Water (Special Measures) Bill [HL]

Duke of Wellington Excerpts

Committee stage
Monday 28th October 2024 Lords Chamber

I look forward to hearing from the noble Lords, Lord Remnant and Lord Sikka, whose amendments seek to ensure that rules made by this authority can be scrutinised by Parliament. The amendment of the noble Lords, Lord Roborough and Lord Blencathra, seeks to set a six-month time limit for publication of the rules under new Section 35B. Finally in this group, Amendment 101, from the noble Lord, Lord Sikka, seeks to give the authority the power to curb excessive dividends and empower stakeholders to object to excessive dividend payments.

[The Duke of Wellington (CB)]

My Lords, first, I congratulate the Government on having set up, last week, the review under Sir Jon Cunliffe. That is an excellent move by the Government; a very respected individual will carry out the review, and a number of us have been asking for this for a while. I really think the Government have made a wise decision.

I want to comment on Amendment 2. I have sympathy with “must” rather than “may”, but I have a reservation about the then wording, “must issue rules”. It seems to me that it is necessary for the authority to issue what I would prefer to call “guidance” rather than “rules”. That would give a certain flexibility to individual companies—no two companies will ever have the same set of circumstances, either among their executive management or in the environment in which they are operating. I ask the Government to consider changing the wording of the clause, so that it reads: “The Authority must issue guidance about the arrangements made by relevant undertakers”.

There is no doubt that the water companies have abused the total independence they have had to date around setting remuneration and everything associated with it. They are monopolies, and I think they have gone too far. Many people have been rather dismayed to see the levels of executive remuneration. I ask the Minister to consider changing “rules” to “guidance”. That would be a great improvement.

On Amendment 3, in a light-hearted manner I point out to the noble Lord, Lord Remnant, a misprint, where his amendment refers to “renumeration” rather than “remuneration”. I am sure that that is an oversight which he will have already noticed.

There is a good point in the amendment from the noble Lord, Lord Remnant, in his proposed new Section 35B(1B)(b), about the importance of attracting, motivating and retaining persons of sufficient quality to work in the industry. We must all remember that what we all want is better-run water companies. I do not think we should be tying too tightly the hands of remuneration committees and the board in general in how they attract and retain executives. I am very persuaded by that particular aspect of the noble Lord’s amendment, but I worry about seeking to define too closely exactly how water companies should make their remuneration arrangements.

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[Baroness Pinnock (LD)]

My Lords, I start by reminding the Committee that I have an experience, rather than an interest, as I was a non-executive director for a number of years on the board of Yorkshire Water. I reassure the noble Lord, Lord Sikka, that I never had a bonus during that time, for the reasons that the noble Lord, Lord Remnant, has explained.

This group of amendments follows on neatly from the previous discussion about performance-related pay and the remuneration of senior directors of water and wastewater companies, so I thought it was worthwhile to draw out a bit more of the debate around this issue. The fundamental problem lies in the fact that water and wastewater companies are regulated by a number of different institutions. Ofwat is the economic regulator and, because of the way that the water Act was written, is primarily looking at the financial performance of the water companies. That inevitably leads to a disregard for the environmental outcomes of water companies as a priority. Consumers, who see that their rivers, lakes and coasts are being heavily polluted by these water companies, are astounded to see the same water companies giving huge bonuses to their directors. That is because the two issues are not related in the mind of Ofwat. That is why my party wants a single regulator for water companies, so that all the issues that are the responsibility of water and wastewater companies are taken into account. Part of that debate was reflected in the first group of amendments, discussed earlier.

We need to remind ourselves that remuneration in companies is decided by boards of directors. They will look at the financial objectives of the company and the outcome of the price review agreed by Ofwat and come to conclusions, whether or not objectives have been achieved or considerable benefit to the company accrued by the actions of directors.

That is part of the problem. As the noble Lord, Lord Sikka, has attempted to describe, the price review is a tussle of words and figures between the companies on the one hand and Ofwat on the other. I remember the discussions. If you are in a company and you want to make sure there is a good outcome for your owners and shareholders, you make sure that the submissions you make in a price review to Ofwat enable profits to be made. That is the whole purpose of a private company. It is at the heart of all the discussions we are having about water companies, their performance and their remuneration and bonuses. The 1991 Act was designed for them to be private companies with shareholders, who were going to receive dividends as a consequence. If that is the prime duty, and the main regulator oversees that prime duty, the other issues that water companies ought to be taking into account—the environmental issues in particular, as we heard earlier—become less important.

