I beg to move amendment 26, in clause 4, page 10, line 4, leave out—

“use that is to be made of” and insert—

“priority that is to be given to”.

With this it will be convenient to discuss the following:

Clause stand part.

New clause 5—Licence conditions about nature recovery—

“In the Water Industry Act 1991, after section 17FB insert—

‘17FC Nature recovery

(1) It is a condition of all licences granted under section 17A (water supply licences) that relevant undertakers must give due consideration to nature-based solutions targeted at reducing flood risk and pollution incidents, improving water quality and benefiting nature restoration in their catchment area.

(2) The Authority must not take any action that discourages or prevents a relevant undertaker from making an investment in accordance with subsection (1).’”

This new clause would make it a condition of all water companies’ licences to consider nature-based solutions to flood risk, improving water quality and benefiting nature restoration in their catchment area, and prevent the regulator from discouraging or stopping such investments.

You will be delighted to hear that I will not say very much about this, Mr Vickers. Amendment 26 relates to nature-based solutions for these broader issues, and many of my points were covered under amendment 24. I simply want to point out the value of nature-based solutions. They are cheap, they are low input, they provide potential income for farmers and other land managers, they are environmentally friendly in and of themselves, and they involve very light engineering to install and maintain. They are also less complex, not labour-intensive and much quicker to achieve and install, as well as having very clear ecological benefits and alleviating pressure on more conventional forms of sewage treatment. I make those points just to add to the importance of prioritising nature-based solutions to tackling sewage treatment.

I understand that this will not be put to a vote, but I want to add my support for nature-based solutions and to draw to the Minister’s attention an experience I had with Anglian Water. It had a village-sized water treatment works just over the border in north Norfolk at a place called Langham. The chalk stream that the sewage works discharge into is the Stiffkey, which runs through my constituency and then just over the border. To its great credit, Anglian Water co-operated with a local landowner and created a wetland. I would have thought it would be the easiest thing in the world to have the treated sewage discharge into a secondary processing unit—it was, from memory, about two acres in size, so it is quite a large wetland with meandering going through it—and then exit back into the Stiffkey.

The Environment Agency eventually allowed this to take place, but it is worth highlighting that its initial response was, “No, you have to apply for a new licence to discharge effluent into the river.” That was because it was coming not from the pipe, which was semi-treated, but from a new entrance into the stream via the wetland. The “computer said no” attitude of the Environment Agency was quite extraordinary, because it was not going to get any worse with the discharged water going through a wetland before entering the stream, and yet it took several months. It was a very significant constraint, and it called into question whether or not the project would go ahead.

I would be grateful if the Minister could take that away with her and ensure that the Environment Agency sees the development of wetlands as a really positive step forward. I know its senior leadership does, but that message should go right through the organisation so that the time and delay of bureaucracy, and the requirement for new applications for licences, do not get in the way of what we all wish to achieve.

I rise to speak to new clause 5, tabled by His Majesty’s loyal Opposition. We are talking about practical nature-based solutions to flood risk. I welcome the comments made about nature-based solutions, not least from the hon. Member for Westmorland and Lonsdale, who talks passionately about the importance of nature-based solutions for flood mitigation and that side of things.

I noted that during the election campaign, he waxed lyrical about Windermere, which is a beautiful part of his constituency. I know that he was an active participant with the leader of his party in water sports as well, although I note that he was a lot more competent at staying on the paddleboard than his leader. I welcome his comments on the importance of protecting and preserving our water spaces, but very much encourage the Government to facilitate landowners, land managers and farmers to do nature-based solutions to mitigate flood issues.

New clause 5 would try to ensure that water companies consider practical, nature-based solutions to flood risk. That would also make water companies try to improve water quality and nature restoration in their catchment areas, so there would be a double win. In Government, we Conservatives set specific, legally binding targets to improve water quality and availability in order to try to reduce nutrient pollution and sediment pollution from agriculture to the water environment. We also set out how to reduce water pollution in our environmental improvement plan. Nature recovery was carried out under us, and opportunities to do that with nature-based solutions should be seized on as we move forward.

