better. There have been 287,836 overflows, lasting for 2,290,674 hours over the last three years. The bosses of Welsh Water have been paid £3.5 million, including £841,000 in bonuses, benefits and incentives. The top executives of Wales’s other water company, Severn Trent, paid themselves £15 million, including £11.2 million in bonuses, benefits and incentives. In Wales, Welsh Water is not-for-profit and is still responsible for vast amounts of illegal sewage discharges. The Labour Government in Cardiff Bay are responsible for the regulation of Welsh Water and sewage overflows within Wales. Labour has systematically underfunded Natural Resources Wales, which is responsible for monitoring water quality, and has provided nowhere near enough oversight of Welsh Water. Liberal Democrats are also calling for a ban on sewage bonuses for directors in Wales.

Up in Scotland, illegal sewage discharge is also a problem, but its sewerage company, Scottish Water, is publicly owned by the Scottish Government. Over the last three years, Scottish Water allowed sewage overflows 37,396 times into Scottish rivers, lakes and coastal areas, lasting 403,230 hours. However, of the 3,614 overflows in Scotland’s 31,000-mile sewerage network, only 4%—that is, 144—are currently monitored. The Ferret website made a freedom of information request and, on 22 September, revealed that more than half of Scotland’s bathing waters—49 out of 87—have been contaminated with sewage. Meanwhile, Scottish Water’s top executives took home £2.9 million in remuneration, including £1.13 million in bonuses, benefits and incentives over the last three years. This is unacceptable. However, the SNP and its Green Party partners have failed to tackle sewage discharges, despite being directly responsible for them. Due to their failure to monitor, we do not even know the full extent of the problem.

Liberal Democrats are calling for an end to sewage discharges and a ban on bonuses for Scottish Water bosses until the discharges end. Scottish Liberal Democrats have also called for targets to be set to reduce discharges. Renationalisation will not be effective and would make no difference to the issue. Scottish Water is publicly owned, and we simply do not know how many illegal sewage overflows are taking place. At least in England, according to the Government, 100% of sewage overflow outlets are monitored. However, it is unclear who is doing this monitoring. Can the Minister give information on this please?

We need strong action from the Government to regulate these water companies to stop illegal sewage overflows, coupled with a truly independent water regulator, to ensure that companies are held to account with transparent reporting, plus the acceleration of measures to upgrade sewerage systems and tackle overflows.

In the 2023 round of accelerated infrastructure delivery decisions, we sadly saw a number of nature-based solution project proposals rejected by Ofwat for not being able to reach technical specifications designed for concrete engineering. Ofwat needs to wake up and ensure that it is getting a lot more for its money than just carbon-creating concrete solutions.

Government communications are also not helping. Last July, the Secretary of State sent a communication to water companies through the EA, raising concern about the affordability of environmental investments and encouraging deferral of these investments to keep water bills low. I begin to wonder why the Government spent so much time getting the Environment Act through if they were going to undermine it from the start.

I am sure the Minister will tell the House that Ofwat is independent. However, a recent article in the Guardian of 1 February indicated that water company executives and the chairs of Ofwat and the Environment Agency went for dinner at an exclusive private members’ club to discuss how to quell public anger over rising bills and sewage spills—at an estimated cost of £1,200. It does not appear to me that either the Environment Agency or Ofwat are independent of the water companies—quite the opposite. A cosy chat over dinner about how to alter public opinion, without addressing the root cause of the problem, hardly seems likely to reassure the public.

On Tuesday this week, Southern Water was fined £330,000 over a raw sewage spill at a rural beauty spot. That killed more than 2,000 fish, with staff ignoring an alarm about the emergency for five hours. The YMCA Fairthorne Manor, an outdoor activity centre popular for school trips, had to stop water activities for 10 days after the incident and cancel more than 1,000 sessions. The health implications of sewage are why Liberal Democrats have previously called for sewage sickness victims to receive compensation, and we repeat that call today. It is not right that, as water companies make large profits, swimmers get sick. If someone is poisoned by sewage, they should be compensated for it.

A recent report by Surfers Against Sewage found that the number of people who fell ill after entering water between October 2022 and September 2023 was 1,924. This is three times the number reported in the previous year. The sewage spill that Southern Water was fined for on Tuesday, and many other spills like it, show the need for an effective Environment Agency.

Defra is heavily dependent on the monitoring and intervention of the Environment Agency. However, cutting the Environment Agency’s budget from £170 million in 2009-10 to £76 million in 2019-20 is not likely to assist this hard-pressed organisation to act effectively. A general rule of life is that you get what you pay for. It is essential that the Environment Agency is provided with adequate funding to conduct inspections and take remedial action.

According to a Guardian article on 13 February, the Levelling-Up Secretary, Michael Gove, proposed an amendment to the then Levelling-up and Regeneration Bill that would strike at the directive on preventing extra sewage going into waterways in sensitive areas by either updating infrastructure or buying biodiversity credits. The Secretary of State’s action would allow developers to ignore the rules that were so strenuously fought for in this Chamber by the noble Duke, the Duke of Wellington, and others. The Government are not taking this issue seriously. There is then the issue of axing the right of developers to connect to already overloaded sewerage systems, which is not currently anywhere on the horizon.

On Tuesday afternoon, as I sat in this Chamber waiting for the next business, a message came through to my private email from Southern Water, of which I am a customer. The heading was, “Tired of hearing about storm releases? Us too”. There then followed some excellent nature-based solutions that it is prioritising. Obviously, it was trying to head off criticism. However, when I got home and watched the local television news—delayed due to the football overrun—I saw the news of Southern Water’s fine, to which I referred earlier. This sewage discharge was in the next village to where I live. The worst aspect of this is that it took from 2019 until this week to come to court and be dealt with. No wonder water companies include the cost of possible fines in their business plans. To them, it appears to be all part of their operation.

The country cannot wait any longer. The countryside and our waterways are submerged by pollution. A radical overhaul is needed of the way in which water and sewage companies operate, and a more accountable replacement Ofwat needs to be delivered without delay. I beg to move.

Photo of Baroness McIntosh of Pickering Baroness McIntosh of Pickering Conservative 3:19, 29 February 2024

My Lords, I declare my interests as set out in the register. I co-chair the All-Party Parliamentary Group on Water, and last year I chaired a study organised by the Chartered Institution of Water and Environmental Management into bioresources strategy. I also worked with the water regulator for Scotland, the Water Industry Commission, between 2015 and 2018.

At the outset, I congratulate the noble Baroness, Lady Bakewell, on securing this timely debate on river pollution and the case for the regulation of private water companies. I, for one, recognise that privatisation has permitted the massive investment required to move UK water from being one of the dirtiest in Europe to upgrading our drinking water, rivers and bathing waters to infinitely better quality than they were in the 1980s. We can always improve regulation, although some might say that there is already a wealth of regulators for private water companies: Ofwat, the Environment Agency, the Drinking Water Inspectorate, and now the Office for Environmental Protection.

Let us examine the causes of the pollution of our rivers. A recent phenomenon has been surface water flooding, which was first recognised in 2007, with run-off from our roads spilling into combined sewers. Does my noble friend the Minister, whom I welcome to his place today, think it right that national highway authorities are not held accountable for surface water run-off? There is also the case of inappropriate developments, whereby water companies are required to connect wastewater—sewage—to antiquated infrastructure, causing further spills when mixed with flood water entering the combined sewers.

Photo of Baroness McIntosh of Pickering Baroness McIntosh of Pickering Conservative

We are on a timer, so I will take advice on whether we are permitted to take interventions. Does the Clock stop if I take an intervention?

Photo of Baroness McIntosh of Pickering Baroness McIntosh of Pickering Conservative

I am afraid that I cannot give way.

Large-scale developments built in inappropriate places, such as zone B flood plains, compound that with poor connections. We must tackle the problems of sewage at source, before it enters the rivers and sea. While the Government make the case for building on flood plains in certain circumstances, that should not be encouraged. In any event, such homes will not be insured under the Flood Re scheme if built after 2009.

I will also raise the vexed issue of misconnections. The Government made two commitments under the storm overflows discharge reduction plan that could help to address the issue: to give water companies the right to repair defective drains on private property, and to give water companies the right to alter drainage systems on private property to reduce impermeable areas connected to the combined sewer network. An important part of tackling misconnections is getting to the drains on private land, so that water companies can take action, as the majority of misconnections are on private land. Will the Government also allow water companies access to government-owned land, such as hospitals and schools, to make the necessary repair work and to repair drainage separation work where required? That measure alone would prevent excess water entering combined sewers.

Having examined the causes of pollution in our rivers, is there a case for further regulation of private water companies? Water companies have a positive role to play in areas such as creating natural flood defences—as the noble Baroness, Lady Bakewell, pointed out—particularly by working with farmers and others. I pay tribute to the work of Yorkshire Water and United Utilities in that area. Defra should encourage other private sector players to contribute to that. What plans does my noble friend the Minister and his department have to do so? The Slowing the Flow scheme in Pickering, with which I was associated, is a good example of a natural flood defence combined with a small reservoir—not an overengineered project, such as those to which the noble Baroness, Lady Bakewell, objected—although all those involved were from the public sector. I urge the Government to lever more private sector funding into that. If we are to follow through with linking renumeration to performance, I invite my noble friend the Minister and his department to look at the corollary of that by giving water companies the tools to do the job.

The Government promised in this place and the other place that Schedule 3 to the Flood and Water Management Act 2010 will be implemented as it has been in Wales. Will my noble friend confirm that this will happen in England before the election? It is extremely important that we stop the automatic right to connect, whereby water companies are expected to connect pipes from three, four or five-bedroomed homes to antiquated Victorian pipes that simply cannot take the amount of wastewater and sewage coming out of these new builds. The Government must insist on mandatory SUDS—sustainable drainage systems—for all new builds. I hope they will also commit to an ambitious programme of retrofitting to existing developments, where appropriate. Obviously, that raises the question of who will maintain the SUDS, which is an open question at the moment.

