Independent Water Commission

Before I call the Secretary of State to make his statement, I place on the record the fact that Mr Speaker and the Deputy Speakers were disappointed to see extensive coverage in the media this morning of Ministers’ responses to the Independent Water Commission, before the House has had the opportunity to consider the matter. It would be nice to think that the normal courtesies will be resumed.

Thank you, Mr Deputy Speaker. I have, of course, saved the bulk of my responses for you and the House this afternoon. With permission, I would like to update the House on the Government’s plans to reform the water sector.

The water industry is clearly failing. Our rivers, lakes and seas are polluted with record levels of sewage, and water pipes have been left to crumble into disrepair. I share customers’ fury at rising bills. Right now, hosepipe bans are in place across the country because not a single new reservoir has been built in over 30 years, and the lack of water infrastructure is blocking economic growth. Water companies have been allowed to profit at the expense of the British people when they should have been investing to fix our broken water pipes. They got away with this because of a broken regulatory system that has failed both customers and the environment. The public expressed their fury in last year’s general election and voted for change. That change will now come.

In just one year, we have put in place the building blocks for change. First, we restored accountability by giving the regulators more teeth and introducing a ban on unfair bonuses, severe and automatic penalties for breaking the law, and jail sentences for the most serious offences. Secondly, we are investing £104 billion of private sector funding to rebuild the water network, upgrading crumbling pipes, repairing leaks, building new sewage treatment works and digging out new reservoirs. It is the single biggest investment in the history of the water sector, and it allows me to make a new commitment to the country: this Government will cut water companies’ sewage pollution in half by the end of the decade. That is the most ambitious commitment ever made by any Government about water pollution, and it is just the start. Over a decade of national renewal, we will restore our rivers, lakes and seas to good health.

The third building block for change is today’s final report from Sir Jon Cunliffe’s Independent Water Commission. I express my thanks to Sir Jon, his officials, and all those who have contributed to this outstanding piece of work. I agree with Sir Jon that water regulation has been too weak, too complex, and ineffective. Having four separate regulators with overlapping and conflicting remits has failed both customers and the environment. Ofwat has failed to protect customers from water companies’ mismanagement of their hard-earned money, and it has failed to protect our waterways from record levels of pollution. Today, I can announce that this Labour Government will abolish Ofwat. We will bring water functions from four different regulators into one—a single powerful super-regulator responsible for the entire water sector, with the teeth it needs to enforce the high standards that the public rightly demand.

The new regulator will stand firmly on the side of customers, investors and the environment and prevent the abuses of the past. For customers, it will oversee investment and upgrade work, so that hard-working British families are never again hit by the shocking bill hikes that we saw last year as customers were left to pay the price of failure by the previous Government. For investors, it will provide the clarity and direction required for a strong partnership between Government, the sector and investors to attract billions of pounds of new funding. For the environment, it will reduce all forms of pollution to clean up our rivers, lakes and seas for good. We will work closely with the Welsh Government to devolve the economic regulation of water to Wales.

I call the shadow Minister.

I am grateful to the Secretary of State for advance sight of his statement. I shall be responding on behalf of the shadow Secretary of State while she meets farmers at the Royal Welsh Show.

Let me begin by recognising the scale and seriousness of the work undertaken by Sir Jon Cunliffe and his team. The review contains 460 pages and 88 recommendations, and represents one of the most detailed examinations of the water sector since privatisation. Indeed, there is much in it that we cautiously welcome, including the merger of the regulators. As we examine the recommendations in more detail, we stand ready to support serious reform if it is done properly. However, I am afraid that what we have seen and heard from the Secretary of State over the past year has not matched the seriousness of Sir Jon Cunliffe’s work, nor has it gone anywhere near the root-and-branch radical reform that he sold to voters before the election. I therefore seek clarity from him on the following points.