I want to be fair to the Government and welcome their movement on this issue throughout the Bill’s passage in the other place. I thank the Minister for her engagement and Baroness Hayman for the collegiate way in which she worked with colleagues. There is a spirit of consensus when we talk about the importance of nature, nature recovery and using nature-based methods to try to help in these situations. I welcome the Government’s approach in the other place, which has led to the measures we are discussing in clause 4.

I welcome the work done in the other place by my Conservative colleagues, and I will name-check, in particular, Lord Gascoigne. However, we again believe that despite the movement from the Government, there is still room for further movement and improvement—I hope that the Minister will consider some of this—to ensure that we benefit from the power of nature-based solutions to water-related problems.

Everyone in this room will be acutely aware that flooding is becoming a much more regular phenomenon across the United Kingdom—I see Government Members nodding their heads. We all have experience of representing constituencies where flooding is becoming increasingly apparent, with extreme weather events and the impact of climate change. We had a statement on flooding on Monday from the Minister, and we talked about the issues that people face. I reiterate my sympathy to those who have been affected by flooding. As I said during those exchanges with the Minister—a bit of repetition is not bad on this particular subject—we must not underestimate the mental health impacts of flooding. I pay tribute to people on the frontline, in the emergency services, the Environment Agency and local authorities, as well as the volunteers who do so much to help people in these challenging times—not least, as the Minister and I said in the Chamber this week, during the flooding and extreme weather that we have seen in recent days and weeks. Sadly, I think our exchanges will go on and on, but I think we can agree on constructive measures to try to mitigate the impacts of flooding and on using nature to help with that.

Nature-based solutions can have a significant impact on flooding, such as the recreation of bends in rivers, re-wiggling rivers and the creation of wetlands that slow the flow of water. Although this is not the amendment’s specific purpose, I quickly suggest that the Government look at financially supporting farmers who implement such nature-based solutions. This was introduced through the environmental land management scheme. It would help if the Government took that forward and acknowledged farmers, land managers and landowners who are doing the right thing to try to help their communities and also restoring nature in the process.

I must ask the Government to clarify their formal position on nature-based solutions. I see lots of nodding heads, and it would be great to get clarity on that from the Minister. If the Government are not content with this proposal from His Majesty’s Opposition, why do they not believe that it complements clause 4 in some way? We would like to hear what the Government feel about it. We have chosen to table new clause 5 because we believe that it does complement clause 4.

At present, clause 4 mandates that nature-based solutions be considered in drainage and sewerage systems and their drainage and management plans. Our new clause, however, strengthens that by directly connecting the need for nature-based solutions to the very conditions of holding water licenses. This is an important distinction, as it follows a process of reform that has led to the improved position in the sector in recent years.

We all agree that more needs to be done, and there are still drastic things happening. We are hopefully acknowledging that some progress has been made, but we need to hold water companies’ feet to the fire in making more progress, such as through the licensing law changes in paying dividends to shareholders, which we have already discussed today. Further still, we have widened the scope in which nature-based solutions must be considered to include flood risk. As I mentioned, that can be vastly improved on, including by using nature-based solutions, as the hon. Member for Westmorland and Lonsdale mentioned.

Even more so, proposed new section 17FC(2) of the Water Industry Act 1991 explicitly states that Ofwat cannot take any steps that discourage any water company from investment in nature-based solutions. By making such an explicit statement, we are ensuring that the regulator does all that it can to advance the nature-based solutions that can make a real difference. Given all that, we encourage the Government to look at the new clause closely, and if they are not keen to support it, to explain why not and what they are going to do with nature-based solutions. We feel that this particular constructive amendment is complementary to the clause. We would like to hear from the Minister, but notwithstanding that, we will be likely to take this to a vote.

I thank all hon. Members for their thoughtful contributions during this debate and the careful consideration of the amendments tabled to clause 4. We are in danger of having a bit of a love-in with so much agreement in this room.

