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New Clause 23 - Primary duty of sustainable development

Water Bill – in a Public Bill Committee on 17th December 2013.

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‘(1) Section 2(3)(e) of the Water Industry Act 1991 is omitted.

(2) In section 2(2A) of the Water Industry Act 1991, there is inserted—

“(e) to contribute to the achievement of sustainable development”.’.—(Roger Williams.)

Brought up, and read the First time.

Photo of James Gray James Gray Conservative, North Wiltshire

With this it will be convenient to discuss new clause 32—Primary duty of sustainable development (No. 2) —

‘(1) Section 2 of the Water Industry Act 1991 (General duties with respect to water industry) is amended as follows.

(2) In subsection (2A)—

(a) omit the “and” at the end of paragraph (c);

(b) after paragraph (d) insert “; and

(e) to contribute to the achievement of sustainable development.”.

(3) In subsection (3) omit paragraph (e).’.

Elevates Ofwat’s sustainable development duty from a secondary duty to a primary duty.

Photo of Roger Williams Roger Williams Liberal Democrat, Brecon and Radnorshire

It is always a pleasure to serve under your chairmanship, Mr Gray. As we come to the close of our consideration of the Bill in Committee, we have a few remaining new clauses to consider, including new clause 23, which would promote Ofwat’s duty of sustainable development to a primary duty. Ofwat has a difficult job. It has three primary duties: to protect the interests of the consumer by promoting competition—that competition will hopefully be greater after the Bill is passed—wherever appropriate, to ensure that the companies properly carry out their functions and to ensure that the companies can finance their functions.

The term “sustainable development” is misconstrued in some ways. People believe that if Ofwat had a primary duty of sustainable development, environmental considerations would trump all other considerations, but it is far from that. The classic definition of sustainable development is something that ensures that the economic, social and environmental aspects are considered together and that there is balance in determining how developments take place and how operations are carried out. The water industry is very involved in all those aspects.

Economically, water companies are rather peculiar creatures in some ways. They are monopolies, or near monopolies, and they depend on historical investments such as reservoirs and sewage works. The cost of many of those investments has been written off, because of age or privatisation. Nevertheless, those investments have been made and continuing investments need to be made in the future.

I see the hon. Member for Arfon in his place, and it would not be appropriate to miss an opportunity, in looking at water from a Welsh perspective, to say, “Cofiwch Dreweryn”, which means, “Remember Treweryn”. I am sure the Minister heard that many times when he was in Aberystwyth. Treweryn was the village that was flooded in the 1950s to provide water for the people of Liverpool. The decisions on that matter were made here in Westminster, not at a local level. I believe that all but one of the Welsh MPs sitting at the time voted against that proposal.

Some of these issues have a historical context as well, but they are primarily economic. The Elan valley in my constituency was flooded 100 years ago to provide water for Birmingham. I am told that, such is the fineness of the engineering, the water goes from the Elan valley to Birmingham without any pumping at all. The sole force moving that water is gravity.

Huge investment needs to be made to provide water, to deal with sewage and to upgrade the water quality of our rivers, lakes and coastal areas. For that reason, most water companies for most of the time are cash-negative. They require continuous investment and the cost of that depends on interest rates and the credit rating of those companies seeking to attract that investment.

Ofwat has to take into account a lot of environmental duties as well. We have heard about over-abstraction. Some elements in this Bill will help there, in that it will be able to revoke or vary abstraction licences without paying compensation to the people who held those licences. I hope that those powers will be used, because they are important if we are to improve the quality of our waters and rivers. There is the even larger environmental aspect of how we deal with our sewage; how we ensure that it is treated in a way that all the water that comes out of the sewage works is of a high enough quality not to damage our environment. Then there is the social aspect of water companies and the provision of drinkable water at a cost that is affordable to those who need it.

Water is not an unregulated business. Some would say that it is almost over- regulated. It has three regulators. Ofwat is the overarching environmental regulator. The Environment Agency is the overarching environment regulator and the Drinking Water Inspectorate is in some ways a social regulator which ensures that what is delivered through people’s taps is of good enough quality to keep people healthy. The greatest advances in public health have come about as a result of providing decent drinking water and sewerage systems. That investment has been very worth while for a very long time.

What holds those three regulators together and gives them coherence is sustainable development. I recently picked up a briefing note from the Department for Environment, Food and Rural Affairs entitled, “Sustainable Development and Resilience Duties”. I appreciate that  resilience is another duty that is being introduced in the Bill. I should like to read a little bit of the document as it makes as good a case for sustainable development and for Ofwat having that as a primary purpose as I have heard. It states:

“The founding principle of sustainable development is that the three ‘pillars’ of the economy, society and the environment are all interconnected. In the context of the water sector, this makes sustainable development equally central to the work of the economic regulator as it is to the work of the environmental and quality regulators. Our long-term economic growth relies on protecting and enhancing the environmental resources that underpin it, and paying due regard to social needs.”