I hope that, when we come to Report and discuss these issues more closely, the Minister will think about a government amendment that strengthens the duties of water companies, and of Ofwat as the regulator, to take into account these other issues. For me, that is at the heart of the discussions we have had on this group and the previous group. I agree with the amendment from the noble Lord, Lord Remnant. You cannot try to control pay awards further down the company; those often very talented people need to be attracted into water companies if we are to improve what is a sad state of affairs.

[The Duke of Wellington (CB)]

My Lords, I support Amendment 18 in the name of the noble Lord, Lord Remnant, which simply deletes new subsection (5)(c) on page 2. It seems to me that we cannot allow the authority—whatever it may be in the future, after the review, or even from now on—to start getting involved in the remuneration of those below board level. That really becomes too much intrusion into the way a company is run.

The noble Lord, Lord Sikka, is entirely correct that, in the end, a director of a company is a director, whether executive or non-executive, as covered by the Bill; it mentions “a director” of the company. It seems to me that, while senior role remuneration should have some guidance from the authority, that should be restricted to the chief executive and other executive board members. There is no point entering into a discussion about non-executive directors, who clearly do not participate in performance-related pay or bonuses or anything like that. I think the noble Lord, Lord Remnant, is right; it would be appropriate to delete new subsection (5)(c) and include in this clause only the chief executive and any other executive director.

[Lord Roborough (Con)]

My Lords, I thank the noble Lord, Lord Sikka, for moving Amendment 4. It is right that the Government should take steps to put appropriate pressure on water and sewage companies to reduce the frequency and scale of water pollution incidents, and imposing financial penalties on board-level executives is a powerful way of disincentivising unwanted behaviours in the sector. But if we are to have financial penalties targeted at water executives who do not meet the standards expected of them, we must ensure that these are appropriate. As we discussed in the last debate, it is crucial that Parliament gets the opportunity to scrutinise the rules that Ofwat will be implementing.

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[Lord Cromwell (CB)]

My Lords, I will speak to Amendment 16 in my name. I underline at the outset that this is not about putting people on the board; if that is a misapprehension, I want to dispel it. Civil society has been at the forefront of raising issues around water pollution, including monitoring pollution incidents, and, frankly, it has done a better job than the regulators, which have been playing catch-up ever since.

There is an unbalanced and sometimes adversarial power relationship between civil society, water companies and the regulator, and this has given rise to numerous complaints about a lack of transparency—for example, companies deliberately adopting a very narrow definition of “environmental” in order to reject and bat away inquiries from civil society and others. This amendment would require the regulator and water companies to engage with civil society on a regular and formalised basis to agree actions and to record these actions publicly.

This achieves two things. It addresses the disbalance between civil society, the water companies and the regulators and will be an important means to increase transparency, including detailed public transparency as to what is going on, what the regulators and water companies are being challenged on and what actions are planned. It is very easy to underestimate the importance of this. In a previous role I had, we were handing over large sums of money to organisations and one of the stipulations was that they had to publish on their own website exactly what actions they had committed to. This made life very easy for us, because the media then held them to account against those actions. I suggest that a formal process where these things are recorded properly and publicly will be of great assistance to keep the water companies and the regulators up to the mark. Without a formal process of that sort, the relationship will remain distant and most likely adversarial. Therefore, I hope the Minister will look favourably on this amendment or produce one of her own from the government side.

[The Duke of Wellington (CB)]

My Lords, I will speak to Amendments 21 and 23 in my name. In effect, they both seek to amend new subsection (6) on page 2. The main point of my amendment is that I believe it does not lead to effective governance of a board of directors if sectional interests are represented directly on the board. It is much more effective and likely to have more influence if a specialist panel is created to advise and meet the chief executive. I cannot understand why the Government’s clause refers only to the views of consumers. It seems essential—I agree in various ways with the noble Earl, Lord Russell—that environmental interests are similarly represented on a panel. It could be a separate panel or one representing both consumer and environmental interests; I think it would be better to have two panels.

The real point is that I have never seen a board work effectively where there is a sectional interest represented directly on the board, with one or two members of the board speaking only for that particular interest. It makes it very difficult to reach a consensus on a board. Most boards work by consensus, and there has to be a collegiate atmosphere on any board. Where a particular interest is represented, be it environmental or consumer, that is less likely to lead to effective management of the board of that company.

I would like to persuade the Minister to delete from new subsection (6) “board” and “committee” but leave in “panel”, to include consumers and environmentalists on those panels and, importantly, that those panels should have regular meetings with the chief executive to exercise real influence over the conclusions of the board when it next meets on that subject.