First, over the weekend the Secretary of State announced that Labour would cut sewage spills by 50% by 2030, but what he did not mention was the fact that plans submitted under the last Conservative Government were already set to cut sewage spills by even more than that amount. The Times reported yesterday that the Secretary of State’s new pledge would actually see an additional 20,000 discharges of sewage in our rivers, compared with existing plans. Can the Secretary of State explain why, after 88 recommendations and a year-long review of the sector, he has watered down sewage reduction targets rather than massively ramping them up?

Secondly, the Secretary of State took to the airwaves at the weekend telling the public that we needed to go back to the “purity” of our waters that we all remember, but the uncomfortable truth for which Labour still refuses to take responsibility is that when it left office in 2010, just 7% of storm overflows were monitored. Let me repeat that: under Blair and Brown, 93% of sewage discharges were happening with no oversight and no accountability whatsoever. The only reason we can talk tough today is the fact that the last Government pushed monitoring to 100% in 2023. May I therefore ask the Secretary of State to clarify his statement?

I thank the hon. Gentleman—I think—for his comments, but it is disappointing that the shadow Secretary of State did not consider a matter of this urgency to be important enough for her to show up in the Chamber this afternoon. I am afraid that that really does reflect the importance that their party ascribed to this issue during the 14 years in which it was in power.

I enjoy listening to the hon. Gentleman, but I am afraid that he sounded a little delusional this afternoon. If he really thinks that the Conservatives did so well on sewage, I wonder why he thinks sewage pollution in our waterways increased every single year during their 14 years in charge. The fact is that the Conservatives made the situation far worse, because they instructed the regulator to apply a light touch when they should have told it to get a grip. They stripped out resources from the regulator, reducing its resources by 50% at one point, so it was less able to enforce against sewage pollution. They allowed millions of pounds, if not billions, to be diverted away from investment and to be used instead for unjustified bonuses and dividends for water companies.

It is this Government who have secured £104 billion of investment to upgrade our water system. It is this Government who have banned the unfair bonuses that water bosses were taking. It is this Government who are introducing monitoring of all sewage outlets. And it is this Government who are going to clean up our rivers, lakes and seas, where the previous Government failed abysmally.

My constituents will be very pleased with what the Government have announced today, following 14 years of seeing increases in the dumping of sewage on the beaches, and in the rivers, in my constituency. I could not help but notice that yesterday the leader of Reform, in his answer to every question, said either “I don’t know” or “I’ve no idea.” Of course, he is not here either, but he did say that his answer to this problem is to increase payments to the shareholders and to do absolutely nothing to deal with the problems in our water industry. Will my right hon. Friend confirm that, during his time as Secretary of State, he will make it his priority to ensure that we reduce the sewage being dumped in our rivers, on our beaches and in our lakes?

I was, of course, on the television show in question with the hon. Member for Clacton (Nigel Farage). I think he told us six times that he had no idea—well, that much we knew. It is this Government who have a plan to clean up our waterways. We have put in place the building blocks for change, and that allows me to stand before this House and commit that by 2030 we will reduce sewage pollution from water companies by 50% as we move towards a decade of national renewal in order to clean up our waterways for good.

I call the Liberal Democrat spokesperson.

I thank the Secretary of State for advance sight of his statement, and Sir Jon Cunliffe for his report and for his work in producing it. The Liberal Democrats have long argued for the abolition of Ofwat, and for the creation of a new, consolidated and powerful regulator. In fact, we put it to the Public Bill Committee and it was supported by neither the Labour party nor the Conservative party, but today’s proposal seems to include doing just that, so we strongly welcome the statement. It is a reminder to the wonderful volunteers and water campaigners across the country that their work is absolutely worth while and has made a huge difference. My message to them is: thank you so much and keep going, because we still do not know the details and the nature of the new regulator, and we still see no sign in the report of any plan to tackle the toxic nature of the water industry’s ownership structure.