The key sentence is this:

“Sustainable development is central to everything that Ofwat does and must be fully embedded throughout its regulatory decision making.”

That is a really good case for making sustainable development a primary duty for Ofwat. It will bring coherence between it and the other regulators. I believe that it will serve to provide water not only for now but for the future as well.

Photo of Thomas Docherty Thomas Docherty Shadow Minister (Environment, Food and Rural Affairs) 9:00 am, 17th December 2013

Like other members of the Committee, I am suffering from a slight cold, so I do not intend to delay proceedings for long.

I welcome the excellent and thoughtful remarks made by the hon. Member for Brecon and Radnorshire. It is probably worth explaining to those members of the Committee who have not had a chance to read all the new clauses that new clause 32, which I have tabled, is almost word for the word the same as the hon. Gentleman’s new clause 23. My new clause would simply re-badge some of the details in a slightly different way—I suspect that the difference is purely semantic. We will therefore be supporting the hon. Gentleman’s new clause if the Minister finds himself unable to do so for whatever reason. I would be surprised if he did not support it because the EFRA Select Committee, of which the Minister was a member, unanimously agreed with the hon. Gentleman and me that sustainability should be a primary duty. The Minister is a man of great consistency, so I know that he will support the views he has previously espoused and vote for new clause 23, as will, I am sure, the hon. Member for Tiverton and Honiton, whom I welcome and whose name is also on the Select Committee report.

Now that I have taken my tongue out of my cheek, I would like to add to the remarks made by the hon. Member for Brecon and Radnorshire. A plethora of organisations support the new clauses. The hon. Gentleman has already mentioned some of them, but it is worth noting that just yesterday we received a written submission from the Food and Drink Federation. When one thinks about the great environmental champions, one obviously thinks about the World Wide Fund for Nature or the Royal Society for the Protection of Birds, but one would not necessarily think that the Food and Drink Federation, with its 400,000 members, and representing one of the most vibrant and important parts of the British economy, would necessarily be a champion of our proposals. The reality is, however, that our proposals do not represent a tree-hugger’s charter—they are not about keeping the sandal-wearing brigade happy, although there is support from Liberal Democrats. We want to  ensure that sufficient care is given to making sure that when we are planning long-term requirements for water use we think about not just economic criteria and resilience but how sustainable our water use is.

One or two Members in the margins have asked me what is the difference between resilience and sustainability, so I would like to clarify that. If I can oversimplify it slightly, resilience is about ensuring that the system can survive a shock, such as a flood that overwhelms the infrastructure, whereas sustainability is about the long-term vitality of how we abstract water from the ground, process it and make it available to customers. Those are important nuances.

Photo of John Cryer John Cryer Labour, Leyton and Wanstead

I am interested to hear my hon. Friend’s thoughts on whether increasing sustainability is compatible with increased competition. Should there be increased competition within the water industry?

Photo of Thomas Docherty Thomas Docherty Shadow Minister (Environment, Food and Rural Affairs)

I am most grateful to my hon. Friend for his pertinent question, which he is right to ask. They are compatible. In fact, non-domestic competition should ease the burden slightly on sustainability, as we have seen in Scotland. I referred to the figures last week. A huge saving on the amount of water used has come about through competition in Scotland. It should make our jobs slightly easier in England and the parts of Wales that will benefit from retail competition.

My hon. Friend leads me neatly on to the heart of the issue. We have a water crisis in the United Kingdom. You would not have thought that yesterday, Mr Gray, when you saw the rain pouring down and the rivers rising. However, in reality, every year for the past few years the Minister, his predecessors, civil servants and people who work in the water industry have become more and more nervous about the lack of rainfall in winter. Those of us who are a bit nerdy—unlike you, Mr Gray—know that it is important to have sufficient rainfall in the winter in the right places to build up our reservoirs and other reserves such as streams and rivers so that there is sufficient water in the summer months.

As we discussed at length last week, the problem is that there is increased draw from our rivers and reservoirs, and not enough work is being done to make that sustainable in the long term. Therefore, it is crucially important that Ofwat considers how to ensure that we do not have hosepipe bans and that some parts of the country do not have drought warnings, which would be bizarre, given the weather we are enjoying at the moment. I hope that the Minister will look at the new clause carefully, given that he agrees with the principle and that a range of NGOs, including WWF, is championing the issue.

I suspect that the Minister will cite the Gray review from 2009 or 2010—I think that is correct; my memory may be failing me at this time of year—which said that it was not critical that sustainable development was promoted to a primary duty. I will pre-empt him and get in my rebuttal first. He is in danger of picking and choosing. He has consistently tried to ignore reports and recommendations from all the other experts commissioned by the Department, such as Walker and Cave, yet he suddenly does not wish to—[Interruption.] The Minister is chuntering from a sedentary position. I am happy to give way if he wants to say something.

