My Lords, Ofwat has imposed fines to the value of £122.7 million on Thames Water. There is a payment plan in place, with the first 20%—that is, £24.5 million—paid last year. The remaining 80% is due by 31 March 2030 at the latest. Fines following EA enforcement action total £4.6 million, and we are not aware of any unpaid fines. Fines are only part of the enforcement toolkit, however, with over £164.6 million of enforcement undertakings announced over the same period.
My Lords, it is shameful that water companies, with nearly 1,200 criminal convictions, are permitted to negotiate the amount and timing of fines. Some will not pay the headline-grabbing fines announced in 2024 until 2030, while others will not pay any of the announced fines. No statement to that effect has been made to Parliament. Can the Minister explain why the Government continue to indulge criminal organisations?
I politely suggest to my noble friend that we do not indulge criminal organisations. We put in payment plans because it would not help a water company if we forced it to pay fines so that it went bust. I do not think that would help consumers at all. So we need to bring in sensible payment plans which ensure that we get the money back, but we are also bringing in tough, swift penalties to clamp down further on water companies. For example, we have increased enforcement powers to the regulators, we have given existing regulators the teeth they need to take tougher action against water companies, and the Environment Agency can now impose automatic penalties, and penalties to the lower civil standard of proof. We are looking to clamp down heavily on offenders.
It is important that the water companies pay the fines in such a way that it does not impact on consumers and consumer bills, and the Government are certainly keen to enforce that.
Can the noble Baroness explain what proportion of the fines paid to date have been used to improve the environment? Will she ensure that these fines can be used to help farmers prevent pollution from agricultural diffusion? At the moment, the sustainable farming incentive is paused, and in any event it does not yet cover agricultural pollution.
We have announced that we are reopening the sustainable farming incentive, and we hope for a good response to it. The important thing to note about the fines is that currently, if they are from Ofwat, they go to Ofwat and then to the Treasury, and if they are EA fines they go straight into the Treasury. It is important that we have an agreement where we hypothecate the fines so that Defra can decide the projects where the fine money will make the biggest difference, and then HMT provides us with the money to do that. That is the important focus.
My Lords, we had the very cautious report from Sir Jon Cunliffe about water, and the Government followed that up with a fairly timid White Paper last week. Does not something much more drastic in terms of restructuring water companies need to happen so that they avoid this sort of fiasco in the future?
I disagree with the noble Baroness about the White Paper being timid. I believe it sets out once-in-a-generation reforms that will really transform the water system for good and lead to a water Bill which Members of this House, including the noble Baroness, can help us make the best piece of legislation for the water industry that we have ever seen.
My Lords, to follow my noble friend’s question, the Government have announced that water company fines will help fund environmental restoration, including 100,000 new trees. To put that in context, a block that size would be only 50 hectares and cost £200,000. That seems a token effort. Will the Minister commit to more ambitious targets for the use of these fines in environmental restoration and tree-planting? I refer the House to my interest in developing new forests.
The Government have very ambitious plans for tree-planting, including three national forests, one of which has already begun planting and two are progressing well, so we are very keen. We understand the impact that trees can have in mitigating both climate change and flooding. We absolutely want to work with farmers to ensure that we can help and support them to plant trees in order to support their ambitions.
My Lords, fines were levied in August 2024 on Yorkshire Water and Northumbrian Water, and they have not been collected, as I understand it, because the companies have subsequently invested in infrastructure. Is that not like someone driving, injuring a person and then having the fine returned to them so that they can fix up their car and, possibly, sell it on for a profit? That would be unacceptable, as is the non-payment of these fines by water companies. Does my noble friend agree?
In March last year, Yorkshire Water agreed to pay an enforcement package of £40 million to address the failures that were found by the investigation at that time. That package is to prioritise work on some of the most problematic storm overflows in environmentally sensitive areas to ensure that they spill less than 20 times a year. Surely that must be our priority.
My Lords, it may have come as a surprise to many water bill payers that payment plans out to 2030 were agreed to pay fines. Will the Minister agree that when fines are imposed in future, a payment plan that goes with them should also be announced?