Will the Government look favourably on rewarding farmers for storing water on flood land? According to the NFU, over half the most fertile farmland in Britain is on flood plains. The farming community and landowners are performing a public good by preventing communities downstream from flooding. However, there is great uncertainty as to how farmers can benefit from public funds. Often this flooding will include sewage. Can my noble friend clarify who will be eligible to apply for both the flood recovery framework and the farming recovery fund, and what level of damages can be recovered? Equally, will Defra recognise that the role farmers play in storing floodwater is a public good? Will the Government look positively at a whole-catchment area approach, and more slow-the-flow schemes such as those successfully implemented in Pickering and elsewhere protecting downstream communities from flooding?

I applaud the action that the Government have taken on holding directors to account, particularly the instruction they have given to Ofwat and the work Ofwat has done on executive pay. Ofwat has been very clear that companies need to demonstrate that performance-related executive remuneration is linked to performance for customers and the environment. In June last year, Ofwat confirmed that where companies do not demonstrate that executive pay is linked to performance, it will stop companies recovering the cost of bonuses from consumers.

I welcome the level of investment announced in the five-year business plan that Ofwat has yet to approve. It will factor in £96 billion in the next investment period 2025 to 2030, of which £11 billion will be allocated to reduce overflow spills. The noble Baroness, Lady Bakewell, identified an area which has only been recognised for spend—innovation—since 2014. I hope that Ofwat will go much further, recognising the natural flood defences to which the noble Baroness referred as innovative projects under the spending review. I think this will help many of the issues the noble Baroness identified. We do not want overengineered projects, we want natural flood defences—and these schemes have to be approved as part of the price review.

Finally, the NAO report in November 2023 made a number of very apt recommendations to increase resilience to future flood events, such as reprofiling capital spend, maximising long-term value for money and ensuring flexibility to switch money from capital spend to asset management. My preference is to establish a single budget for all flood spending.

Finally, will my noble friend look favourably on the use of SUDS and natural defences to ensure no overspill of raw sewage into combined sewers, so that it will not enter the rivers. Will he look favourably at a whole-catchment area management approach, to make highways authorities responsible for water run-off of pollution from these surfaces into combined sewers? Will he address the issue of missed connections and permit water companies to enter private land and government property in schools and hospitals? Will he look at giving water companies the right to alter drainage systems, consider the recommendation from CIWEM for a comprehensive independent review of water management, inform the public of the importance of water efficiency and address all the recommendations of the NAO report of November last year?

Photo of Lord Sikka Lord Sikka Labour 3:29, 29 February 2024

My Lords, I thank the noble Baroness, Lady Bakewell of Hardington Mandeville, for securing this debate and congratulate her on setting out the issues in her superb speech. I will concentrate on regulatory issues.

The key principles of effective regulation are that the regulator must be independent, must levy effective sanctions, must be publicly accountable and must empower stakeholders to curb abuses. Water and sewerage regulators fail these key tests. In any system of regulation, capture of the regulators by the regulated is a recurring problem. However, this is the starting position in the water industry. Two-thirds of England’s biggest water companies employ key executives who previously worked at Ofwat. Water company directors and the chairs of Ofwat and the Environment Agency regularly meet at exclusive clubs to discuss how to quell public anger over bill rises and sewage dumping. The cost of these lavish lunches and dinners is passed to customers, but no agenda papers or minutes of such meetings are made publicly available. We all know that secrecy breeds corruption and the water industry is full of that.

The revolving doors deepen cognitive capture and the cosiness is all too evident. Water companies have an operating profit margin of 35%, even though they have no competition. Water bills have risen by 363% since privatisation, and over 40% in real terms. Up to 28% of customer charges cover the interest paid on debt, which would not be necessary if Ofwat had been vigilant and curbed high leverage at water companies. It has completely failed to protect customers.

In the debate on 22 February, I drew attention to the number of times some water companies have been sanctioned since 2010. I gave the example of United Utilities, which has been sanctioned 215 times. In reply, the Minister seemed to regard that as a sign of success. Imagine an offender hauled in front of the same judge every three weeks for identical offences and given a puny fine, only to reoffend again. Nobody would consider that to be a regulatory success—but the Minister thought it was somehow a success story. I hope he will explain why the Government consider repeat offences by the water companies to be a success—that was just an easy question for him.

Despite the repeat offences, bonuses continue to flow. Again last week, in response to my suggestion that customers should elect water company directors and vote on executive pay, the Minister said:

“Remuneration committees for each water company independently determine the appropriate level of remuneration for their water company executives”.

This is simply not true. First, remuneration committees are staffed by non-executive directors who owe their position to favours from the executive board. They have absolutely no independence from the executive board and they very rarely bite the hand that feeds them. None is a substitute for direct representation of customers on company boards.

Secondly, the Minister added:

“Ofwat expects water companies to take into account the legitimate concerns of stakeholders when making decisions on the application of remuneration policies”.—[Official Report, 22/2/24; cols. 758-9.]

Every opinion poll has shown that people are concerned about high bills, pollution, lack of investment and poor regulation. Relying on failed structures and practices cannot give us effective regulation, yet the Minister was defending them, for some reason. Maybe he has had second thoughts since; I do not know.

In the debate on 22 February, the Minister defended water companies with the claim that, since privatisation, £215 billion has been invested in infrastructure. I do not have any confidence in that number because it has been manufactured by dubious accounting practices. I will give two examples, both relating to the accounts for 2022-23 published by Thames Water.

First, on page 134 of those accounts, the company states that it

“capitalises expenditure relating to water and wastewater infrastructure where such expenditure enhances assets or increases the capacity of the network. Maintenance expenditure is taken to the income statement in the period in which it is incurred. Differentiating between enhancement and maintenance works is subjective”.

What does that mean? It means that the amounts that are capitalised to show higher investment cannot be independently corroborated. It just depends on the whims of the directors; there is absolutely no solidity to it. Will the Minister write to the House after this debate and say how much of the repair and maintenance costs have been capitalised since privatisation by water companies so that we can remove it from the £215 billion?

Secondly, on page 143 of Thames Water’s annual accounts, it states that

“£215.2 million of borrowing costs were capitalised in the period” and gives a comparison of £114.8 million for 2022. So, the investment made by Thames Water in those two years alone has been inflated by £330 million. The crazy logic of this policy is that, when a company mends leaks by borrowing money compared to one that uses retained earnings, it is somehow investing more and its assets are worth more. That simply is not true. We know a company that used such imprudent policies: Carillion. I have a slight declaration to make here in that I was an adviser to the Work and Pensions Committee for that investigation—and we know what happened to Carillion. This is where water companies are heading with the full blessing of the Government, Ofwat and all the other regulators. Again, I ask the Minister to write to the House and explain both how much interest has been capitalised by water companies since privatisation and what the consequences of such practices are. Are those companies going to go the same way as Carillion? I fear they are; Ofwat certainly has no financial nous to check these things.

After 35 years of failure, we can all see that the current regulatory structures are highly deficient. We cannot have that; we need to change it. Ofwat and the Environment Agency need to be replaced by bodies that are pluralistic, with direct representation of stakeholders on their boards. The regulators and the regulated do not need to have a hostile relationship but there must be distance between them. They cannot be in each other’s pockets or cosy. Regulators must owe a duty of care to stakeholders so that they can be sued for failing the public; that is virtually impossible at the moment. All significant board meetings must be in the open so that we can all see how appropriate evidence submitted to regulators is weighted, filtered or acted on. At the moment, there is complete secrecy. All board minutes, working and agenda papers need to be publicly available. If the Minister possibly feels uncomfortable with those suggestions, it would be helpful to know why he is afraid of openness and democracy. Why is he afraid of empowering stakeholders and the public at large? We need to bring public pressure upon the water industry and its regulators so that they clean up their act.

Photo of Baroness Jones of Moulsecoomb Baroness Jones of Moulsecoomb Green 3:38, 29 February 2024

My Lords, it is such a pleasure to follow the noble Lord, Lord Sikka, who really does his homework. I advocate to the Government Benches reading his speech in Hansard just to make sure that they have got the full picture.

I congratulate the noble Baroness, Lady Bakewell, on bringing this topic up again. When I was thinking about what to say, I wondered whether I should just print off my speeches from six months, a year or two years ago. We have debated this issue a lot; there is strength of feeling here. The Minister might stand up and say, in his innocence, “But we’re doing more than any other Government have ever done on this issue”. That may be true but, unfortunately, the situation has got worse and the Government are not doing enough.

We have had some really good briefings on this issue. The Rivers Trust produced a very good report saying things such as this:

“No single stretch of river in England or Northern Ireland is in good overall health”.

That is shameful. It also said that 85% of river stretches in England have failed to reach good ecological health, and that toxic chemicals pollute every stretch of English rivers. What a legacy this Government have left us. This will come up on doorsteps—I am going to make sure that it does if I have anything to do with it—and the Government will be shamed.

We also had a very good briefing from Sustain. It made the point that the main cause of river pollution is livestock farming—that of chickens and other animals. This is perfectly true but it does not mean that sewage will not be important; somehow, the general public have heard the word “sewage” and will ask questions about it.

We had a briefing from Windrush Against Sewage Pollution. It talks about the inadequate monitoring and the fact that there simply is not enough data to know the full picture. This is something that the Government have not taken seriously. The Freshwater Future briefing called for the regulation of private water companies.

Clearly, we are all tired of talking about this and of the Government replying in platitudes, saying how it is going to be fine and that they have done everything anyone could possibly do. They have not. I think that even the two noble Lords on the Front Bench know that water regulation has failed; I would be very disappointed if they did not know that basic fact.

I have all sorts of facts and figures here but, quite honestly, I will have to cut those bits out of my speech because the noble Lord, Lord Sikka, has used them all. It is time that all politicians of all political parties question and reject the ideological belief in water privatisation; it has failed. Once you are free of that ideological straitjacket, when the water companies say, “We’ll go bankrupt if you don’t let us raise the average water bill by £150 a year”, you can say, “No problem. We can take you over; that is fine. You failed. We’ll buy you for 50 pence”, or whatever.