Photo of Dan Rogerson Dan Rogerson The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs

The hon. Gentleman is correct that the Government will consider and respond to any report that came to the previous Labour Government or this Government. However, we have built many recommendations from those reports into the Bill and wider regulations and policy.

Photo of Thomas Docherty Thomas Docherty Shadow Minister (Environment, Food and Rural Affairs)

I am most grateful to the Minister for that point. He is right to say that he should not be wedded to a recommendation just because it comes from an independent expert. We agree. We think that it was a worthy point several years ago, but events have overtaken it.

Last Tuesday, we had a debate about pricing and the fact that we will no longer impose penalties for ending abstraction, which must be considered as part of Ofwat’s five-yearly price review. I made the point that, if we are going to make that kind of change, it is even more important that we elevate sustainability to a primary function of Ofwat.

The new clause is supported by a huge range of organisations. Clause 41, which the Government propose, makes that even more imperative. It is even more critical than before as we go forward and face ever greater water stress in many parts of the country.

Photo of George Hollingbery George Hollingbery Conservative, Meon Valley 9:15 am, 17th December 2013

I know the hon. Gentleman wants to bring his remarks to a close and I apologise for leaving this so late, but I sat on the Communities and Local Government Committee that discussed the national planning policy framework at length and the meaning of sustainable development. There is no agreed view of what sustainable development is, but there are many learned papers and learned journals, and many professors have talked about it a great deal. At the moment, we know what Ofwat does—we know it does resilience and that it is an economic regulator. What slightly worries me is what happens if we give it a primary duty of judging sustainable development. Where does it put economic development and what do we mean by economic development?

Photo of Thomas Docherty Thomas Docherty Shadow Minister (Environment, Food and Rural Affairs)

I am grateful to the hon. Gentleman and I hope he will make some short remarks in a moment. He is right to raise the definition of sustainability, but he went on to answer his own question by pointing out that there is no such thing as a clearly agreed definition of economic growth. The Treasury certainly has no such agreed definition. The point of making sustainability a primary duty is that it allows Ofwat to consider it in the round. Perhaps we can come back to that after the Minister has spoken—I am genuinely keen to hear what he has to say. I pose a question back to the hon. Gentleman as I close: just because we do not have one very narrowly defined definition of sustainability, why should we not make it one of the key focuses for Ofwat?

Photo of George Hollingbery George Hollingbery Conservative, Meon Valley

I shall be very brief and try to do a slightly better job of explaining what I was trying to explain just then. As I have said, I sat on the Communities and Local Government Committee that looked very  carefully at the national planning policy framework. We struggled a great deal to work out what we meant by sustainable development and, indeed, what the NPPF meant by sustainable development. That is important in this context.

We know what Ofwat does currently. We know that it is basically responsible for the economic regulation of a monopoly market. The Government propose that resilience becomes a much more important part of what it does as well. That is important because, without resilience in the system, it does not matter how cheap water is. If there is no water, however much it costs really does not matter. That is very important. There is a great deal of other advice set out by the Government about what we mean by sustainability as a secondary duty, and there will be guarantees put in place to ensure that Ofwat looks very carefully at what happens to the environment in considering any further developments.

To return to why I believe a primary duty of sustainable development might be dangerous, I am intrigued by the words of the hon. Member for Dunfermline and West Fife, who described how many different groups are backing the new clause. I am curious and I wonder whether there is not a parallel with the development sector. The duty for sustainable economic development is being used by developers across the piece in planning, especially with respect to housing developments that may not be what local councils and local people want—they propose developments because they have that economic development aspect. If the regulator—Ofwat, WICS or whatever—has a primary duty for sustainable development and somebody comes forward with an idea for a new factory, what factors does the regulator consider?

In considering sustainable development, the regulator would not just look at environmental factors, which is one part. It would also consider sustainable economic development, sustainable social development, sustainable environmental development and now even sustainable cultural development—I would be very happy about that, because fishing is part of our culture, and no doubt we would have to build reservoirs just so people could go fishing. I am being flippant, obviously.

If I were sitting in Ofwat’s chair, I would ask myself which of those pillars of sustainable development I should consider. What representations is the food and drink industry likely to make? I suspect I would be as likely to hear about sustainable economic development as about environmental matters. I am therefore slightly worried that the broad definition, which is not an agreed definition, of sustainable development might come back, in due course, to bite us, and create confusion about the role of Ofwat.

Photo of James Gray James Gray Conservative, North Wiltshire

I call Mr Murdoch. My brain has gone soggy this morning; I mean Mr Docherty. Why did I say Murdoch?

Photo of Thomas Docherty Thomas Docherty Shadow Minister (Environment, Food and Rural Affairs)

It is a good Scottish name, Mr Gray. I have lost my train of thought now. I am used to being sledged by Government Members, but it is a new thing for the Chair to do it.

The hon. Member for Meon Valley referred to a lack of definition, but if the words mean so many things to so many people, is it not even more important to put things on a primary footing, enabling Ofwat to consider the range of views before taking its decision?