Water (Special Measures) Bill [HL]

Duke of Wellington Excerpts

2nd reading
Wednesday 9th October 2024 Lords Chamber

[The Duke of Wellington (CB)]

My Lords, I welcome the Bill. It demonstrates a much greater determination by the new Government to tackle the continuing and barely reducing problem of pollution of our rivers, lakes and beaches. Since we debated these matters three years ago during the passage of the Environment Bill—now the Act—the position has hardly improved. It has needed new Ministers with greater focus to force the water companies to take the matter more seriously. It has been a national disgrace that water companies have in many cases become financial structures to provide investors with an above-average return, through not only dividends but high-yielding bonds and executive management rewards.

We should all remember, as any player of Monopoly knows, that water companies used to be boring utilities providing a secure but not very exciting return. Some 35 years after privatisation, the companies are, on the whole, not owned by the original retail investors, who in many cases had been the consumers of water services in a particular area, but are now owned largely by institutional investors through private equity structures with high leverage. Such structures are not suitable for a regional monopoly utility. Water is essential for all residential and business premises.

I commend the Government for increasing accountability and transparency for the water industry. Yesterday, I heard the chief executive of Ofwat say on the “Today” programme that there needs to be a cultural change in the water companies. I believe that the Bill is likely to help that process as directors of the different companies come to realise their personal accountability. However, I must again suggest to Ministers that they should set up, within the independent review that they have already announced, a review of the current regulatory structure. The Minister has said that there will be a review of the whole industry, and I quite understand that it cannot be part of this Bill, but I hope that when she replies to this debate, she will undertake that a review will definitely include a look at the structure of regulation.

I and other noble Lords have received a suggestion that the growth duty placed on the Environment Agency and Ofwat should be disapplied, but this was added only recently by a statutory instrument. I spoke against that statutory instrument—the then Minister was here a few moments ago but unfortunately is now not in his place—but, as there is no ability by either House of Parliament to amend a statutory instrument, it was passed. I cannot imagine that this new Government would wish to be seen to disapply a growth duty on any public body.

Throughout this Bill, there are frequent references—sometimes slightly confusingly—to new powers for the regulators. Dividing regulation between Ofwat as the financial regulator and the Environment Agency as the environmental regulator has, with hindsight, allowed the industry to evolve in a way that has damaged the aquatic environment and offended the public’s perception of our green and pleasant land. The state of our rivers, lakes and beaches is a national disgrace—we must surely all admit that. At last, this Government are trying to overcome this stain on our reputation and our sense of well-being. I have a concern, however, that unless we improve the way we regulate the polluters we will not in the long term arrive where we want and need to be in terms of the ecological state of our inland and coastal waterways.

A number of us yesterday received emails suggesting that Ofwat should be given an additional duty to protect the environment. Whereas this is a laudable intent and something that all businesses and indeed individuals should aspire to, I am not sure that, in the current regulatory structure, it would be sensible to add this statutory duty to the other regulator while it is principally the duty of the Environment Agency.

I turn now to some specific ways in which I think the Bill could be improved. I am very grateful to the Minister for a meeting that a number of us had with her on Monday. It is, I think, significant that the Bill has been tabled in this House, thus enabling it to be better scrutinised—and improved—before it goes to the other place where, as we know, very few amendments will ever be properly considered, let alone voted on.

I am a bit concerned at the idea of consumer representatives on boards. In my experience, such defined interests on a board are not likely to improve the effectiveness of the board. New Section 35B(6), inserted by Clause 1, on page 2 of the Bill, does refer to a “committee or panel”—as the Opposition spokesman has already said. I believe that one of these would be much more effective and appropriate, particularly if the chief executive was required to have regular meetings with such a panel. If consumer interests are to be represented, why not also environmental interests, which I would have thought are, in this circumstance, equally important?

In new Section 94EA, inserted by Clause 2, the requirement for water and sewerage undertakers to prepare and publish a pollution incident reduction plan should, I suggest to the Minister, be extended to include a legal requirement to implement the plan. There are too many cases of plans being announced and then not being delivered.

The Bill introduces the concept of “emergency overflows” in addition to the permitted combined sewage overflows, or CSOs. I understand the department’s wish to have another category of overflows, but it surely cannot be justified that the water companies can claim that an emergency overflow is legal if it is caused by an electrical power failure, as detailed in new Section 141G(2)(a), inserted by Clause 3. Any other public service provider, such as a hospital or a school, would be required to have in place sufficient electricity generator capacity to cope with power failures. I suggest to the Minister that this is too easy an escape clause for the water companies.