The water companies had the public money to invest but, instead, they paid it out in dividends. Either they can do what they were paid to do already or they can go bankrupt. As I say, we can buy them. An even better solution has been put forward by the charity We Own It, which suggests that, instead of the stupid, paltry fines that the water companies keep getting thrown at them—they pay them quite happily because they just do not care; it is not much money—we could take shares from them every time. We could be quite strict and tough about it, then we would have them in no time.

The water companies are saying that they need the predicted £150-a-year rise in bills with which they are insulting us at the moment in order to invest over the next 27 years. However, the £57 billion that the Government are offering is the same amount of money that those water companies have paid to shareholders in the previous 27 years. Where is the guarantee that any money we give to these water companies will actually be spent on the things we care about? I would argue that we have absolutely no guarantee.

Of course, Ofwat has failed and the Environment Agency has failed. I feel very sad about that. Instead of our regulators acting years ago to clamp down on CEO bonuses and shareholder dividends, they are still going to private dinner clubs with the water industry to discuss how to quell the public anger at sewage and rising bills. As I said, there will be anger over this at the next general election. The cost of living will be the major concern but sewage will come up.

I have had quite a lot of people saying to me, “Oh, we should just take all these CEOs and top execs to court, throw them in jail and forget about them, basically”. I am not a big fan of putting people in prison. What we should do with all these top execs is give them community service. They should be out there on the riverbanks and the beaches clearing up the mess that they have made. A couple of years of doing that and possibly other CEOs would learn that you cannot carry on polluting our natural resources in that way.

I will cut huge chunks of my speech out now, which I am sure everybody will be very happy about. Local campaigners in West Oxfordshire have worked with the district council to ensure that planning applications have conditions set for Thames Water to upgrade illegal sewerage systems before accepting the occupancy of new housing. The effectiveness of the conditions is being tested, with the first examples under way. The Environment Agency has been prodded into action, and on one application of 1,450 houses north of Oxford it said clearly that the Oxford sewage works is operating illegally and has failed to upgrade, despite the water company having had the money years ago.

I do not want there to be a shortage of housing. I do not want us to stop building new housing; I want to stop our polluting some very precious ecosystems. The same rule that I have just talked about would apply to any new housing served by the Oxford sewage works and every other illegally operating sewage works in the country. It will stop a new deluge of sewage being dumped into local rivers due to overloaded systems.

How many sewage works around the country are currently operating illegally and do not have the capacity to handle the existing levels of sewage? This is a very important question. If we do not have the data on that, we really ought to. Perhaps the Minister can write to me and to everybody about that, because it is a crucial question. You cannot fix a problem if you do not know what it is and how big it is.

Lastly, can the Minister explain how water companies that are blocking new housing from being occupied and have never invested the money given to them to produce a modern sewerage system can now be expected to do so? We have let the water companies run rampant over our very precious land, rivers, waterways and all sorts of ecosystems. It is time we stopped them.

Photo of Earl Russell Earl Russell Liberal Democrat Lords Spokesperson (Energy and Climate Change) 3:47, 29 February 2024

My Lords, it is a pleasure to speak in this debate. I thank my noble friend Lady Bakewell and all those who are speaking. I will talk about the scale of the pollution problem in our rivers and the causes, and will suggest some possible solutions.

The scale of the Government’s overall environmental ambitions is to be commended. This is the first Government to have set a target to leave nature in a better place than they found it, but there is much to do and time is short. My overall message is that more must be urgently done at scale and at pace to meet the targets that the Government have set themselves. Clear plans, clear policy direction, clear timescales for action, monitoring regimes, and a clear and consistent direction of travel and political messaging are all vital to secure the planning, investment and action needed to achieve these objectives at scale and on time.

Water quality was awful but, thanks mainly to EU measures and their enforcement and monitoring, it improved in the past. Progress is either slipping back or stagnant at best. Nowhere is the scale of the challenge clearer than the daily scandal of raw sewage being discharged into our waterways unabated while water company bosses continue to pay themselves millions in bonuses with seeming impunity from the harm their companies do. Our rivers and inland waterways are in a desperately sorry state. The combined impacts of sewage discharges and pollution from farming and agriculture, chemicals, road networks and urban spaces are taking their toll.

The recently published Rivers Trust State of Our Rivers Report found that, of our rivers:

“0% are in good overall status … 0% are in high overall status … 23% are classed as in poor or bad overall status … 85% of river stretches fall below good ecological standards; only 15% achieve good or above ecological health status”.

The report found that very little had changed or improved since the last full report in 2019. Worryingly, river sampling has also decreased, with nearly 6% fewer river stretches receiving health clarifications compared with 2019.

What a sorry situation this is. From Pooh-sticks to the simple pleasures in life of sitting by a cooling river on a warm day, and for the 7.5 million people who regularly wild swim, our rivers and lakes are precious and life affirming. As the noble Baroness, Lady Jones, said, people care passionately about our rivers, which occupy a deep and sacred place in our natural soul and well-being. Their health is an election-defining issue that this Government need to invest more commitment and energy into.

The Government should be aware that there is a reason for the Liberal Democrats going on—and, at times, on—about sewage in our rivers. It is not just because my party cares about these issues but because we know that the Government’s voters care just as much. My party is committed to protecting our natural environment. That protection will be at the heart of our overall policy approach. Everyone should be able to enjoy access to nature, free of this mess and its risk to their health.

The water companies have failed to invest in water infrastructure, especially at a time when interest rates were historically low. In 2011, for example, Defra’s Water for Life paper found that only 1% of public sewers were replaced between 2000 and 2008. At that continued rate, it would take 800 years, or 10 times longer than a life cycle, to replace them all. This lack of investment has continued until today, with Ofwat finding a £587 million water company underspend for the years 2020 to 2023. At the same time, the shareholders continue to receive record bonuses. Poor regulation and enforcement across several sectors are making things worse. The Environment Agency saw its environmental budget more than halve in 10 years, from £170 million to £76 million in 2019-20.

As a result, it is struggling to monitor and enforce the rules. Ofwat has similarly failed to hold water companies to account. It has prioritised low bills for customers over the need for investment in networks and environmental protections. We have seen a revolving door between Ofwat and the water companies. The question remains: who regulates the regulators? We need clear and enforceable statutory regulations for long-term improvements in overall water health to be added to the Environment Act 2021.

Sewage may be in the public consciousness—and, in too many cases, people’s nostrils—but it is only a small part of the overall pollution problem. Land management practices must change. This is an issue that the Government have failed to tackle. ELMS has been rushed. Too much money is given to big agricultural businesses. Our small farmers are excluded and are suffering. Many more small-scale farmers must be brought into the scheme, and more help must be provided for them to make applications. The programme must adequately compensate farmers for the nature-friendly practices that we all need and depend on. There is far too little monitoring of our waterways and far too little understanding of the dangerous cocktail of chemicals, and for ever chemicals, that are still present. When do the Government plan to bring forward their chemicals strategy, a key call of the recent OEP report?

The impacts of climate change are real and are happening now. The average UK winter has become around 1 degree warmer and 15% wetter over the past century. We are seeing more rain and it must go somewhere. We must work to separate rainwater from our sewerage systems. Climate change puts increased pressure on the systems and overwhelms them. Heat will increase pressure for water abstraction, and floods bring increased risks of pollution events. I warmly welcome the £25 million of government money that was announced last week to work with nature, not against it, to help with flood management. It is a welcome sign of a change of direction, but we could have had £250 million and that still would not have been enough.

We need more whole-catchment-area, nature-based approaches to slow water, hold and release it slowly to protect soils, and to filter rainwater prior to it entering our waterways. We must do more to work with nature, not against it, in an age of extreme weather. We need long-term plans and greater ambitions from this Government. Ambition must be accompanied by consistent political will, determined action, adequate investment and regulatory regimes that are statutory, well-funded, enforced and fit for purpose.

My party is clear: we are determined and committed to real change in these areas. We will transform the private water companies into public benefit companies. Our view is that Ofwat has failed to get to grips with the problems and define solutions, so our policy is to abolish Ofwat and replace it with a more effective regulator with more powers to directly intervene with speed and much-needed enforcement teeth. We will ensure that there is more adequate funding for regular monitoring of all our waterways. The Liberal Democrats are also committed to introducing a sewage tax on water company profits to fund the clean-up of the most polluted inland waterways and our coastline. We will also introduce compensation for swimmers, and others, who fall sick after exercising in water. These are our policies for change. I kindly ask the Minister: what plans do the Government have to offer?

Photo of Baroness Pinnock Baroness Pinnock Liberal Democrat Lords Spokesperson (Levelling Up, Communities and Local Government) 3:56, 29 February 2024

My Lords, I thank my noble friend Lady Bakewell of Hardington Mandeville for tabling this very important topic for debate. She has described the consequences for our rivers of discharging raw sewage from storm overflows; the health problems that follow can be very serious, but I will start with some history.

Nearly 170 years ago, sewage was discharged into the rivers that served our great cities. In London, it was the Thames, and one hot summer in 1858 the smell that resulted from the raw effluent was dubbed the Great Stink. It affected Parliament to such an extent that the curtains were soaked in chloride of lime in a vain attempt to reduce the overpowering smell. The failure to deal with a long-running discharge of raw sewage into the Thames had literally got up the noses of MPs and Peers; something had to be done, of course, and it was.

The great Joseph Bazalgette was a civil engineer who then set to work and created the sewage system for central London, including for Parliament. Standards for sewage systems for the whole country followed in 1875, when a Conservative Prime Minister, Benjamin Disraeli, overcame the laissez-faire attitude of his party and passed the Public Health Act, which required local authorities to create or repair sewers at significant cost to ratepayers. It is salutary to think that, over 150 years later, that investment in the sewerage infrastructure has been so neglected that, today, communities across the country face a modern equivalent of the Great Stink.

