National Policy Statement for Water Resources Infrastructure 2018

Motion to Take Note

Moved by

That this House takes note of the draft National Policy Statement for Water Resources Infrastructure 2018.

My Lords, plentiful water is vital for securing reliable drinking water supplies, for growing food, for energy production and other industry, and to sustain biodiversity. Securing a sufficient supply of water in the future will be more challenging as pressure from a growing population and climate change impact on us. We will also have to reduce current levels of abstraction from some sources to protect the environment.

The National Policy Statement for Water Resources Infrastructure forms part of a wider framework that the Government have established to deliver two of the goals of the 25-year environment plan: clean and plentiful water and reducing the risk from natural hazards such as drought. The purpose of the national policy statement is to summarise government policy on nationally significant water resource infrastructure in England, including setting out the need for that infrastructure.

The national policy statement draws on a number of reports looking ahead to 2050 to quantify the expected deficit in terms of water available for supply. The most recent was published last year by the National Infrastructure Commission, which was established to provide independent expert advice to government on the nation’s future infrastructure needs. It suggests that immediate action is needed to close a gap of 3.3 billion litres per day to maintain current levels of resilience. This compares to the 15 billion litres per day currently put into the public supply. We need to tackle this challenge on two fronts, reducing demand and increasing supply through a twin-track approach.

In the decade or so after privatisation, the water industry took action to reduce leaks, and levels today are down by one-third compared to 1994. However, in recent years progress has stalled and still around one-fifth of the supply is lost—around 3 billion litres per day. The National Infrastructure Commission calculates that some 1.4 billion litres per day could be saved by halving leaks by 2050. Furthermore, the Secretary of State has made it clear that a step change to reduce leaks is needed and that the industry should deliver the commission’s recommendation. For the next round of business plans, the industry has committed to an average 16% reduction by 2025; a good first step towards the 2050 target. This long-term goal is stretching, but we must be ambitious, given the challenge that we face.

We must also act to reduce our demand for water. More efficient appliances can help, but it is also about how we behave and how we value water. The water companies can help by supporting their customers to reduce the amount they use each day and they have committed to do this in their draft business plans. Levels of consumption have reduced from around 150 litres per person per day in 1999 to around 140 litres per person per day now. Actions such as revising building standards in 2015 to allow local authorities to set a higher efficiency target of 110 litres per person per day compared to the normal 125 litres per person per day for new developments, will help progress. We estimate that this standard has been adopted by around 25% of local authorities. It means that people living in new developments meeting this standard use around 30 litres per day less than those living in existing housing stock. However, I am sure we all agree that more needs to be done.

I thank the Minister for giving way. This issue of new reservoirs is absolutely central to the debate about new infrastructure for water. The Minister said that there might be a need for new reservoirs, but paragraph 2.6.7 of the Draft National Policy Statement says:

“New reservoirs are likely to play an important role in securing resilient supplies”.

That comes before the passage on water transfers, and raises the very big issue in water infrastructure of whether we have a national system of water transfer to enable water to be distributed from the north, where there is a surplus, to the south, where there is a shortage. It does not say whether the Government’s intention is to place a higher priority on new infrastructure for water transfers than on reservoirs. What the Minister has just said about how there “might” be reservoirs rather than this being “likely” will, if he does not mind my saying so, create further uncertainty in the wider public. Is it “might” or “likely”? What is the hierarchy in the Government’s planning between new reservoirs and new infrastructure for water transfer?

I think that the noble Lord is speaking in the gap, but perhaps I could address those points now. In that passage of the speech, I was taking your Lordships through what may be the range. It may be that I will have to address the crispness of language, but I assure the noble Lord and your Lordships that I will turn in a substantial part of my remarks to the need for further reservoirs. That passage was to say that there will be a range; we will have to assess what its elements will be as we gain more water, as I hope the noble Lord will understand, given his experience on these infrastructural issues. I can fairly confidently say that the next passages of my speech will talk about the fact that, yes, we will need new reservoirs. I hope that that is helpful.

The assessment of options and the choice of the best solutions are made as part of the statutory water resource management planning process. Every five years, the water industry looks ahead at least 25 years into the future to work out how much water will be needed to maintain supplies to customers. Water companies then evaluate all the options, including testing them with customers through consultation, before deciding on the best combination to deliver what is needed. These plans are then assessed by the Environment Agency before publication is approved by the Secretary of State. The most recent round of the process is coming to a conclusion and, despite more ambitious action to reduce demand, it is clear that in the coming decade more infrastructure will need to be built. In total, the infrastructure need in current draft plans broadly meets the deficit of 1 billion litres identified by the National Infrastructure Commission.