Photo of George Hollingbery George Hollingbery Conservative, Meon Valley

No. I disagree fundamentally. We know what Ofwat does. We have a monopolistic market and know exactly what we need from Ofwat. In my view, that is the regulation of pricing mechanisms and of the economy of the water market. That is the thing it should concentrate on most, because otherwise, in a monopolistic market, those in the market can price improperly.

Part of its duty relates to resilience, because, as I said earlier, supply is as important as anything else. In future, we may not be able to guarantee supply, so that duty should sit with the regulator. However, I have a strong feeling that, with such a diffuse duty as the hon. Gentleman proposes, on whose definition there is no agreement, Ofwat and WICS might encounter considerable difficulty over what they should be deciding on in any given application or circumstance.

As long as there is a clear acknowledgement from the Government—in advice and guidance, or perhaps in Committee—that the resilience duty is at least partly defined by an environmental duty, which is set with advice from the Government, that would be sufficient. I understand why we might, taking things a step further, want to proceed with the idea. My hon. Friend the Member for Brecon and Radnorshire has made a persuasive case, but we need clarity on Ofwat’s duties, and the new clause would probably cloud it beyond what is reasonable.

Photo of Hywel Williams Hywel Williams Shadow PC Spokesperson (Education), Shadow PC Spokesperson (International Development), Shadow PC Spokesperson (Work and Pensions), Shadow PC Spokesperson (Health)

I apologise to you and the Committee, Mr Gray, for my absence last week, which was due to illness. I regret it not least because I had tabled provisions to be considered, but perhaps, if I am fortunate, they can be considered on Report. I want briefly to speak in support of the hon. Member for Brecon and Radnorshire.

Sustainability is a contested issue, as hon. Members have noted. The hon. Member for Brecon and Radnorshire mentioned Treweryn. An operational definition of sustainability can be got by talking to people who used to live there, including relatives of mine, who have a clear idea of it. Treweryn was not sustainable for them, as they had to move away to make way for things that might be economically desirable for others. That is a stark reminder for anyone who thinks that local, environmental and social considerations can be ignored. We had a grim and eerie experience in the 1970s and 1980s when there was a long period of drought, and the remains of the village of Treweryn actually appeared out of the water. I went to have a look and it was certainly a spine-chilling experience.

The hon. Gentleman might have mentioned that the National Assembly for Wales is, I believe, the first legislative body in the world to have sustainability written in as its prime purpose. Again, I would suggest to hon. Members who have worries about the duty to look at the way the National Assembly for Wales carries it out in practice and, latterly, the Welsh Government. Ofwat would not operate in a vacuum—there is experience.

Dwr Cymru Welsh Water, operating in Wales, is cognisant of that duty of sustainability. The hon. Member for Brecon and Radnorshire mentioned drinking water. My constituency is partly supplied by Llyn Cwellyn, outside Caernarfon. We had an outbreak of cryptosporidium there a couple of years ago and Welsh Water moved very quickly to improve the treatment,  and then bring in a long-term system of treatment built in the national park. It is a wonderful building, consistent with the local environment and the obvious need for drinking water.

What I am saying is also reflected in how Dwr Cymru Welsh Water has invested in and improved the sewage treatment, which has led to vast improvements in beaches in Wales. That is a positive move and I hope that the Government will consider and act on it. I will certainly support the hon. Member for Brecon and Radnorshire if he chooses to press his new clause to a Division.

Photo of Dan Rogerson Dan Rogerson The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs

I am sorry to hear that so many members of the Committee are suffering from winter colds; it is a measure of their resilience that they have managed to turn up for the debate this morning. I particularly thank my hon. Friend the Member for Brecon and Radnorshire for prompting this debate and the hon. Member for Dunfermline and West Fife for setting out the case, which has been made, it is fair to say, by a number of organisations. I take this opportunity to place on the record the Government’s position.

The Government are committed to reforming the aspects of the current system that can result in short-term thinking and to ensuring that their long-term priorities for the water sector and the water environment are properly reflected in regulatory decision making. Real progress has already been made through the current price review—for example, in removing the bias towards capital investment and in achieving a better balance between capital and operational solutions.

I am committed to tackling unsustainable abstraction and protecting the water environment. During the discussions, a number of hon. Members have raised the progress on consulting on abstraction reform. I can place on the record that I have launched a consultation on our proposals for abstraction reform and I will write to the Committee to make sure that members have access to the link. The hon. Member for Dunfermline and West Fife will check quickly to make sure that it is there for members to check.

Photo of Thomas Docherty Thomas Docherty Shadow Minister (Environment, Food and Rural Affairs)

I take the Minister at his word, but I am sure that he will accept that it is slightly disappointing that we read about the issue in the media this morning. His officials, I am sure, forgot to circulate the same information to the Bill Committee. Will the Minister ask them as a matter of urgency to send to the Committee what they sent to the media last night?