I turn first to amendment 26, which was tabled by the hon. Member for Westmorland and Lonsdale. I was genuinely really pleased to see clause 4 added on Report in the Lords, as a result of the collaborative cross-party approach to strengthening the Bill so that it further encourages greater use of nature-based solutions by water companies, and I appreciate the kind comments from the Opposition spokesperson, the hon. Member for Epping Forest. This is why clause 4 requires sewerage undertakers to address, in their drainage and sewerage management plans, the use that is to be made of nature-based solutions in their networks.

Sewerage undertakers already have existing obligations under section 94A of the Water Industry Act to address the sequence and timing for the implementation of measures proposed in their drainage and sewerage management plans. We believe that these obligations sufficiently require sewerage undertakers to address the relative prioritisation of the proposed measures in their plans. Nature-based solutions are one of a diverse range of potential solutions to complex drainage and sewerage issues. Clause 4 will ensure that sewerage undertakers highlight the proposed role of nature-based solutions within their network. It is right that undertakers have due flexibility to consider the full range of solutions available to them and to work with stakeholders to identify the right solutions.

As much as I love nature-based solutions—and so does everyone in the room, it appears—I am sure we all accept that it is not appropriate to prioritise nature-based solutions ahead of other available options in every circumstance. We believe, however, that the provisions in clause 4 will have sufficient positive effect in supporting greater exploration and development of nature-based solutions without posing operational challenges for the sewerage undertakers. On that basis, I ask the hon. Member for Westmorland and Lonsdale to withdraw his amendment.

Moving to new clause 5, which the hon. Member for Epping Forest tabled, I take this opportunity again to agree and emphasise that the Government think that nature-based solutions are critical to ensuring that we have a resilient and sustainable sewerage system. I am therefore delighted to inform the House that we have recently seen the regulator doing just that. In its final determinations for the 2024 price review, Ofwat has set out an allowance of £3 billion for water company investment in nature-based solutions and biodiversity. That includes £2.5 billion to reduce storm overflow spills through green solutions.

However, the Government have noted the concerns and amendments in the other place, which is why we introduced our amendment to place a new requirement on sewerage undertakers to support the greater use of nature-based solutions, which now forms clause 4. Clause 4 will ensure that nature-based solutions are considered from the start of investment planning and decision making as a solution across multiple risks, including pollution, flooding and drainage. I trust that the hon. Member is therefore reassured that his new clause has already been provided for. On that basis, I ask him not to push his new clause to a vote.

Although I have outlined some of the merits of clause 4, I will briefly reiterate why this Government consider the clause to be an essential part of the Bill. Nature-based solutions are vital to protecting the environment and the wider water system, as well as delivering co-benefits including protection from flooding for the public and enhancing the natural environment. I concur with the comments made about flooding by the Opposition spokesperson. Clause 4 will drive further exploration and development of nature-based solutions, and will require undertakers to be transparent as to how they have deployed, or propose to deploy, nature-based solutions within their drainage and sewerage networks. Compliance with that duty will be monitored by Government and regulators.

Sewerage undertakers will also be required to conduct public consultations on their drainage and sewerage management plans, which will allow the public to scrutinise the plans and propose changes. Therefore, to help realise the Government’s desire to see further development of nature-based solutions by sewerage undertakers, I commend clause 4 to the Committee.

I will add to the words I have already said, but not by very many, I promise. The simple bottom line of our proposal is that nature-based solutions offer great value for dealing with sewage. As has been mentioned on both sides of the Committee, they also have a significant impact on flood prevention. I am bound to crowbar this in, but it is a reminder that among the things that we should be enormously grateful to those who work our uplands—our hill farmers—for is that their work, if we support them properly, prevents people who live in towns, villages and cities from being flooded.

Another part of the Department for Environment, Food and Rural Affairs brief is the environmental land management scheme, and how we can look to further support those working in the uplands—our land managers and our upland farmers, both tenants and owners—to be able to deliver those nature-based solutions to protect millions of homes and avoid billions of pounds of damage, as well as being part of the solution to dealing with sewage.

We will not seek to press the Committee to a Division. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 4 ordered to stand part of the Bill.