In Yorkshire, where I am happy to live, the rivers create a beautiful environment, as well as providing water for habitats and a focus for recreation but also water abstraction for domestic consumption. Sadly, too often, these great rivers are also used to carry sewage from storm overflows. I hasten to add that, despite all else that pollutes our rivers, the water companies and the Drinking Water Inspectorate ensure a very high quality of drinking water.

These are some of the more recent incidents. Over 2020 and 2021, two Yorkshire rivers, the River Nidd and the River Wharfe, received almost approximately 1.4 billion litres of untreated wastewater—for “wastewater”, read “raw sewage”. The River Nidd saw 870 sewage dump incidents in 2022, according to Environment Agency figures. Testing of water pollution in the River Nidd at the time showed that the harmful bacteria E. coli was at “concerningly high” levels.

In 2016, the Environment Agency received a report of pollution in Hookstone Beck in Harrogate. Investigating officers traced it to the nearby overflow, which had blocked. The investigation found that almost 1,500 fish had been killed and that water quality was affected for 2.5 kilometres downstream. A series of further blockages and discharges took place in the following months.

These are just some of the pollution incidents relating to the discharging of raw sewage in our great Yorkshire rivers. The question for the Minister is this: why have these pollution incidents been permitted without earlier intervention by the regulators and the Government?

The EU water framework directive has been retained by the Government as retained EU law. Prior to 2019, the water framework directive was a key driver to very significant capital investment by water companies in their wastewater treatment works and sewage systems. In Yorkshire, there were some very large schemes to improve wastewater treatment facilities and the system attached to them. The Environmental Improvement Plan 2023 only requires

“water companies to have eliminated all adverse ecological impact from sewage discharges at all sensitive sites by 2035, and at all other overflows by 2050”.

The Government are apparently satisfied that raw sewage discharges can continue for a further 25 years. What is worse is that these aims in the plan are not even legally binding.

Further, the Government’s Storm Overflows Discharge Reduction Plan of 2022 set a target for 75% of overflows close to high-priority sites such as SSSIs and so on by 2035. This is a considerable dilution of the water framework directive, which set a date to restore all surface water bodies—rivers, streams et cetera—to good ecological status by December 2027. Yet the Government are apparently okaying 2035 for the most sensitive areas.

One hundred and fifty years ago, a Government were able to accept, first, that they had a responsibility and, secondly, that taking responsibility meant having a duty to act. The situation we suffer today is that Conservative Governments have been keen to outsource these critical responsibilities of providing clean drinking water and treating sewage so that the end-result can be discharged to rivers or the sea without causing pollution.

It is time for the Government to appreciate that discharging raw sewage into watercourses is not acceptable. It is a public health scandal. But, of course, public health is underfunded, as is the Environment Agency, to tackle these health challenges. Disraeli understood that his Government would be judged by the approach to public health. That same challenge exists today, and we are yet to see the Conservative Government rising effectively and with determination to that challenge.

Photo of The Duke of Wellington The Duke of Wellington Crossbench 4:05, 29 February 2024

My Lords, I declare my agricultural interests, which may be relevant to this debate. I also congratulate the noble Baroness, Lady Bakewell, on securing this debate. I am slightly saddened to hear, from various sides, party-political views on this matter. In my opinion, this is not a party political issue. I think that all parties in this House, and those with no party affiliation, share a determination to try to do something about this serious situation.

There is no doubt that pollution in our rivers affects the whole population, and there is wide public support for legislation to clean up our rivers and beaches. Unfortunately, despite many improvements made by this House to the Environment Act 2021, and despite various plans and intentions published by the Department for Environment, Food and Rural Affairs, the Environment Agency and Ofwat, the situation does not appear to be improving.

The Office for Environmental Protection—a new agency created by the Environment Act—stated in its recent annual report:

“The current state of the water environment is not satisfactory. Despite historic improvements, the pace of change has now stalled.”

It is well known, and a number of noble Lords have mentioned it, that only a small proportion of our rivers are in a good ecological state. In a report by the Rivers Trust, published earlier this week and referred to by several noble Lords, this country’s rivers are described as being in a

“desperate state … plagued by sewage, chemical, nutrient and plastic pollution”.

What can be done to encourage an improvement in our rivers? As the Office for Environmental Protection clearly states in its report, the Government’s ambitions can be achieved only with

“effective management of the farmed landscape and engagement with the nation’s farmers and landowners”.

Unfortunately, the rollout of the environmental land management schemes has been slow, and this will have impeded the reduction in the pollution in our rivers coming from agricultural activities. We have been slow in dealing with the slurry from intensive farming systems located in certain river catchment areas.

However, the inexcusable cause of river pollution is the continuing discharge of raw and untreated sewage. This has been happening for decades, and planning authorities throughout the country have been insufficiently insistent on improvements to sewage treatment plants to cope with new housing developments and so many house improvements. The various parts of central and local government have been insensitive to the scale of sewage pollution entering rivers and lakes. With hindsight, I think it is now clear that the regulatory structure created when the water companies were privatised over 30 years ago has been shown to be inadequate.

In the short term, it will be necessary to enforce to a greater extent compliance with new regulations for slurry management and the control of other farm waste. For the water companies, it will probably be necessary for Ofwat to insist on an even greater level of investment in sewage treatments—including, where possible, nature-based systems. I know that many ambitious investment plans have been announced, but I fear they are not adequate for the dire situation in which we find ourselves. I also fear—and it is uncomfortable to say this—that all this may involve increases in water charges greater than the rate of inflation. This must be coupled with a reduction or elimination of dividends until the discharges have been reduced to a minimum.

In the medium term, we must review the structure of regulation. I realise that this would be complex and that the transition could be disruptive. As the Minister and all the party spokesmen are here participating in this debate, I ask them to discuss with their respective colleagues whether all parties should include in their manifestos at the next election a commitment to an independent review of the structure of the regulation of the water industry. Such a review might well conclude, as I have, that it is necessary to have a single regulator, rather than the continuing splitting of responsibilities between the Water Services Regulation Authority—Ofwat—and the Environment Agency. The water companies are, of course, monopolies in their own geographic areas, and must therefore be regulated. I cannot think of other monopolies where the regulation is divided between two different agencies.

I do not suggest that it would not be complicated, and have other consequences, to change the manner in which water companies are regulated and held to account, and any change would not have an immediate effect. But the present system of regulation has meant that it has taken us decades to realise the full extent of the pollution damage, while the industry has become increasingly indebted and yet has paid out regularly dividends to shareholders, who in many cases are not the public shareholders who originally bought shares from the Government but private equity firms that may not share the same environmental objectives as the Government or the public. Some noble Lords have mentioned bonuses. I agree that it is rather shocking how much has been paid out in bonuses to companies which have been polluting regularly our rivers.

I realise that there is no quick fix for the current state of our rivers, lakes and beaches. But we must continue to keep pressure on the Government, local authorities and the regulators to reduce the discharges of sewage and the agricultural waste entering our river systems. A greater sense of urgency is now required.

Photo of Baroness Harris of Richmond Baroness Harris of Richmond Liberal Democrat 4:13, 29 February 2024

My Lords, I too thank my noble friend Lady Bakewell of Hardington Mandeville for her excellent speech and for securing this important debate. It follows on from the one held in the Chamber on “Water and Sewage Companies: Directors’ Remuneration” on 22 February. I urge your Lordships to read that debate closely.

I will talk about my local river, the River Swale, said to be the fastest-flowing river in England. It is supposed to be watched over by Yorkshire Water. This company was privatised in 1989, at which time it had no debt; that debt is now £6.1 billion. It wants to increase our water bills by 6%. I will speak more about it later. I am indebted to a number of individuals and organisations who have helped me with my research, among them the Save our Swale group, the Rivers Trust’s State of Our Rivers report, the Sustain alliance, Daniel Callaghan, and the Local Government Association, to name but a few.

In Richmond, we are fighting back. In July 2023, the Save Our Swale group was founded by a local resident, Deborah Meara. She held a meeting in our town hall, which was attended by more than 100 people. Microbiologist Keith Thomas addressed the audience, as did Ron Wood from a local angling society; there was also a representative from the Rivers Trust. The meeting was told that the sewage treatment works on the Swale at Richmond had discharged untreated sewage into the river for a total of 1,113,013 hours; that the number of releases was 371; and that the average time per release was 3.8 hours. This was during 2022, which, as your Lordships will recall, was a drought year. Indeed, the standard precipitation index between March and August that year stated that the Swale was severely dry. Dry dumping is illegal.

The Save Our Swale group is applying for designated bathing water status—DBWS—as this is its only way, if it is successful, of forcing the Environment Agency to test the Swale’s water quality regularly. This is not a simple task, especially as Defra has recently changed the criteria yet again to make ultimate success less likely. The application will go in at the end of this year and the end of the bathing water season. A mass of volunteers, a number of whom are scientists—here I must declare an interest as my husband is one of them—will be doing the Environment Agency’s job for it by testing the water quality at various points along the Swale.

This monitoring has been going on at seven sites along the river on a monthly basis since September 2023. The volunteers have found unexpected and as yet unexplained spikes in phosphate levels above what are regarded as safe levels. It is clear that the River Swale is polluted yet neither the Environment Agency, Ofwat or Yorkshire Water appears to be doing much about it. Since the Environment Agency began criminal investigations into non-compliance by water companies back in 2021, we, the public, are no nearer to understanding just what is going on. Can the Minister advise me? Ofwat has also indicated that it has enforcement cases against six water companies, including Yorkshire Water, but those still have not been made public. Perhaps the Minister can tell us what is happening and when we might see some transparency.