Why is there no plan to change the structure of the industry itself? Even the best regulator in the world will fail if water companies are still owned by those who care nothing for the quality of the lakes, rivers and seas, and who care only about making as much profit as possible in return for very little investment. Is it really acceptable to ask bill payers for a 30% rise when there is no guarantee that the water company will not be siphoning off huge chunks of that money in dividends, pay rises or bonuses? Why is there nothing in the statement that will truly empower the volunteers, citizen scientists and water campaigners I just mentioned? Why are we not giving places on water company boards to the likes of the Eden Rivers Trust, the South Lakes Rivers Trust, Save Windermere, the Clean River Kent Campaign, Surfers Against Sewage and Windrush Against Sewage Pollution, known as WASP? Why is there no mention of monitoring the volume of sewage spills as well as the number of incidences, and no mention of including legally binding pollution reduction targets?

I thank the hon. Gentleman for his questions. I echo and endorse his comments about the volunteers and citizen scientists who carried out fantastic work to ensure that this issue remained where it needed to be, which was right at the top of the political agenda. I hope that they will join us in welcoming Sir Jon’s report.

There will be a White Paper and a consultation alongside it. We will launch the White Paper in the autumn, giving detailed Government responses to the 450-page report. With 88 recommendations, there is a lot to go through, but the report includes proposals about ownership, which will be consulted on as well. Volunteers and citizen scientists will be able to engage for the first time through the proposed regional structures. We accept that proposal in principle, and the detail of it will be worked through during the consultation. For the first time, there will be engagement on the catchment of entire river systems, and citizens, local authorities and businesses will all have a voice in that, as will members of the farming community operating within those catchments.

I believe that by reducing the number of spills we will also reduce the volume of spills. The hon. Gentleman will be able to monitor that, and he will be able to hold me to account, as will the House and the public, as we work towards the target that I have outlined for reducing sewage spills from water companies by 50% by 2030. He of course is lucky enough to represent one of the most beautiful parts of the country, including Windermere, and we are working with United Utilities to remove all sources of pollution from that beautiful, iconic lake, so that what became a story of decline can become a visible symbol of renewal with this Government.

Order. It is apparent that a very considerable number of Back-Bench Members wish to participate in this statement. There are two further statements to follow before we come to the main business of the day, which is also very important, so I urge colleagues on both sides of the House to ask brief questions and not make statements.

Residents in Peterborough and across Anglian Water’s catchment area will welcome the statement and the bold action taken. They know all too well that the water system is broken. One of the issues we on the Environment, Food and Rural Affairs Committee have looked at is the need for water infrastructure. Can my right hon. Friend confirm that the drive and determination he has shown today to fix the water system will also drive forward the Fens reservoir and the infrastructure we need in the east of England? After a generation of delay on reservoirs, we now have the opportunity to succeed. Can he tell us that this will stay on track, and we will get the jobs and the water resources we need in the east?

My hon. Friend makes a very important point. We are currently going through a dry spell and seeing hosepipe bans in many parts of the country, yet in the winter it rained very heavily. The reason we have hosepipe bans is that we do not have the reservoirs to catch the rain when it falls and then use it in drier periods, which is because we have not built a new reservoir for 30 years. That changes now: these plans include the intention to build nine new reservoirs. To speed up the planning process, I as the Secretary of State am taking control of consents for reservoirs, so that they can be approved much faster and go ahead to provide the country with the clean drinking water we need.

The Environment Agency estimates that there are 4 million regular and occasional anglers throughout the United Kingdom, with 1.2 million getting fishing licences last year. Angling across the country is worth about £3 billion to the economy and it is the favourite pastime in this country, as the Secretary of State will know. Will he give an undertaking to all the anglers throughout this country that they will be fully engaged by the new regulator?

The right hon. Gentleman makes a very important point. Anglers are quite rightly furious about the level of pollution, which is destroying fish and other life in our rivers, but also about the impact of abstractions, particularly from chalk streams, so the new regulator will be engaging with them. Sir Jon has proposed new mechanisms for volunteers and campaigners to engage with the system that were not available previously. We will consult on those in the autumn, and move ahead with legislation following that.