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.
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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.
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In the coming weeks we plan to launch a call for evidence on setting an ambitious target for per capita consumption. This will establish a target against which we can measure the progress of the Government and the water industry. Alongside the call for evidence, we will consult on the policy options required to reach our consumption target, such as labels providing information on the efficiency of water-using products, improving building standards and the future role of metering. We know that metering can be an important part of changing behaviour. Customers with a meter use on average 33 litres less each day than those without. The level of metering varies between companies but now stands at around 50% nationally. Action set out in draft water resource management plans would increase this to 83% by 2045. So there is much more we can do to reduce demand.
However, even with considerable ambition, fixing leaks and reducing the amount each of us consumes, there is more we must do. The gap remaining by 2050 after action to reduce demand will be around 1 billion litres per day. We also therefore need to focus on providing additional supplies. This means new or upgraded infrastructure that might transfer water across a company’s area or between companies. It might mean a new reservoir, or it could come from other solutions such as desalination or the treatment and reuse of sewage effluent. Each of these options has pros and cons. There are choices to be made as to the best balance of different infrastructure types.
Some infrastructure schemes will be large enough to qualify as nationally significant and will need to be considered using the national policy statement. The national policy statement itself identifies the national need for schemes of this nature, so it does not need to be demonstrated again through the planning process. This is where one of the main benefits of the Planning Act 2008 regime comes into play, streamlining the planning process for nationally significant infrastructure projects and ensuring timely delivery of schemes that will be vital for securing water supplies.
The national policy statement will apply to certain types of infrastructure that meets criteria set out in the Planning Act 2008. Some of your Lordships may recall that an order amending the Act was debated and agreed in November last year. The national policy statement will apply to infrastructure to facilitate water transfers, desalination plants and reservoirs with a deployable output of 80 million litres per day. Additionally, reservoirs with a physical volume of 30 million cubic metres would be included.
The Government have consulted on the development of this Draft National Policy Statement—a process that was described as exemplary by some of the witnesses who appeared before the EFRA Select Committee. We consulted on our initial approach in November 2017 and on more detailed proposals around the size and type of infrastructure that should be covered in April 2018. In November 2018 we launched a consultation on the Draft National Policy Statement as we laid the document in Parliament. Those responding to the consultation included: water companies; environmental groups, such as Blueprint for Water; local authorities; and organisations that provide advice on planning and infrastructure projects. There was broad support for the need for the statement and its relationship with water resource management plans. We will take into account the responses from consultation and any recommendations that emerge from parliamentary scrutiny when we produce the final national policy statement by the autumn. We will explain how we have done this in the formal government statement of response.
As required by the Planning Act 2008, an appraisal of sustainability has been carried out on the national policy statement alongside a habitat regulations assessment. This significant piece of work formed part of the first consultation in November 2017, incorporating feedback, including that from statutory consultees such as Natural England and the Environment Agency. The national policy statement has incorporated and will continue to be informed by recommendations from the appraisal. The final appraisal is published alongside the final national policy statement.
Having set out the need for infrastructure and the relationship with water resource management plans, the national policy statement sets out assessment principles to guide the examination of applications and more detailed guidance on the construction and operational impacts of the infrastructure types meeting the criteria of the Planning Act 2008. When deciding whether to make an order granting development consent to nationally significant water resources infrastructure projects, the Secretary of State must have regard to the national policy statement. The planning issues set out in the national policy statement that need to be considered in relation to nationally significant infrastructure align with those in the—
The national policy statement is an essential piece of work to ensure that our nation has sufficient water supply and that we use it wisely. It forms part of a wider framework, which will deliver on our goals in the 25-year environment plan. Our current estimate is that up to three nationally significant projects—all reservoirs—are likely to come forward in the next five to 10 years to provide sufficient infrastructure. Looking to 2050 and beyond, more are likely to be required.
I look forward to hearing from noble Lords on these essential matters. I can assure your Lordships that the Government and their agencies are working on this matter with rigour. A number of questions may be posed and I will endeavour to answer as many as I can. However, the Government and I are most interested in assessing your Lordships’ further commentary on this matter so that we can use parliamentary scrutiny to the best benefit. I beg to move.
The document before us recognises that planning consent for water resources infrastructure projects in Wales is a matter for the Welsh Government. Paragraph 1.2.3 on page 3 states that consideration must be given to,
“the potential socio-economic and environmental impacts of nationally significant infrastructure related to water resources infrastructure in Wales and Scotland, given their borders with England”.
I would be grateful if the Minister could spell out what exactly is meant by that in practice. Paragraph 2.2.6 highlights the impact of population growth, such as the estimation that,
“the population of England will grow by … 9.6 million by 2040”.
To some extent, that may occur largely in south-east England. It will exacerbate the water deficiency that already exists there. We know from publications over three decades that much thought has been, and is being, given to water transfer schemes, such as creating linkages to supply water from the River Severn to the Thames Valley. Clearly, that has implications for water storage and its release into Welsh rivers.
In this content, paragraph 4.1.3 emphasises the need to work with the devolved Administrations, on which I want to focus my concluding remarks. Given the politically explosive nature of these matters in Wales, good sense dictates that there should be some form of standing dialogue structures between the Department for Environment, Food and Rural Affairs on the one hand and the appropriate people from the Welsh Government on the other. This should be operational at both a political and technical level. Of course, the technical level should include environmental and biodiversity dimensions as well as planning and resource considerations.
Any new proposals with cross-border implications should be highlighted at the earliest possible opportunity and discussion triggered through the procedures I just mentioned. The concept of exploratory consent in principle should be developed, and it should be accepted that no proposal can be taken forward unless there is formal agreement in principle on both sides. Does the national strategy project’s approach, which the Minister mentioned earlier, potentially involve projects in Wales? If so, does it overrule the planning powers given to the National Assembly? If so, that could trigger a strong reaction and create the sort of problems we need so much to avoid.
I recognise that the document refers, where appropriate, to the need for consultation where cross-border issues arise. What I am calling for goes way beyond consultation. There is a need for a mutuality of approach, and for a solution not to be imposed cross-border unless there is a genuine acceptance on cross-border issues. Incidentally, that approach should be taken on matters such as dredging and marine management too, not just water abstraction.
Finally, in terms of the use of water abstracted or provided via reservoirs in Wales, there should be reasonable payments made. If Liverpool Corporation was entitled to create an income stream from water obtained from Wales, surely we in Wales should be entitled to some financial benefit. If projects that are needed to meet water shortages in some parts of England require water from Wales, there are two ways of going about it. First, there is the unfortunate approach of Liverpool Corporation in the 1950s. The alternative is to recognise that any cross-border project must have quantifiable benefits for Wales as well as England. If that approach is taken, there is no reason why, in future, we should not be able to have a harmonious relationship on these matters, unlike our experience in the Tryweryn Valley saga.
I entirely endorse the remarks that my noble friend made about leakage. About seven years ago, Yorkshire Water, under measures it signed up to during the last price review, invested in setting up a highly commendable leakage programme. The programme was set back by three days of sub-zero temperatures reaching minus 17 degrees. I defy anyone to be able to protect pipes from freezing at that temperature. I hope that the Minister and the regulator will look kindly on companies that operate under the additional burden of sub-zero temperatures. As I say, it is impossible to protect against leaks in such circumstances.