National Policy Statement for Water Resources Infrastructure 2018
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Lord Gardiner of Kimble
That this House takes note of the draft National Policy Statement for Water Resources Infrastructure 2018.
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Gardiner of Kimble) (Con)
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.
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.
Lord Adonis (Lab)
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?
Lord Gardiner of Kimble
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.
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—
Lord Lansley (Con)
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?
Lord Gardiner of Kimble
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.
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.
Lord Gardiner of Kimble
My Lords, my predictions were correct. We have had great experience, much more than mine, displayed across the House on these matters. I therefore emphasise that I do not have all the answers. The intention was not for me to deliver a diktat on what the Government have decided on an important matter. It is our responsibility. We are having this debate and the consultations because one of the great responsibilities of Government is to supply one of the most essential components, not only of our lives, but of the whole ecosystem. I have made a careful note of all the questions and will not be replying to each in serried ranks, because much will unfold in the further response. I take on board what your Lordships, in their experience, have thrown into the pot, as an important resource to consider.
We have all identified the undoubted challenges that we need to address to make sure there is enough water to supply businesses and homes, and—as mentioned by all noble Lords, but specifically the noble Baroness, Lady Jones of Whitchurch—to protect the environment. This is at the core of our lives.
I turn to the noble Lord, Lord Wigley, who set out some of the historical mistakes and how one should not do things. England has always welcomed water from Wales. I was not quite as convinced when it was in flood in the Severn, but he made the point that there are ways to address these matters. We would all say that what happened before was not the finest hour of bureaucratic rule. The geographic features of Great Britain dictate considerable cross-border flows, as I have mentioned, and undoubted water dependencies between England and Wales.
To safeguard water resources, water supply and water quality, and minimise the potential for risk in this area of the Administrations’ respective responsibilities, the Secretary of State and the Welsh Ministers agreed the Intergovernmental Protocol on Water Resources, Water Supply and Water Quality, which came into force on 1 April last year. Planning systems are devolved in the UK, so any infrastructure elements of cross-border schemes require all relevant permissions from the relevant authorities within those jurisdictions. The guidance on water resource management plans sets out that a company should consult the Welsh Government for sites that affect Wales. Nothing in the Planning Act 2008 overrules the relationship with Wales with regard to water resources.
A number of other points were raised by my noble friend Lady McIntosh of Pickering. I fully intended to talk of Slowing the Flow at Pickering, but quite rightly she got there first. This is a prime example of natural capital. I think that we would all agree to the use of natural capital alongside—when we have to use it—hard engineering in certain towns, including some of those in Cumbria. We need to slow the flow above but we also need to invest in hard engineering in certain places. The most important part of what we have been learning—my goodness, we needed to learn about it—is that natural capital is a resource as well as supplying a much-needed element of our ecosystem.
A number of your Lordships, including the noble Baroness, Lady Bakewell, raised the issue of small reservoirs. Whether they are on farms or are to supply part of our national water supply, the decisions remain with local planning authorities. The Environment Agency’s national framework and regional groups will consider the whole need in a region, not just public water supply. This should help to meet the needs of smaller users, where appropriate. In the future, particularly in the agricultural sector, marshalling of water through farm reservoirs may be much more common than it already is in certain parts, particularly the eastern counties.
My noble friend Lady McIntosh and the noble Baroness, Lady Jones of Whitchurch, mentioned floods, which clearly are also important. Defra is spending £2.6 billion to protect the country better from flooding. This involves 1,000 flood defence schemes, with the intention of protecting 300,000 homes by 2021. In terms of real-terms increase, the figures reflect the fact that we need to do something and have needed to do something about flood protection and investment for quite a long time.
The noble Lord, Lord Adonis, from his previous position, particularly in terms of infrastructure, will know these matters much more intricately. We need to ensure that government and all the water regulators work together and challenge industry on its ambitions about leaks and customer consumption, and on how the needs of neighbouring companies are taken into account. We want companies to build on this in the next five years. Ofwat’s regulatory alliance and the Environment Agency’s national framework are intended to and will support the maturing regional water company groups, making sure that large water resource options that come forward for development have been adequately evaluated and are the best to meet both national and regional need, as well as that of individual companies.
I was at a meeting with the water companies about this winter’s issues, to which I think the noble Baroness, Lady Jones, referred. I had better be careful and diplomatic with my words, but the Secretary of State was correct, polite and robust in saying that matters had to be attended to. The water companies were in no doubt of the need to address some of the points made, and that it was not acceptable for customers to be without water. However, having had frozen pipes, I recognise what my noble friend Lady McIntosh said about those who work for water companies and who were out and about dealing with water pipes at a time of extreme weather. There is a balance to these matters.
In response to my noble friend Lady McIntosh on the environment Bill, someone has to say the following words from the Dispatch Box: “We wish to introduce the Bill in the summer. We have consulted on a range of changes to water legislation which may be included”. I am sorry that that is what I have to say, but I hope it is sufficient to indicate that we clearly wish to make progress on this matter.