The Government, regulators and industry continue to improve the water resource management planning process and are strengthening the national and regional dimension through the Environment Agency’s national framework and the regional group of water companies. Ofwat’s recently established regulatory alliance for progressing infrastructure development will further supplement co-ordination between companies and the identification of appropriate projects.

I apologise for interrupting my noble friend’s flow. I declare an interest as chair of the Cambridgeshire Development Forum. As my noble friend will know, Cambridgeshire is the driest place in the country, but none the less it has probably the fastest rate of housing growth. I want to ask a question before he moves to the nationally significant infrastructure projects. It seems that the national policy statement, in talking about shaping water resource management plans, was not quite specific enough about taking account of spatial strategies in so far as these are produced by combined authorities, in our case, or local planning authorities. There continues to be an issue about ensuring that the necessary investment is in place to supply water to development projects and not to lead to any delay, as we want to build houses and build out, and doing so is one of the Government’s objectives. That can be because the investment ahead of need criterion sometimes applies, as interpreted by the regulator. Can my noble friend perhaps look at this so that, through the water resource management plans and Water Resources East, for example, we can ensure that not just the nationally significant infrastructure projects but some of the more regional and local projects are incorporated into the water companies’ investment plans, and the regulator enables them to support some of that investment, which they currently tend to treat as speculative?

My noble friend has engaged in something that clearly is part of the reason why we need to be thinking about a range of things. The noble Lord, Lord Adonis, in quizzing my perhaps imprecise language, pointed to the need for a balance of work that will need to be done. I live in Suffolk—Cambridgeshire, Suffolk and many parts of the east are dry and will have increases in population. Part of the responsibility, working collaboratively across the piece, is to ensure that in building these houses we ensure resilience of water supply. This is precisely why a lot of work is going into this. A lot of work needs to be done in increasing supply and reducing demand.

My noble friend raises an issue that is an enormous part of the challenge. We need to supply more houses in some of the driest parts of the country. That is why I deliberately stressed in setting out the challenges that we may need to use a range of options to deal with the elements in different parts of the country. I do not want to go into desalination, because I probably do not know enough about it. However, one can imagine that there may eventually be parts of the country where this is a viable or commercial option. For the future, with a growing population—we know that there could be another 4 million in England by the end of the decade—we will need to find more water and reduce demand. My noble friend raises an absolutely acute point, certainly in relation to Cambridgeshire.

I want to emphasise a point that came up in our debate last November. When decisions are made at the national level, the Planning Act 2008 and regulations made under it set out the consultation requirements for development consent order applications, which include extensive pre-application consultation and engagement with those affected by the proposals. Furthermore, members of the public can participate in the examination process by registering their interest, thus ensuring that local views can be heard. I think that we would all agree with that.

My Lords, I am delighted to follow the Minister. I listened to his comments with great interest and thank him for the inclusive way in which he presented this document and his arguments to the House. I accept, in general, the logic of his presentation, although it triggers some worrying questions, to which I will return in a moment.

I recognise that the statement applies primarily to England. I am glad to participate, because it has a huge significance to Wales. The whole subject of water resources has been said to be a burning issue in Wales from time to time—it certainly has been a difficult one. The question of the framework within which policy is developed and executed in relation to the transfer of water from Wales to English conurbations certainly comes into the ambit of what we are discussing today.

I hardly need to remind noble Lords of the background to this: our bitter experiences of the previous century, encapsulated in the Tryweryn Valley saga. Briefly, that entailed Liverpool Corporation, after failing to secure either of two sites in north-west England, identifying the Tryweryn Valley near Bala in Gwynedd as a suitable location for its purposes. In Westminster, legislation was driven through against the combined opposition of all but one of Wales’s 36 MPs to flood the village of Capel Celyn and purloin the farms there to create a reservoir. The purpose of that project was to supply and sell industrial water on Merseyside. Liverpool Corporation ran the whole project to make money for itself and refused to pay a reasonable extraction charge for water it secured from the Tryweryn reservoir. This was a massive political hot potato. That experience colours all our considerations in Wales of issues relating to the supply of water to English conurbations.

I say this by way of context to the debate. As the Minister referred to in his opening comments, it was widely reported earlier this year that demand for water, particularly for south-east England, is likely to increase massively over the next two decades. Clearly, where possible, it makes good sense to reduce leakages, to encourage self-limitation on water use, to develop techniques such as desalination, to recycle where appropriate and to mitigate any negative implications of climate change.

My Lords, I welcome this debate and am delighted to follow the noble Lord, Lord Wigley. I declare my interests on the register. I co-chair the All-Party Parliamentary Water Group with the honourable Member Angela Smith in the other place. I also do some excellent work with the water regulator for Scotland—the Water Industry Commission for Scotland—and, through that, with WAREG. I am vice-president of the Association of Drainage Authorities and I am the recently appointed president of the NEA.