Before we left the European Union, we were signed up to the water framework directive. This required member states to have good chemical and ecological status in their waterways by 2027. We were promised huge improvements to our way of life by leaving the EU, so can the Minister tell me where we are on those timescales? Can he also help me on what the Government mean by saying that there is an exemption on this timescale until 2063? The Liberal Democrats put down an amendment to the Environment Bill that would have placed a legal duty on water companies to make improvements. We are also calling for a sewage tax, as we have heard. I quote my noble friend Lady Bakewell:

“This would be a 16% tax on pre-tax profits, providing a £340 million fund to clear up the rivers that have been damaged and to fix the sewerage system”.—[Official Report, 22/2/24; col. 754.]

That may be one solution to this burgeoning problem. We should transform England’s water companies into public benefit companies, abolish Ofwat and put in its place a new regulator with proper teeth to tackle sewage dumping, as we have also heard. I am yet to see where the many improvements the Government say they are making are being demonstrated.

On 22 February, the Minister said:

The Environment Agency and Ofwat have recently launched the largest ever criminal and civil investigations into water companies’ sewage discharges, and into over 2,200 treatment works, following new data coming to light as a result of increased monitoring”.

It is citizen scientists who are providing data and doing their work for them. Why did it take those agencies so long to see what should have been before their eyes? They have known about these discharges for many years. The Minister went on to say that

“this Government are going further and faster than any before to protect and enhance the health of our rivers and seas. We are holding water companies to account on a scale never seen before”.—[Official Report, 22/2/24; cols. 759-60.]

Of course it has never been seen before; the water companies have been allowed to get away with committing environmental vandalism on a huge scale, all on the Conservatives’ watch.

I fear that this all comes down to a board of directors who are perfectly happy to take huge sums of money, paying out £62 million in dividends in 2022-23 to its parent company—the Kelda Group—to

“cover costs including debt interest” but going on to say that the money did not go to external shareholders. Who are they kidding? They have paid £1.2 billion in dividends to shareholders over the past 10 years, as we have just heard, while not even carrying out their primary functions of maintaining and investing in sewage infrastructure—improvements that we were promised in 1989. In August 2022, the Yorkshire Post reported that the Yorkshire water bosses paid themselves more than £3 million in bonuses despite leakages running at 283.1 million litres a day. That is absurd. Bonuses should be banned today.

It is said that, in the 7th century, St Paulinus baptised thousands of people in the River Swale. I wonder whether he would have been happy to baptise people in there now as sewage dumping in the Swale continues to be legal until 2050.

Photo of Lord Addington Lord Addington Liberal Democrat 4:22, 29 February 2024

My Lords, a certain degree of nostalgia comes in as I speak in this debate because, looking around the Chamber, I see that I am the only survivor here today of the Committee that dealt with privatising our water industry. Throughout that process—I do not mean to dump this on the Minister—I was told repeatedly by a variety of individuals, most of whom are not in the House, “Don’t worry, the regulator will deal with it. It’ll jump in”. If you raised a concern, that was what you were told. We heard it so often that it almost became a joke. In those very late hours towards midnight, which were normal then, I lost count of the number of times we were told on group after group that the regulator would deal with it.

It is now quite clear from what we are hearing that that model did not work. This might be because the regulator did not expect to deal with what was going on but lots of different parties have had lots of chances to intervene here. We have known for a long time about global warming, about the fact that warmer air has more water in it and about the fact that the increased water vapour in the air comes down as rain. We have known for a long time that this was coming—we should remember that one of the last acts of Baroness Thatcher as Prime Minister was to talk about the fact that we do not own the planet but are merely leaseholders on it; I think that was the term—yet we have permitted this model for the water industry to carry on despite the fact that it does not do anything. I remember, when we finally finished that process—once again in the small hours—picking up the Times, I think, and seeing a cartoon of a classic yuppie of the era looking at a computer screen and saying, “We’ll all get filthy rich”. That was somebody who got it right.

We have known that this has been coming. It is not something that is removed from us—a dreadful problem but not one to worry about—because it is starting to affect other bits of our lives. The thing that caught me, which was suggested by some of my noble friends, is that it is affecting leisure activities on water. You would have thought that being able to canoe, fish, swim or go rowing is something that you could take as read most of the time on a river or inland waterway in Great Britain. On the River Trent in Nottingham is our national water-sports training centre. The one thing I regret about getting older is that I am becoming long-sighted, so I will put my glasses on: last autumn, 5,106 hours of training were lost to our elite centre there due to red-flag water notices—amazing. Think about that; that stretch of water has been taken so that elite athletes can use it for canoeing and open-water swimming. There have been cases recently of open-water swimming where everybody got sick. At the World Triathlon Championship, people got sick from their training programmes. We have something here which is directly affecting human health.

Some people might shrug their shoulders at sporting activity and say that it does not really matter that much—that it is only a bunch of people running around and that they can all go to the gym. But sport is a bit bigger than that. It is a representation of bringing people together and getting them outside, giving them status and—in the case of these athletes—national pride. If you cannot keep a place like that safe for activity, what other types of activity lower down the sporting food chain are going to be affected too? When news gets out, people will say, “Do we want our child, brother, sister or father to be anywhere near that water if it is dangerous?” The Government should keep that in mind.

Let us talk about another group: anglers. We are affecting our waterways. Everybody should pay attention to anglers because there are an awful lot of them. They are the biggest participation group in the country by a long way. We are damaging the environment which allows them to have that pastime. From the invertebrates to other animals and activities in water, it will all be reflected in the food chain to the angler. I suggest that, as a body, anglers do not punch their weight. I hope that they will get out there and start to put a bit of pressure on the Government. That might mean that they will have to work with the canoeists and rowers, who they do not like—they disturb each other—but I hope that someone will come in and say, “Get together and make people listen”.

The historical analogy of the Great Stink and Bazalgette’s inspiration is one I hope we do not have to get to. I hope that others can say that there is a problem coming, because there is. It is starting to affect the smaller outlets. The fact that water companies have been making lots of money but have not even done the basic function of making sure that raw sewage does not get into the water system is unforgivable. They have failed in that basic requirement. We knew that higher rainfall was coming; we knew they were making money. Why did the regulator not do something about it? I do not know if the regulator needs bigger and sharper teeth—a more powerful jaw, if you want to follow the analogy through—but I know that it needs encouragement to use those implements to make things very uncomfortable for those who pollute.

If we do not do that, this current model of ownership of water—a natural monopoly, because it is expensive and heavy, and you cannot move it around the country without huge energy costs—will fail. We must make sure that this pays. The cost to us all is a worse environment and probably worse health. Surely that is worth making sure that the regulatory function fulfils its basic duty and that those who run water companies can be satisfied with simply having a perfectly solid blue-chip investment, as opposed to something rather better.

Photo of Baroness Miller of Chilthorne Domer Baroness Miller of Chilthorne Domer Liberal Democrat 4:30, 29 February 2024

My Lords, it is a pleasure to follow my noble friend Lord Addington, whose practical examples are extremely useful in this debate. I congratulate my noble friend Lady Bakewell of Hardington Mandeville on explaining so vividly why untreated sewage going into our rivers is an issue.

I will turn to something slightly different—treated sewage, or sewage sludge—and explain why it is still a problem for our rivers and land. Sewage sludge is recycled to land, where it can act as a useful fertiliser containing nitrogen, phosphorus and organic matter. The regulation governing this dates from water privatisation in 1989 and, appropriately, its acronym is SUAR, pronounced “sewer”—Sludge (Use in Agriculture) Regulations. Those regulations are over 30 years old, and were devised simply to deal with the human faeces element of sewage. But, in the 30 years since, the water companies have been selling more and more of the services to industry, so the industrial effluent element of the sludge has increased, as have the variety and toxicity of the pathogens, chemicals and heavy metals in the resulting sludge.

That sludge is spread on to farmland and, in theory, it should stay there, drilled into the grasslands that feed our livestock. Whether you think that toxic cocktail is a good thing in the grasslands that feed our livestock is a different issue, one I will not talk about today. But what happens as the ground becomes waterlogged, like it has been for these last few months? Farmers are given guidance to avoid run-off. The guidance says they have a responsibility to make sure that liquid sludge does not run off into roads, adjacent land, rivers or waterways. If it rains heavily enough to cause run-off, the spreading must stop. The guidance says that spreading must not take place on

“frozen, waterlogged or very dry ground”.

But, with climate change, the ground is nearly always either waterlogged or very dry.

The Environment Agency was very concerned about this growing issue of toxic chemicals, so it commissioned some consultants in the spring of 2015 to undertake a study of all this. They worked with about 50 farms and undertook a much wider paper trail review. The Environment Agency’s conclusion was that the trade in sewage sludge and other waste had changed radically, making it much harder for the Environment Agency, the regulators or farmers to know what was being spread on fields—microplastics, pesticides, residues and all sorts of other things.

The Environment Agency came up with a plan. It developed a strategy for safe and sustainable sludge use, which was published in 2020. It explained why the regulatory changes are needed—of course, there have been many changes in the supply chain industry feeding into the sewage sludge—and it identified the new hazards that were emerging. It said:

“Modern sludge practices may harm the environment”.

It proposed a number of things, particularly more soil testing and improved record keeping, and more upstream sludge treatments—such as the sewage treatment works and those through trade effluent controls, which are key—as well as better storage and pre-spreading control. It had a plan, because some of the elements in this sludge are very toxic—zinc, cadmium, mercury, chromium, selenium, arsenic, antibiotics, dioxins, furans, phthalates and microplastics. Is there a legal limit for the amount of sludge that can be spread on to farmland? Who sets the limit, and has it been changed recently?

As I understand it, there are no restrictions on using treated sludge on growing crops of cereals or oil seed rape, and treated sludge can be used on grassland so long as there is no harvesting or grazing within three weeks of use. Given the list of toxins that I have just outlined, it seems that three weeks is pretty minimal.

So there is a big issue here, and it is particularly an issue because all of those toxins can still wash out—and do wash out—into streams or get absorbed into the soil and so into the ground water. The water company or supplier of the sludge is responsible for the testing of potentially toxic elements in the soil. Can the Minister say how often that happens? Does his department actually see the results of this?