Photo of Dan Rogerson Dan Rogerson The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs

This is my first opportunity on the day of the launch to raise the issue, and I am doing it. As I said, I will write to the Committee to make clear what our proposals are and where members can find them so that they and relevant organisations can comment.

I am in no doubt that environmental damage undermines the long-term resilience of the water industry by threatening the natural services on which the whole system relies. That is why we have developed a duty of resilience specifically designed to address the legitimate concerns raised by hon. Members about the need for long-term investment that will address the pressures caused by climate change and population growth, and protect the natural environment on which our water sector relies.

The hon. Member for Dunfermline and West Fife sought to define resilience fairly narrowly, in terms of the ability to withstand shock to the system. He then went on to talk about the need for sustainability in the system and gave the example of dealing with droughts. He was, perhaps, looking at similar issues in respect of both potential duties. We do not define resilience so narrowly. The drafting of the new duty makes it clear that it is long-term resilience to a range of pressures on which the regulator must focus.

Photo of Thomas Docherty Thomas Docherty Shadow Minister (Environment, Food and Rural Affairs) 9:30 am, 17th December 2013

Perhaps it might speed things up if I were to remind the Minister that I said I was over-simplifying the benefits of this debate.

Photo of Dan Rogerson Dan Rogerson The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs

I am grateful to the hon. Gentleman for repeating that helpful point of clarification.

On the points made by my hon. Friends the Members for Brecon and Radnorshire and for Meon Valley and by the hon. Member for Arfon, I should say that Ofwat has had a statutory duty to contribute to the achievement of sustainable development since 2005. We have reinforced that by providing statutory guidance that sustainable development is central to everything that Ofwat does and must be fully embedded throughout its regulatory decision making. Ofwat must achieve a balance between the needs of customers, stable investment and environmental outcome; it will always need to strike a balance between its duties.

The Government commissioned the Ofwat review to consider these matters. Having looked carefully at the case for change in the status of the sustainable development duty, David Gray concluded that he did not believe that such a change would have the effect that its proponents were looking for.

In terms of the changing situation that the hon. Gentlemen pointed out, it was not related to the situation of the industry or the environment at the time; it was that the Gray review felt that changing the sustainable development duty would not achieve the results that some of the proponents were looking for. The Government concur.

Photo of John Cryer John Cryer Labour, Leyton and Wanstead

I am interested in the Minister’s view of the points raised by his hon. Friend the Member for Meon Valley. Is the problem the difficulty of coming up with a definition of sustainability rather than any other reason?

Photo of Dan Rogerson Dan Rogerson The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs

The key is that we want duties that are clear for Ofwat, so that it can apply them in its regulatory role simply and in a straightforward way that achieves the outcome that we want—resilience for customers in terms of water supply and economic impact, but also environmental resilience. A clearly defined resilience duty achieves the objectives that we are seeking.

Photo of Hywel Williams Hywel Williams Shadow PC Spokesperson (Education), Shadow PC Spokesperson (International Development), Shadow PC Spokesperson (Work and Pensions), Shadow PC Spokesperson (Health)

I referred in my brief remarks to the duty placed on the National Assembly for Wales. Has the Minister had any discussions with Welsh Ministers as to how that is carried out—the operational definition of utility sustainability in practice?

Photo of Dan Rogerson Dan Rogerson The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs

A number of bodies have duties of sustainable development. They operate as part of their regulatory framework. Ofwat already has in place a duty to have regard to sustainable development.

My hon. Friend the Member for Brecon and Radnorshire reminded us about the bodies with regulatory functions with regard to the water industry. There is the Drinking Water Inspectorate, and, particularly important in this case, the Environment Agency, which makes sure that we have a sustainable water resource that meets the needs of the natural environment as well as those of society. That is an important safeguard that we must not forget.

However, given Committee members’ stated desire to make sure that we are giving Ofwat adequate scope to take account of environmental concerns, and given the evidence that we received at an early stage of this Committee, I am keen to ensure that the resilience duty is defined in the correct way. As I said at the time, I am open to looking at whether we can improve it to provide reassurance. If we feel that we can improve it, I will bring forward something at a later stage.

As a Government, we remain fully committed to sustainable development, and Ofwat has a duty to take account of it. However, we do not believe that a simple change in the order of Ofwat’s duties is the best response to the long-term environmental challenge. I urge my hon. Friend the Member for Brecon and Radnorshire to withdraw his new clause and consider how my remarks on improving or strengthening that resilience, and clarifying the role of resilience, may help him.

Photo of Thomas Docherty Thomas Docherty Shadow Minister (Environment, Food and Rural Affairs)

I am grateful for this opportunity for a second bite at the cherry. Perhaps I could correct the record on my own behalf. I said earlier that I was not quite certain of the date of the Gray review. If it is helpful to the Committee, I should say that the report was published in 2011, although I think that the work was undertaken slightly earlier than that. I wanted to make sure that that was set straight.