I agree that we want further uptake of SUDS in planning and building regulations. Defra, the Environment Agency and MHCLG are working on this matter; it is an important force for good. A number of noble Lords, including the noble Baroness, Lady Bakewell, and my noble friend Lady McIntosh raised the issue of net gain. The noble Baroness, Lady Jones of Whitchurch, rightly described it as “crucial”. Paragraph 3.4 of the statement concerns environmental net gain. This means achieving biodiversity net gain first, then going further to achieve wider benefits, to deliver ecosystem services and make schemes with wider beneficial impacts on natural capital. Defra has consulted, and will continue to consult, on how best to incorporate natural capital into the planning system. It is extraordinary that we are having to discuss these matters as if we had discovered them. Working with nature seems to me an obvious consideration.
The noble Baroness, Lady Bakewell, raised resilience. It looks as though we are going to have changes in rainfall due to climate change. This could mean droughts and severe rainfall. How do we capture it so that, when we have to endure floods, we can work the system to use that water appropriately and to best advantage? This is going to be a vital element of protecting the environment. As all noble Lords said, we need to reduce demand as part of the process. We have to engage with ourselves, as well as with everyone outside this Chamber, on reducing our consumption of water. We should be looking at how other countries are dealing with the demands of increasing populations, perhaps climate change and using water wisely.
The National Infrastructure Commission sets out very good arguments for increasing resilience further. As the Environment Agency develops its national framework, we expect to test what is needed and what it would cost to increase preparedness for a one in 200-year drought to a one in 500. The current draft national policy statement alludes to this but, assimilating what your Lordships’ and others will say, the final draft can make this particularly clear. The noble Lord, Lord Adonis, intervened on the contributions of the noble Baroness, Lady Bakewell, and my noble friend Lady McIntosh about mandatory metering.
Where the Environment Agency has designated a water company as “water stressed” it can consider mandatory metering if appropriate. We will be consulting in coming weeks on further changes. It is very interesting to see the statistics from water companies on proposals for leakages and on metering numbers. We need to look at the evidence: the evidence for metering is self-evident if we are all to reduce our water consumption, but we also need to be mindful in that arena that some vulnerable parts of the community probably need a disproportionate amount of water compared to others.
Lord Adonis
What the Minister just said is very significant: he said that the Government will be consulting on further changes. Will the options for further changes include national mandatory metering?
Lord Gardiner of Kimble
The noble Lord is rigorous in his questioning and I will be opaque in this answer: I would not want to pre-empt anything that may come up. Noble Lords have made some interesting comments, but I am not in a position to give the range of choices because I have not got that before me. I think it is always unwise to make policy on the hoof, but the noble Lord has made an important point.
The noble Baroness, Lady Bakewell, raised leakages, something we all feel very strongly about. Ofwat expects companies to justify their leakage performance commitments relative to the minimum level of leakage achievable and expects those companies with the worst records on leakage to go further. There is no doubt about it. Ofwat set out draft determinations for three fast-track companies: Severn Trent, South West Water and United Utilities. All three water companies had proposed a 15% reduction in leakage, but United Utilities is one of the companies with relatively high leakage. As part of the process, for instance, United Utilities has agreed to increase the reduction to 20% over the period 2020 to 2025. I know that this is an area the public feels very strongly about: we need to ensure that water is used wisely and that we reduce leakages very strongly.
The noble Baroness, Lady Jones of Whitchurch, raised water abstraction and the protection of the environment. As I said in my opening remarks, current levels of water abstraction from some sources will need to be reduced, because it is clear that the environment in some parts of the country is being jeopardised. That is in line with the water abstraction plan published in 2017 and river basin management plans. Clearly, we need to work with all parties to ensure that we get the right result for the environment, but yes, as I think the noble Lord, Lord Adonis, referred to, water is important for enterprise and for ensuring that this country has an economic heartbeat, so it is important that we get this right. Going back to the reason we are having this debate, we will need to invest in major infrastructure projects: that is at the heart of all the issues we have rightly discussed today. We must reduce demand but also have to attend to increasing supply. We want to go further in protecting the water environment because that is of prime importance. The noble Baroness also referred to loss of supply. The Government expect companies to increase their investment in water and sewerage in order to maintain a resilient network, fix leaks and prepare for severe weather. That is part of their responsibilities.
Looking through the key points that your Lordships raised, I hope that I have attended to quite a lot of them. I am certainly not seeking to kick any can down the road: in fact, that is not my style of words. I say to the noble Lord, Lord Adonis, that that sounds as if I am about to drop litter, which of course I have a passionate phobia about. This piece of work—and today’s debate—is absolutely not about kicking this essential matter down the line. It is about having parliamentary scrutiny and consulting organisations that have a stake in getting this right for us all. I will reflect on Hansard, because key points have been raised on demand, climate change, net gain and—I have referred to this—support. We recognise that we will need both big national infrastructure projects and small-scale projects, which is part of what I have described in lay language as the balance of how we are good custodians of our water supply.
The noble Lord, Lord Adonis, and the noble Baroness, Lady Jones, spoke of difficult decisions. I agree. The whole purpose of this debate, and for taking this matter forward, is that difficult decisions have to be taken for the national interest. If everyone is to have water, that will mean that we may well, provided it is done properly, courteously and correctly, have to ask parts of the country about this—the busy south-east and other parts of the country where reservoirs, for instance, and other infrastructure projects will be not only in the national interest but probably in the local interest as well.
I shall read Hansard again and assure your Lordships that all the points that have been made, particularly given the experience of many noble Lords, will be very important in bringing policy forward. If any of your Lordships would like to have discussions and further meetings at any stage, I would be very pleased to accommodate that.