The noble Duke, the Duke of Wellington, who is not in his place, said that this should not be party political. However, the party-political element of the issue that I have just raised is the fact that the regulator—the Environment Agency—did actually suggest the solution that we revoke the regulations from 1989 and bring them up to date with environmental permitting regulations. There was a deadline set of 2023. Well, that simply did not happen. Why not? The Government could have put all this into the Environment Act; or, as the Environment Agency suggested, it might need a small, additional legislative change. None of that has happened, however, and that was a purely political choice. So that toxic cocktail will continue to be spread on our agricultural land, and a large element of it will continue to end up in our waterways.

Photo of Lord Stoneham of Droxford Lord Stoneham of Droxford Liberal Democrat Lords Chief Whip, Deputy Speaker (Lords), Deputy Chairman of Committees 4:37, 29 February 2024

My Lords, I am grateful to the House for allowing me to speak in the gap. I want to make three brief points, while declaring my interests as living in the Meon Valley in Hampshire and as a volunteer warden of the St Clair’s nature reserve on the River Meon, run by Hampshire & Isle of Wight Wildlife trust.

My noble friend Lady Bakewell, in her excellent opening speech, drew attention to the recent prosecution of Southern Water in our area. We are near neighbours. This happened on 21 July 2019. When two pumps failed, the sewage overflowed from a pumping station, and three kilometres of river were affected. Two thousand fish were killed and the legal limit for the ammonia level was exceeded by 25 times. It was a pretty serious incident, so it was shocking in what I know is quite a small stream. What is particularly concerning is that it took four and a half years for the prosecution to come to fruition and the case to be resolved, when, on the face of it, it looked like a pretty open-and-shut case.

Therefore, can the Minister say whether the Government have considered whether this expensive and lengthy legal process is really necessary in this sort of case? Is it actually helping to get the long-term issues resolved? Are the Government looking at quicker means of resolving and dealing with the problems so that the industry, the regulator and the water companies can learn lessons quickly and concentrate on improving investment levels? That is my first question to the Minister.

Secondly, is one of the problems that the Environment Agency is seriously understaffed and underresourced? Has it not actually had, over the past 14 years, quite a lot of cutbacks in resources? Did this cause a delay in bringing this sort of prosecution? I hope the Minister can address this in his closing remarks.

Thirdly, there are three significant chalk streams in my part of Hampshire: the Itchen, the Test and the Meon. The first two are pretty well known; the Meon is the lesser-known treasure. The Itchen and the Test are designated as areas of special scientific interest. This gives them extra protection. A local councillor in our area, Jerry Pett, is leading a campaign for this designation to be granted for the Meon, and he is being told that Natural England is holding back on further designations as it is short of resources to promulgate them.

Can the Minister say whether the intention is to cover this issue in the review on the chalk streams strategy that, as I understand it, is being led by the Defra Minister Rebecca Pow, when the Government finally publish their chalk streams recovery package? When can we expect that to be published?

Photo of Lord Teverson Lord Teverson Liberal Democrat 4:40, 29 February 2024

My Lords, I declare my interest as chair of the Cornwall and Isles of Scilly Local Nature Partnership. I, too, congratulate my noble friend on getting the timing of this debate exactly right. We have heard that, within the last 48 hours, Thames Water has been lobbying the Government to increase charges by some 40%, to decrease the level of fines and to loosen up on dividend control. Of course, that is there partly because Thames Water is very much under threat of both itself and its holding company going under water. Can the Minister confirm those conversations? Also, as my honourable friend Sarah Olney asked in the other place, do the Government have a contingency plan in case Thames Water finally dies and drowns in its own debt? That is very important to a very large proportion of the population of this nation.

My noble friend Lord Addington said that he was here during water privatisation; I did not know that the House had people in short trousers at that time, but he obviously looks far younger than he is. When I was young, I used to enjoy board games, and my parents got fed up with me because I was far too competitive. One of my favourites was Monopoly. Noble Lords who are Monopoly fans and players will know that one of the squares you did not want to land on was the water company, because it was boring and had very low returns. What you wanted to do was to get on the properties, become a red-blooded property developer and get hotels. In a way, before their privatisation, the water companies were exactly that: they were boring and a utility—that was their asset class, if you like—and had low returns.

I guess that the first members of Ofwat had that in their minds and thought, “Hey, this is a fairly easy job. We’re going to agree investment and price increases and, frankly, after that we can probably go home and it will run itself”. But what they did not realise is that the people who were going to buy those purchases—as the noble Lord, Lord Sikka, will know well—were private equity firms who were greatly into financial engineering, and they thought, “Hey, there’s a real opportunity here”—and at the time, Ofwat was nowhere near capable of controlling or regulating that industry. You can say that it was naivety or negligence or that the people who were there at the time did not see it approaching. The result has been that we have rivers and waterways that are indeed polluted by sewage.

I will echo, in some ways, my noble friend Lord Russell on why rivers are important. One of the things that often used to be said in the social area was that you can tell how good a society is by how it treats its prisoners. Well, I would say that you can tell how good an environment is by how good the quality of its rivers is. Because the rivers are the lifeblood and the veins of our nation; they support biodiversity, they have all sorts of ecosystem services and, clearly, they provide water. If they are not straightened, they can provide flood prevention. That is why they are important—as well as for human health. And because they are not healthy—in all the ways that we have heard—we have that challenge to both biodiversity and to human health. And those are the challenges that we have here. Of course, we also have, as we know, not just effluent in terms of pollution but, as has been mentioned by other noble Lords, plastics and other urban waste, and the phosphates that come primarily from agriculture.

I was glad that the noble Duke, the Duke of Wellington, who is not in his place at the moment, mentioned ELMS. It seems to me that one of the important things here —perhaps the Minister, as a Defra Minister, might like to comment on this—is the question of how we can help farmers and the agricultural sector to get away from this issue of phosphates. Will there be, through the ever-changing environmental land management scheme, an exit route—a ramp off—where we can offer the agricultural sector help on that? Then, there are the intensive parts of cattle-rearing, obviously; I would not say that those companies are always the best in terms of the environment but, generally, the agricultural sector reacts only to the financial incentives that it is given by government. So what ways are there to do that?

A number of noble Lords mentioned the Environment Agency. In my work with local nature partnerships and some of the schemes that we—along with the Environment Agency—are looking at in Cornwall at the moment, I have never come across anybody from the Environment Agency who has not wanted to be on the right side of this argument, to be out there, to warn, to change and, ultimately, to enforce the fact that river health is really important. Yet, as a number of Peers have said, Environment Agency funding has fallen substantially over the years. It has started to come up again in terms of environmental enforcement, perhaps, but we are still way behind. I make this plea to the Minister: in the past, when the Chancellor has said, “I need some money”, Defra has been a department that usually puts up its hand. That should stop. We need to have Natural England and the Environment Agency funded well.

I was pleased to hear mention of natural systems and the way we should tackle this problem, not through hard concrete so much as through nature-based solutions. This is talked about a lot. It can sound a bit clichéd but I really believe that it is the way forward. If there are planning issues or Ofwat regulatory issues around it, that needs to change; that is one of the ways in which we need to move forward.

Again, coming back from privatisation, I remind noble Lords that we have been through this process once before. I come from the south-west. When water was privatised, bills went up by 100%—in fact, by more than that at the time. Households were really squeezed. What we need here is a solution where we do not have, as Thames Water would want, bills going up by another 40% over the next few years. We need this to be financed in a different way and, with the squeeze on household incomes at the moment and everything on that side, we need to find a different way to do it; that needs to be through the water companies rather than through consumers.

Lastly, I come back to the regulator. After a financial crisis in 2013, the reputation of the Financial Conduct Authority was shot. The Government—it was the coalition Government at the time—decided that that reputation had gone too far and that we had to change, so the Prudential Regulation Authority and the FCA were brought in to have a new system. I say to the Minister and to the House that Ofwat’s reputation is shot, I am afraid. We need a different, far cleverer and more adept regulator; that would be one of my biggest asks. I also agree—absolutely and definitely—with my noble friend Lady Bakewell that we need to bring these companies into some sort of social ownership.

So there is a real challenge here. Rivers are key to the health of our nation and our population. We need to get those things right. The noble Baroness, Lady Jones of Moulsecoomb, said that we should pay them 50p. I suggest something different: if you look at a Monopoly board, the water company is two spots before “Go To Jail”—just out of interest—but its cost is £150. Perhaps that would do instead.

Photo of Baroness Hayman of Ullock Baroness Hayman of Ullock Opposition Whip (Lords), Shadow Spokesperson (Environment, Food and Rural Affairs) 4:50, 29 February 2024

My Lords, I start by thanking the noble Baroness, Lady Bakewell of Hardington Mandeville, for bringing this debate forward today and for her excellent, thorough introduction to this issue. As she said, we have had this discussion a number of times over the past 12 months or so.

Noble Lords have mentioned the data from the Environment Agency showing that only 14% of our rivers in England have a good ecological status, with no rivers in England having a good chemical status. The House of Commons Environmental Audit Committee said this in its 2022 report, Water Quality in Rivers:

“Getting a complete overview of the health of our rivers and the pollution affecting them is hampered by outdated, underfunded and inadequate monitoring regimes”.

Monitoring has been mentioned a number of times by noble Lords. The report also suggested that the current range of pollutants being monitored is “too narrow”, focusing on nutrients such as nitrogen, phosphorus and ammonia but not routinely monitoring other substances that contribute to poor water quality, such as metals, pesticides, pharmaceuticals, industrial chemicals and plastics. Will the Government consider monitoring those other substances?