I begin by taking the Minister back to the evidence sessions that he himself referred to. I am not going to try to pronounce the acronym, but the Chartered Institution of Water and Environmental Management is one of the organisations that the Minister himself recommended as being worth listening to, both in his remarks today and previously. It believes that the economic regulator should have a statutory duty to protect water conservation and efficiency, and that the existing governance and operational structures are not fit for the future and will not be effective going forward.

That is particularly true given the fact that, with our support, the Government adopted clause 41 last week. I would argue, and I think the hon. Member for Brecon and Radnorshire would as well, that the point is made even more compelling as the Government are not minded at this stage to accept the need for abstraction reform to be moved on to a priority footing.

It is disappointing—I am sure the Procedure Committee would have a view on this—that yesterday the Minister chose to provide information about the review of abstraction in some detail to the media, but not to Parliament. It is Christmas and we all have a spirit of bonhomie at this time of year, but I am not convinced by the Minister’s assurances that the information will be made available at the earliest opportunity.

The earliest opportunity was this morning, before the Committee met. The Minister did not make available, in electronic form, a copy of the briefing that has been provided to The Guardian and other newspapers. I hope that he will get some inspiration in the very near future and provide that information to the Committee, particularly before we get to the vote on the new clauses regarding abstraction; otherwise, I think, there would be a clear breach of procedure.

Photo of James Gray James Gray Conservative, North Wiltshire

Order. It would not be a clear breach of procedure, but as the hon. Gentleman has raised the matter, I should say that Mr Speaker has made his view consistently known that the Government should take steps to make all information available to Parliament before the media. I am sure that, if he were apprised of the particular details of this case, he would very much sympathise with the point that the hon. Gentleman is making. None the less, the Government are not, of course, in breach of any procedures. I am certain that the Minister, having heard this exchange, will seek to provide the information in question to the Committee as soon as he possibly can.

Photo of Thomas Docherty Thomas Docherty Shadow Minister (Environment, Food and Rural Affairs)

I am sure that inspiration will be forthcoming in the very near future.

The economic regulator of the water industry needs to be empowered to address the problems of the future of the water industry. The current arrangements, put in place 25 years ago, are simply not fit for purpose. The challenges that we face in the 21st century—climate change, population growth, economic constraints—are very different and perhaps more complex than those facing our predecessors when they considered the paving Bill in the late 1980s.

To give one practical and simple example that even the officials could understand, at the last price review a number of schemes for leakage reduction and widespread metering put forward by water companies were stuck down because they were not compatible with Ofwat’s duties. I am thinking of the proposal in the Hertfordshire area in particular. I do not know which water company was involved—I suspect it was Welsh Water.

Photo of Thomas Docherty Thomas Docherty Shadow Minister (Environment, Food and Rural Affairs)

My English geography is probably as good as the Minister’s Scottish geography. Inspiration from the Minister when he replies would be helpful. I suppose that the Welsh are everywhere, anyway.

In Hertfordshire, a water company proposed water metering and various schemes. We freely acknowledge that those schemes would have cost money, but, as Ofwat deemed that the area was in water surplus, it struck them down. There was nothing wrong with them. They would have helped the local environment and wider water problems and local residents thought that they were sensible, but, because sustainability was not a primary duty, Ofwat did not believe that it could give that the same weighting as the schemes’ economic cost and benefit. That is, therefore, a clear and present example of where the current system needs reform.

I hear the Minister’s comments about promoting resilience to be a primary duty, and the Opposition welcome that. He will recall that we supported that in a  proposed amendment earlier in Committee, but, as he will probably agree, resilience and sustainability are not quite the same, even after stretching resilience to its broadest definition. For that reason, we will support the hon. Member for Brecon and Radnorshire if he presses his new clause to a vote. As the Minister said, in clause 22, resilience is confined to economic resilience, to reduce the frequency of restrictions on supply and to try to tackle the more severe impacts of flooding; it does not look at the long term. I give way to the Minister.

Photo of Dan Rogerson Dan Rogerson The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs

I was not seeking to intervene, but indicating that I will respond to that.

Photo of Thomas Docherty Thomas Docherty Shadow Minister (Environment, Food and Rural Affairs)

I am grateful. Resilience still has quite a narrow definition and the Government risk creating trade-offs with environmental outcomes. It would be relatively easy, for example, to increase the resilience of water companies by lifting restrictions on abstractions during droughts to avoid interruptions to public water supplies, but that would have the perverse outcome of doing more damage to the chalk streams that we have in Hertfordshire among other places.

Photo of John Cryer John Cryer Labour, Leyton and Wanstead

It occurs to me that one thing that was established—I think during the evidence sessions—was that this is a broad framework Bill, with the intention, as I understand from the Minister, to use secondary legislation to fill in the details, as is often the case, particularly nowadays. Could not secondary legislation be used for the definition of sustainability and the other elements that my hon. Friend talks about?