I am extremely proud of the work I have done with the Water Industry Commission for Scotland, through which we managed to achieve a contract for technical assistance with the Romanian equivalent regulator, under the auspices of the EU. Through WICS, I have worked with WAREG—the European association of water regulators—and have seen first-hand the importance of sharing best practice both between member states and between existing member states and applicant countries to the European Union.

I congratulate the Minister and the Government on producing this draft national policy statement and, in particular, on the collaborative way that they have worked with the water sector in producing it. It plugs the gap to boost water efficiency, originally as set out in the Walker review. It is interesting that it has taken this long for water efficiency to become the order of the day, but I welcome the recent initiative shown by the Environment Agency in this regard. Successive Governments have implemented the recommendations of the Cave review on competition and, in large part, the recommendations set out in the Pitt review for flood and water management.

I echo the importance that my noble friend has attached to infrastructure and resilience in that regard. I have a passion for SUDS, or sustainable drainage systems, which I hope my noble friend will share, and also for the building of more reservoirs. That begs a question, given that it is one of the remaining issues from the legislation that was set out between 2010 and 2015. I urge the Government to deal with the de minimis rule that is currently discouraging the greater use of reservoirs on farms, golf clubs and caravan parks. I notice that, both in the document and in the Minister’s remarks, the focus is especially—and, probably, quite rightly—on nationally significant infrastructure projects in the next three to five years. I urge the Minister and the department to look at the importance of smaller reservoirs, too, particularly in areas of increasing water stress, where the environmental impact will surely be much less—both in the building of reservoirs and their maintenance.

As we have heard, water companies face increasing challenges of water stress from population growth, housebuilding, global warming and climate change. I recognise that, of all the challenges they face, surface water flooding is one of the greatest and most recent. I welcome the Government’s catchment management approach, which brings together all the relevant partners, but if it is to succeed, one body within each catchment area must be identified as the lead organisation. They must decide which organisation should take the lead, and that will differ from area to area. However, the approach may fail if no one actually takes ownership of the catchment. In many areas, it may be the water company, while in others it may be the drainage board. This needs to be identified in order to enhance the excellent work that is being done on catchment management.

Natural capital is becoming increasingly significant in government policy, yet it remains nebulous, hazy, vague and indistinct. I urge the Government to put more meat on the current bare bones. I refer to the report, Bricks & Water, co-authored by the honourable Angela Smith MP and myself, which has been published under the auspices of the Westminster Sustainable Business Forum and Policy Connect. If my noble friend Lord Gardiner has not received a copy, I will make sure that one is dispatched to him. The report puts forward a number of specific proposals to local authorities, including that they should consider carefully how planning permission for major developments can best be delivered, ideally with the use of SUDS going forward and possibly meeting the even bigger challenge of retrofitting SUDS to historic drainage systems. Also, one of my pet wishes is to end the automatic right to connect to the water supply. This is one of the key recommendations in the Pitt review, but we have still not actually taken it on board.

I welcome the Government’s commitment to reduce per capita consumption, and we have seen how that can be delivered in part through building regulations. I hope that my noble friend will look at other jurisdictions, in particular Scandinavian countries like Denmark, where loos are specifically designed to limit the amount of water that is released with each flush. That, along with the use of grey water, must be considered going forward in order to improve resilience and encourage the greater use of innovation.

My noble friend referred—as does the draft national policy statement—to the importance of transfers between water companies and, as the noble Lord, Lord Adonis, has said, the potential for creating a national grid. I would look no further than to congratulate Yorkshire Water, which I believe is the first water company to make a significant investment, delivering a 31,500 kilometre network of underground pipes to ensure that, in times of stress in one area or another, one company can supply water by transferring it from one area in the region with plentiful supplies to another which is suffering from a shortage at a particular time. I welcome similar investments which are being planned from 2020—under the 2019 price review—by companies such as Anglia Water, which has also planned a multi-million pound development.

All major housing developments must pass the test of being built in appropriate places using appropriate infrastructure. We must stop building on functional flood plains, and we need to end the right to connect. I commend the use of natural flood management and defence schemes. My noble friend will be familiar with pilot flood defence improvement schemes such as the Slowing the Flow at Pickering programme, where the planting of trees and the creating of bunds, mini-dams and peat bogs, which take 200 years to develop, is being undertaken. It is a long-term project, but it has already prevented any further flooding in Pickering, a town which used to flood every two or three years. I would place much greater emphasis—I hope I can persuade my noble friend to do so—on natural flood defences rather than on elaborate engineering projects. There is scope for much more rewarding schemes for public good under the environmental land management schemes that Defra imagined going forward. I hope this can encourage the use of such natural flood defence schemes.