I thank the Rivers Trust for its excellent recent report, to which other noble Lords have referred. The noble Duke, the Duke of Wellington, hosted a meeting at which we spoke to the trust. It is an incredibly important report; I hope that the Minister will take account of what it says. It draws attention to the fact that, as noble Lords have said, sewage and urban pollution, agricultural pollution, industrial pollution and chemical pollution are all contributing to this problem. According to Defra, agriculture is the main cause of river pollution incidents in England with intensive livestock farming being the major reason for the complete collapse of the River Wye, as we have often heard about in this House. Untreated waste from chicken, pig and dairy units is routinely spread on land, adding to the problem. Such has been the growth in the intensive livestock industry in recent years that soils across England are receiving significantly more nitrogen and phosphate than they can cope with and absorb; that excess is contaminating our rivers and having an impact on our wildlife.

Looking at the River Wye, it is so concerning that the group River Action has brought a judicial review saying that a loophole in the law is allowing poultry waste from 25 million chickens intensively farmed in the catchment to poison the river, and that the Environment Agency and the UK Government have failed to protect it from catastrophic decline. We all await the outcome of that judicial review with great interest. In his speech to the recent NFU conference, Alan Lovell, chair of the Environment Agency, said that pollution from agriculture and rural land is “roughly equal” to that coming from the water industry. Farmers, who need to play a really important role if this is to be resolved, say that they need help with both expertise and financial support. The noble Lord, Lord Teverson, in particular, talked about the help that farmers will need if they are to tackle this.

The outgoing president of the NFU, Minette Batters, has said that farmers need better access to funding through the environmental land management scheme, which the noble Duke mentioned, in order that they can create buffer strips along waterways. They also need much faster planning permission for slurry storage and incentives to grow the right crops in the right places. Will the Minister look at ELMS in light of these comments? Our transition out of the EU common agricultural policy into ELMS has been pretty challenging for farmers, with too much uncertainty. This has also added problems.

The complicated current system has made it difficult; it is not easy for farm businesses and land managers, who can feel lost in the system. It has also been harder for them to make long-term strategic plans. We need to look at cross-sector regulation; we cannot just regulate the water companies or the farmers. We need a fair and transparent system in which everybody understands what is happening and what role they have to play in reducing the pollution going into our rivers. We are still waiting to see the promised land use framework, to help balance all the demands on our land, and that includes land use to help with water quality and biodiversity targets. Does the Minister have any update, or is it still going to be published “shortly”?

Chemicals, of course, cause a lot of the problems around pollution in rivers; they can come from cleaning products, medicines and even the food we eat. Using chemicals clearly has a number of benefits, but we know they can cause some really appalling damage when they leak into the environment. We also know that they can persevere in the environment for weeks, months or even years, causing significant harm to wildlife, particularly in fresh water and the sea.

A number of noble Lords mentioned the Rivers Trust report. I pick out of it the work the Rivers Trust has done in collaboration with the Wildlife and Countryside Link chemicals task force. They have recently analysed Environment Agency data on levels of just one of the many toxic for ever chemicals: perfluorooctanesulfonic acid, or PFOS. They looked at that within English fresh water fish, and their work revealed that the PFOS levels in English fresh water fish are on average 300 times higher than the levels considered safe by the European Union. Is the Minister aware of that? If not, this really needs to be picked up.

We have also heard that much pollution comes from urban environments, such as the amount of plastic that we throw away—you only have to look at your local river to see how much plastic can end up in it. We know that plastics break down into toxic chemicals and harmful microplastics, and then rivers become a major pathway for plastic reaching and polluting our coasts and oceans. The noble Baroness, Lady McIntosh of Pickering, talked about road run-off, which again is very problematic. You get oil, diesel and petrol spills, plus the particles from tyres and the roads wearing down, getting washed into our rivers and drains. This is a really important area that we need to deal with. We know that urban wetlands, reed beds and other nature-based solutions can help intercept this run-off and reduce the pollution, and it is really important that the Government properly invest in these mitigations. What investment are the Government making? Perhaps the Minister can give us a clue.

We have also heard an awful lot about the problems around regulation and enforcement. The poor quality of our regulation enforcement in recent times has compounded all the pollution that is coming from several different sectors, making things even worse. In her opening speech, the noble Baroness, Lady Bakewell, talked a lot about England’s sewerage system being not fit for purpose, as did other noble Lords, particularly the noble Duke, the Duke of Wellington. We have heard again how, over the past few decades, Ofwat has simply failed to ensure that water companies have invested sufficiently to upgrade, or even just maintain, our water infrastructure. Delivering the necessary improvements to save our rivers now, at speed and at scale, has become a truly enormous task.

I congratulate my noble friend Lord Sikka on his forensic analysis of the water companies’ finances. The work he did was very important, and I encourage the Minister to have a good look at Hansard, because I expect he may need to write to my noble friend at the end of this debate.

We need more enforcement from the Environment Agency, but we have heard that the Government have cut the protection budget hugely—in half—in the last 10 years. With the failure to monitor and investigate pollution incidents, and the failure to enforce the legislation and rules that are supposed to protect our water environment, it is particularly worrying that this has included instructing EA staff not to attend low-level pollution incidents, requiring water companies to self-monitor and self-report. This is simply not going to get the change that we need. We need a strategic direction for water regulation.

The Government’s Plan for Water was published with great fanfare in April last year. The plan included creating a new water restoration fund that would use money from water company fines and penalties taken from their profits—not from their customers—to support local groups and catchment projects such as re-meandering rivers and restoring habitats, which are really important. Nothing has appeared on this since. Can the Minister provide an update on when we are likely to see this? If the Government are to make great announcements and publish lovely plans, they are no good if what they say is going to happen does not then actually happen.

Photo of Lord Douglas-Miller Lord Douglas-Miller The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs 5:01, 29 February 2024

My Lords, I declare my interests as set out in the register. I congratulate the noble Baroness, Lady Bakewell, on securing this debate and thank noble Lords for their valuable contributions.

It might be helpful to remind noble Lords that the combined water and wastewater infrastructure that is managed by water companies is a system designed by our Victorian ancestors and allows, as it has for more than 150 years, for sewage to be spilt into our rivers at certain times and under certain circumstances—as the noble Baroness, Lady Pinnock, described so well. This may not be deemed desirable or even acceptable today, but it is a reality from which we cannot escape. In heavy rainfall events, of which we have more and more, there is a binary choice between sewage going into our rivers or backing up into our homes. I make reference to this to differentiate between what water companies are legally allowed to do and what I suspect the noble Baroness, Lady Bakewell, and many other noble Lords are mainly seeking to address, which is the illegal spilling of sewage into our rivers, as well as how to address reducing sewage spills altogether.

I think we can all agree with the comments that the noble Viscount, Lord Stansgate, made last week in a similar debate: the volume of sewage going into our waters is not what any Government, any Member of this House or the public would wish. We rightly expect to see the quality of our water improve and water companies to play their part.

In tackling this challenge, it is really important to be clear that there are both legal and illegal discharges of sewage, as I have already explained, and that the Government are taking action to reduce both. However, I will heed the advice of the noble Baronesses, Lady Jones and Lady Hayman, and spend my weekend rereading the speech by the noble Lord, Lord Sikka, and preparing to write to him on his detailed accountancy questions, and to the noble Baroness, Lady Jones, on the number of water companies operating illegally and blocking developers.

In April last year, the Government published the Plan for Water. We are delivering this with tighter regulation, tougher enforcement and more investment. We committed in the 25-year environment plan to restore three-quarters of our water bodies to be close to their natural state, and this plan will help us to achieve that by directing £2.2 billion of new, accelerated investment into vital infrastructure to improve water quality and secure water supplies. This includes £1.7 billion of funding to tackle storm overflows.

This is on top of the water companies investing £7.1 billion in environmental improvements between 2020 and 2025, including £3.1 billion invested in 800 storm overflow improvements, such as the Thames Tideway super sewer. Storm overflows causing the most harm are being addressed first, so that we can make the biggest difference as quickly as possible. We are the first Government to address and implement 100% storm overflow discharge monitoring, so that the public and our regulators can see exactly what the water companies are doing and set clear targets for them to significantly reduce legal storm sewage discharges. We expect water companies to use the next five-year price review period—PR24—to set bold and ambitious plans that deliver on this plan for people and the environment. This means cleaner rivers and beaches, fewer leaks and supply interruptions, and substantial improvements to tackle storm overflows.

In addition, the Storm Overflows Discharge Reduction Plan, published in September last year, will see the toughest ever crackdown on sewage spills, driving the largest infrastructure programme in water company history, with around £60 billion of capital investment over 25 years. Companies will upgrade storm overflows individually, depending on how they impact the targets set out in the plan.

Meeting these targets will result in hundreds of thousands fewer sewage discharges. By 2035, we will have protected all our designated bathing waters and the vast majority of our most sensitive and protected habitats from storm sewage discharges, and by 2050 there will be an 80% reduction in all storm sewage discharges.

This Government are the first to face up to the fact that, as a country, we need to fundamentally change how we deal with sewage. That cannot change overnight and will come with some cost. Eliminating all discharges could cost up to £600 billion, increasing annual water bills to an unacceptable level. The Government are committed to reviewing the targets in the storm overflow discharge plan in 2027 to establish whether companies can go further and faster to achieve the storm overflow targets without hiking up bills to unaffordable levels. If they can go further, the Government are clear that they must.

These initiatives work alongside a raft of other measures to improve the quality of our rivers and seas. As a result of our work, 90% of designated bathing waters in England met the highest standards of “good” or “excellent” in 2023, up from just 76% in 2010, despite stricter standards being introduced in 2015. Last week, we announced that we would consult on 27 potential designated bathing sites in England, the largest number we have ever consulted on, and encourage all interested individuals, businesses and organisations to respond to the consultation by 10 March this year.

Both the noble Baroness, Lady Jones, and the noble Earl, Lord Russell, referred to nutrient neutrality. On 25 January this year, we designated catchments in which water companies will be required to upgrade wastewater treatment works to reduce nutrient pollution by 2030. This will help unlock the homes that communities need, while also reducing pollution at source.