Photo of Thomas Docherty Thomas Docherty Shadow Minister (Environment, Food and Rural Affairs)

My hon. Friend makes an important and useful observation. I hope that the Minister was paying attention and that he will address that when he replies. The problem that the Opposition and, indeed, the hon. Member for Brecon and Radnorshire have is that, although I will not say that the Government want to have their cake and eat it, they do seem to be in a slightly contradictory position. Since coming to office three and a half years ago, the Government have been very clear that they do not believe policy should be set by agencies. They believe policy should be set by the Department in Nobel house, and it is up to the regulator—particularly the Environment Agency—to implement the policy decisions taken by the Department.

The Minister will recall from his time on the Select Committee that the Environment Agency told it more than once, both publicly and in private, that it does not do policy and that policy is done by central Government. The Minister nods, and he would accept that that is the case. Yet if I understood him correctly, he is arguing that we should simply trust Ofwat to get on with it. He shakes his head. I assume that he wants to cover that point when he responds.

If I have understood the Minister correctly, he seems to be saying that he will give some assurances today in his thoughtful remarks and that Ofwat will then be able to interpret those remarks when it considers the importance of sustainability in the next price review and, indeed, the one after. However, as we have just covered and as  the Minister agreed, Ofwat does not do policy any more and the Environment Agency does not do policy. The Government do policy, and therefore the only way to set policy is by elevating sustainability. With that, I will sit down, and I very much welcome hearing what the Minister says in response.

Photo of Dan Rogerson Dan Rogerson The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs 9:45 am, 17th December 2013

Thank you, Mr Gray, for giving me a second bite of the cherry, too. Possibly it is a different cherry to that of the hon. Gentleman, as I do not want to catch his cold. I am grateful to him for giving us an example of a past case. Although I am proud of my Celtic ancestry, I think that a few battles would have had to have gone a little bit differently for the Anglo-Saxon incursion to have stopped just north of London and for Welsh Water to have stretched their boundaries that far, but there we go. That would be a different reality, which I am sure that the hon. Member for Arfon, who is no longer in his place, would have welcomed.

In citing that case, the hon. Member for Dunfermline and West Fife set out the position as it was, not the position as it is now. In my earlier contribution, I explained that the Government were clear in the statement about long-term resilience and long-term investment that we need to take account of alternative ways to invest. We not only need short-term or hardware solutions, but to look at how we manage water as a resource in general.

The Government have therefore been clear and have set the policy. The hon. Gentleman is quite right to point out that the Environment Agency would not see that as its role, but its role is to be the regulator of issues such as abstraction. That is the key difference. Through the policy that we set and Ofwat’s duty of resilience, the Government are putting in place the framework that the regulators—the Environment Agency and Ofwat—will then implement.

Photo of Thomas Docherty Thomas Docherty Shadow Minister (Environment, Food and Rural Affairs)

So that we do not have to keep going backwards and forwards, perhaps the Minister will clarify this point. As we understand it, Ofwat will have a primary duty on economic issues and a primary duty on resilience. Surely, those duties will greatly outweigh a secondary duty on sustainability. Does the Minister accept that concern?

Photo of Dan Rogerson Dan Rogerson The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs

I understand what is behind that concern. The key issue is that we must be sure that the duties placed on Ofwat are to consider the economic impacts of its interventions and decisions, and to consider the social impacts but also the environmental ones. I want to be clear on that. As I undertook earlier, I will consider the resilience duty to make sure that it is absolutely clear that it takes into account those long-term environmental considerations. We believe that it does, but clearly other people are concerned, so I want to make it absolutely clear that we will seek to do that.

In summing up, I hope that hon. Members will see that the existing sustainability duty remains in place and that we will have a new resilience duty, under which all aspects of managing water resources, which are so vital to our future, will be considered. We can see that Ofwat is already taking account of the different ways that companies invest their resources to do things effectively. That will inform what Ofwat does. I will look at resilience to ensure that it is clear to everybody that the environmental aspects are considered as part of that duty.

The hon. Member for Dunfermline and West Fife prompted me to respond to the hon. Member for Leyton and Wanstead on the further definition of sustainable development and the possibility of doing so through secondary legislation. We have been clear what the role of the Government is through the strategic policy statement, which already sets out what the Government are seeking with respect to sustainable development and with respect to resilience. That is where the Government set out their aims and the framework. It is then for the regulators to implement that in their decision making. On that basis, I hope that my hon. Friend the Member for Brecon and Radnorshire will feel able to withdraw his new clause, so that we can make progress on securing that resilience in a way that covers all those aspects of resilience that we intend to introduce.

Photo of Thomas Docherty Thomas Docherty Shadow Minister (Environment, Food and Rural Affairs)

I am more confused than I was at the start. Earlier, I confused Hertfordshire and Herefordshire—my sincere apologies to those good counties—but the Minister seems to be giving ground before our eyes. Perhaps my cold is blurring my vision, but he seems to be indicating that he wants to go away and have another think about the resilience duty. For the benefit of the Committee and the watching stakeholders, will he clarify exactly what he proposes?