This Government are committed to increasing the quantity and quality of sustainable drainage systems—usually referred to as SUDS—in new developments, as my noble friend Lady McIntosh mentioned. SUDS reduce the pressure on our traditional infrastructure by slowing down the overall amount of water that ends up in the sewers and storm overflow discharges. The review and decision for making SUDS mandatory in new developments was published on 10 January last year. A public consultation on the implementation proposals will take place shortly, and I am encouraging my department to progress this as quickly as possible.

My noble friend Lady McIntosh and the noble Baroness, Lady Hayman, raised points about roads. In the Plan for Water, we committed to reducing pollution from roads by improving water quality through the road investment strategy for 2020 to 2025. So far, National Highways has delivered over 30 water quality initiatives. It is important to make it clear that National Highways is not responsible for pollution from roads, which are managed by local highway authorities.

My noble friend is also right that we must improve water efficiency. She will be pleased to hear that we have a new legally binding target under the Environment Act 2021 to reduce the use of public water supply in England per head by 20% by 2037-38. To help meet this, in our 2021 Written Ministerial Statement the Government set out our approach for a range of water efficiency measures, including our mandatory water efficiency label, leakage and metering.

As for fixing misconnections, water companies have the power to lay, inspect, maintain and repair or alter pipes falling on private land. I will write to the noble Baroness about access to government land.

I commend my noble friend for her tireless campaigning for farming and its part in storing floodwater. Since 2015, we have protected over 900,000 acres of agricultural land, along with thousands of businesses, communities and major infrastructure via our flood investment programmes. In addition, there will be measures that benefit flood risk mitigation in all three environmental land management schemes, the sustainable farming incentive, Countryside Stewardship and landscape recovery, which will include payments that relate to floodwater storage.

I move on to the issues raised about the Environment Agency. The Government’s work is backed by enforcement action from the regulators. Where there is evidence of wrongdoing, the Environment Agency and Ofwat will not hesitate to hold water companies to account. In 2013, the Government directed water companies to increase their storm overflow monitoring. In 2010, only 7% of storm overflows were monitored. As of December last year, we are at 100%. This has given us a clear sense of all discharges, which we never had before. In answer to the question from the noble Baroness, Lady Bakewell, on who is responsible for monitoring storm overflows, it is the Environment Agency.

The Environment Act requires water companies to monitor the operation of storm overflows and the water quality upstream and downstream of their assets. This is helping regulators to identify and enforce storm overflow discharge offences and permit breaches. We are providing an extra £2.2 million per year in this spending period for the Environment Agency, specifically for water company enforcement activity. We have legislated to introduce unlimited penalties on water companies that breach their environmental permits and expand the range of offences to which they can be applied.

Last week, we announced that we are significantly increasing our oversight of the water industry. Every water company should expect their wastewater treatment sites to be regularly inspected. The number of inspections, including unannounced inspections, will rise to 4,000 by the end of March 2025—a fourfold increase. Our consultation on increasing permit charges for water companies to enable these inspections is under way and due to close shortly. This will be backed by around £55 million per year. More inspections will allow the Environment Agency to conduct more in-depth audits to get to the root cause of incidents, reducing the reliance on operator self-monitoring.

Since 2015, the Environment Agency has concluded prosecutions against water and sewerage companies, securing £150 million in fines, including a record £90 million fine for Southern Water. These will go into the water restoration fund to protect and enhance the water environment. As the noble Baroness, Lady Hayman, mentioned, I will report on that date shortly.

The noble Baronesses, Lady Bakewell and Lady Jones, and the noble Lord, Lord Sikka, questioned the effectiveness of Ofwat and the Environment Agency. The Environment Agency, with Ofwat, recently launched the largest criminal and civil investigation into water company illegal sewage discharges at over 2,200 treatment works, following new data coming to light as a result of increased monitoring introduced by this Government.

In May last year, Ofwat announced that its enforcement capacity would be trebled, following the approval of £11.3 million in additional funding by the Government. If water companies fail to meet their statutory or licence obligations, Ofwat can issue an enforcement order or financial penalty of up to 10% of a company’s turnover. Following the Water Company Performance Report 2022-23, Ofwat published the financial penalties and payments for all water companies. Ofwat has required 13 companies to return £193 million to customers for underperformance in 2022–23. This money will be returned to customers through bills over 2024-25. Ofwat has also required each lagging company to prepare service commitment plans outlining the actions they will take to deliver the levels of service that customers expect. Ofwat has reviewed these plans and is regularly engaging with companies over them.

This month, the Environment Secretary announced that Ofwat will be consulting on banning water company executives from receiving bonuses if a company has committed a serious criminal breach. The consultation will seek to define the criteria for a ban, which we expect to come into effect later this year. This could include successful prosecution for a category 1 or 2 pollution incident, such as causing significant pollution at a bathing site or conservation area, or where a company has been found guilty of serious management failings. I will, however, consider the suggestion from the noble Baroness, Lady Jones of Moulsecoomb, of community service for the chief executives. This builds on Ofwat’s announcements last year to tighten restrictions on bonuses using powers given to the regulator through the Environment Act.

The noble Baroness, Lady Harris, asked about open investigations into Yorkshire Water. I am afraid I am not able to comment on those or, indeed, on any open investigation.

The noble Lord, Lord Addington, brought up the issue of anglers. As the past chair of the Atlantic Salmon Trust, I have the greatest sympathy with him and with anglers. He also mentioned that they might start to bring pressure to bear on the Government. I can assure him that the Rivers Trust, WildFish and Fish Legal and many celebrity anglers are already applying considerable pressure. I should add that, as a keen angler, I am not against canoeists at all.

The noble Baroness, Lady Miller, asked about the testing of sludge. This is regulated by the Sewage Sludge in Agriculture code of practice.

The noble Lord, Lord Stoneham, referred to an investigation with Southern Water, and I will look into the speed of that response and what can be done to speed these things up in the future.

The noble Lord also commented on the chalk stream strategy. The Plan for Water recognises chalk streams as a priority for the Government and identifies action to protect and include them in the chalk stream recovery pack that is due to be published later this year—I hope by mid-summer. It will set out the Government’s policies that act together to address the key pressures on chalk streams from abstraction, agriculture and wastewater.

The noble Lord, Lord Teverson, raised the issue of Ofwat and the monitoring of water companies. The Government remain confident with Ofwat’s approach and have contingency plans in place in the event of any public service failing.

The noble Lord also brought up other points relating to farmers and farming. We are taking significant action to work with farmers to reduce diffuse pollution and deliver improved environmental outcomes. We have doubled our catchment-sensitive farming budget to £15 million per year, which enables farmers across England to receive face-to-face advice on recurring water and air pollution issues. We have also budgeted for an additional 50 Environment Agency farm inspectors to work with farmers to meet their legal obligations. Our environmental land management schemes are being rolled out to pay farmers for the delivery of environmental benefits that include activities to improve water.

The noble Baroness, Lady Hayman, asked again about the land use framework. I am afraid that the answer is the same: it will be published shortly. That is about all I can say on that at the moment.

As I have set out, this Government are going further and faster than any other to protect and enhance the health of our rivers and seas. We have set out clear targets for water companies and are holding them to account on a scale that has never been seen before, making sure that the Environment Agency and Ofwat are equipped to take enforcement action where there are failings. This Government are fully committed to addressing the historic issues that are causing pollution in our waterways, and we will continue to strive for healthy and thriving water environments.

Photo of Baroness Bakewell of Hardington Mandeville Baroness Bakewell of Hardington Mandeville Liberal Democrat Lords Spokesperson (Environment, Food and Rural Affairs) 5:20, 29 February 2024

My Lords, I thank all those who have taken part in this debate, especially the Minister for his response. I appreciate that he has inherited this problem, and I thank him for his very detailed response, which I shall study in Hansard. We have had a very varied debate; at the same time, there has been much agreement across the Chamber in condemning the overspills of sewage when there have been no unusual weather conditions requiring them. Until quite recently, water companies have discharged sewage and untreated water on hot, sunny days with impunity. We have heard how this has affected different people. I believe that we may possibly be on the cusp of a change.

I am grateful to my colleagues, who have spoken so passionately, knowledgeably and entertainingly on this subject. It is often overlooked that, at the point of privatisation, water companies were debt free. The noble Baroness, Lady Jones of Moulsecoomb, and my noble friend Lady Harris of Richmond also raised this. The noble Lord, Lord Sikka, makes a really excellent forensic accounting contribution—there is a role for him in another place if he should decide that this is enough. Although the water companies were debt free when they went private, that changed when the new private owners saw the glint of money for themselves and borrowed money to increase share dividends. Not all water companies followed that course, but many did. Some invested in the infrastructure, but this was often based on concrete solutions instead of the cheaper and more carbon-efficient nature-based solutions. The noble Baroness, Lady McIntosh of Pickering, has been campaigning for nature-based solutions for a considerable time, as has the noble Duke, the Duke of Wellington, who is not in his place.

I am grateful to the noble Lord, Lord Teverson, for raising the issue of farmers and phosphate discharge. Farmers have a role to play in improving the quality of our waterways, at the same time as producing food. The noble Duke, the Duke of Wellington, referred to the role of farmers.

I do not intend to return to the debate and run through every contribution, but I draw attention to one particular contribution. My noble friend Lady Miller of Chilthorne Domer has referred to the SUAR sludge. Many of the chemicals that she listed are known as forever chemicals. We need to deal with this problem, because it is extremely worrying that these chemicals should be on the land for ever.

All sides of the House are concerned about sewage pollution of rivers and waterways. The Minister referred to the Victorian sewer infrastructure, as did my noble friend Lady Pinnock. However, surely it is time that we had a better solution than the Victorian sewers. The regulator is not fit for purpose and needs to be replaced. I am not sure that it is comforting to know that everyone in the House agrees on this issue, but the power in numbers is considerable. I hope that the Minister is listening and will act accordingly, although I know that he is doing as much as he possibly can. It is time to introduce more stringent measures to improve the quality of our water, which should be crystal clear and gurgling in the streams instead of brown, sluggish and smelly.

Motion agreed.