Photo of Dan Rogerson Dan Rogerson The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs

I said on Second Reading when my hon. Friend and others raised these issues that I believe that the resilience duty, as drafted, covers all the aspects that are being raised here under people’s aspirations for an elevated sustainable development duty. However, if on looking at the clause and the way that the duty is set out, there is anything that I can do to reassure people, I would be happy to do so. I propose to reflect over the coming weeks and to see whether it might be possible to introduce something at a later stage to make that absolutely clear. But it is my belief and our legal advice that the sustainable development duty in its current place must be taken into account by the regulator. Our resilience duty also achieves that emphasis on environmental resilience.

I would make one other point to the hon. Gentleman. He has been very generous to me and other members of the Committee in his remarks. On occasion, however, he has mentioned officials who are not present in the Committee or who cannot speak for themselves. I urge him to reflect on the language that he uses when describing people who have been working on the Bill and who have been very active in consultation to ensure that they frame it fairly and helpfully.

Photo of Thomas Docherty Thomas Docherty Shadow Minister (Environment, Food and Rural Affairs)

I draw the Minister’s attention to our remarks last Thursday, when I was quite effusive. I believe in giving credit where credit is due at all times. I shall be brief, as I am conscious that the hon. Member for Brecon and Radnorshire wants to press the new clause to a vote. Although we welcome the Minister’s intention and I hope that he will meet some of the stakeholders early in the new year, does he realise what he has just committed himself to do? Our problem is that, apparently, the Bill will be considered on Report on the first day back after Christmas. There was no consultation with the Opposition on that. We are most unhappy, as the Minister knows. Although I believe that he is an honourable individual, both personally  and in his ministerial role, we cannot take his assurances at face value because of the time scale involved in getting the Bill through. Therefore, it is with some regret that we will support the hon. Gentleman in the vote on his new clause.

Photo of Roger Williams Roger Williams Liberal Democrat, Brecon and Radnorshire

I thank all hon. Members for their contributions to this important debate, which has obviously created a great deal of interest. A large number of organisations from various interests support the concept of Ofwat having sustainable development as a primary duty.

We have debated the hierarchy of duties for Ofwat. I remain convinced that there is value in promoting sustainable development. We have had a wide-ranging debate. Those of us who live in east Wales have looked at the fertile pastures of Herefordshire and Shropshire, but we have not yet extended that avarice to Hertfordshire. I thank the hon. Member for Dunfermline and West Fife for giving us that greater ambition.

Photo of Thomas Docherty Thomas Docherty Shadow Minister (Environment, Food and Rural Affairs)

Once again, I offer my apologies to both counties involved. I think my confusion came because we Scots went as far as Derbyshire, so we assumed that the Welsh had gone equally as far eastwards.

Photo of Roger Williams Roger Williams Liberal Democrat, Brecon and Radnorshire

I will not pursue that debate, as I understand the Chairman is getting slightly tired of it. However, the hon. Gentleman did raise the issue of demand control, which is fundamental to sustainability, and how a number of projects were struck out in the previous price review undertaken by Ofwat.

I am taken with the words used by the Minister this morning and his commitment to look again at this—in particular, to try to unpick the relationship between resilience and sustainability. That is very important.

New clause 23, in my name, and new clause 32, in the name of the shadow Minister, are perhaps intended to achieve the same thing. We have not yet had a debate about the wording of which would be more appropriate to pursue our intention to elevate the duty of sustainability to the first order for Ofwat.

Photo of Thomas Docherty Thomas Docherty Shadow Minister (Environment, Food and Rural Affairs)

Referring back to my opening remarks, I understand that the new clauses use the same wording, but we have included some extra lettering. We will support the hon. Gentleman’s new clause, because there is no substantial difference between the two.

Photo of Roger Williams Roger Williams Liberal Democrat, Brecon and Radnorshire

I thank the hon. Gentleman for that. Mention has been made that progress in considering the Bill will be quite quick. When the Minister returns to his beloved Cornwall and sits down after his Christmas lunch of turkey and all the trimmings, will he reflect on the fact that people outside are looking at this important debate and want him to propose something more substantial?

My faith in the Minister is good. I have commented on his fine defensive capabilities during earlier discussions on these matters. I hope that those defensive capabilities will not overcome his natural inclination to be a good friend to sustainability. On that basis, I beg to ask leave to withdraw the motion.

Hon. Members:


Question put, That the clause be read a Second time.

The Committee divided: Ayes 8, Noes 10.

Division number 9 Decision Time — New Clause 23 - Primary duty of sustainable development

Aye: 8 MPs

No: 10 MPs

Ayes: A-Z by last name

Nos: A-Z by last name

Question accordingly negatived.