In conclusion, I support this Bill but I hope that, in Committee, we can help the Minister to make this an even better Bill before it goes to the other place.

Wild Atlantic Salmon

Duke of Wellington Excerpts

Thursday 12th September 2024 Grand Committee

[The Duke of Wellington (CB)]

My Lords, I declare an interest in that one of my children owns a stretch of a small salmon river in south-west Scotland, where I have fished all my life.

In the very short time available, I want simply to suggest to the Minister that, in informing herself about this dangerous situation with the Atlantic salmon, she might care to visit, or at least find out about, an organic salmon farm in Ireland which I visited this summer. It is extraordinary. Anybody who watched the “Panorama” programme on salmon farming a few years ago will never again eat any farmed Scottish salmon. However, that organic farm in Ireland is truly admirable. It does not have a lice problem. The salmon are not so packed in the cages as in Scotland, where they are like battery chickens. There is virtually no use of antibiotics or other chemicals. The seabed under the cages is regularly inspected and never resembles the state of the seabed under the salmon farms on the west coast of Scotland.

So there is an alternative to the sort of salmon farming which takes place on the west coast. I do not know whether the Minister can apply any influence over the Scottish Government, but the industry should be more regulated. At the very least, the use of antibiotics in it should be strictly controlled.

Sewage Pollution: Lakes and Rivers

Duke of Wellington Excerpts

Tuesday 30th April 2024 Lords Chamber

[Lord Douglas-Miller (Con)]

My noble friend raises a very good point; the water companies are consulted on these issues on a regular basis.

[The Duke of Wellington (CB)]

My Lords, I think the Minister just said that there is 100% monitoring of storm overflows, but my understanding is that, whereas the quality of water coming into the rivers from sewage plants is indeed monitored, outflows from the combined sewage overflows are not completely monitored and should be. That still needs further monitoring. Will the Minister meet with the Environment Agency and suggest that it accelerates the programme of installing monitoring of the combined sewage overflows?

[Lord Douglas-Miller (Con)]

The noble Duke has a profound knowledge of this issue, so I will bow to that on this occasion. I commit to speaking to the Environment Agency on this issue and will take that point forward.

Environment Agency

Duke of Wellington Excerpts

Thursday 7th March 2024 Lords Chamber

[Lord Douglas-Miller (Con)]

I am not entirely sure what the key question was. If it was about linking up across government, I assure the noble Lord that it takes place across all departments.

[The Duke of Wellington (CB)]

My Lords, I declare my interests relevant to this matter. In the past, the Environment Agency did not give sufficient priority to the discharge of sewage into our rivers. The Minister just explained how its budget has been increased, but the most important thing is to make the discharge of sewage and cleaning up our rivers a sufficient priority within the management of the Environment Agency. Is the Minister convinced that that is now the case and that what happened in the past will not recur, and we will have more effort from the Environment Agency in cleaning up rivers?

[Lord Douglas-Miller (Con)]

The noble Duke is absolutely right. Just in the last year, the Government published the Plan for Water, which marks a step change in how we manage our water. We plan to deliver clean and plentiful water for people, businesses and nature. We are delivering this with tighter regulation, tougher enforcement and more investment. The Government are committed in the 25-year environment plan to restoring three-quarters of our water bodies to be close to their natural state, and this plan will help us achieve that.

Pollution in Rivers and Regulation of Private Water Companies

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Thursday 29th February 2024 Lords Chamber

[The Duke of Wellington (CB)]

My Lords, I declare my agricultural interests, which may be relevant to this debate. I also congratulate the noble Baroness, Lady Bakewell, on securing this debate. I am slightly saddened to hear, from various sides, party-political views on this matter. In my opinion, this is not a party political issue. I think that all parties in this House, and those with no party affiliation, share a determination to try to do something about this serious situation.

There is no doubt that pollution in our rivers affects the whole population, and there is wide public support for legislation to clean up our rivers and beaches. Unfortunately, despite many improvements made by this House to the Environment Act 2021, and despite various plans and intentions published by the Department for Environment, Food and Rural Affairs, the Environment Agency and Ofwat, the situation does not appear to be improving.

The Office for Environmental Protection—a new agency created by the Environment Act—stated in its recent annual report:

“The current state of the water environment is not satisfactory. Despite historic improvements, the pace of change has now stalled.”


It is well known, and a number of noble Lords have mentioned it, that only a small proportion of our rivers are in a good ecological state. In a report by the Rivers Trust, published earlier this week and referred to by several noble Lords, this country’s rivers are described as being in a

“desperate state … plagued by sewage, chemical, nutrient and plastic pollution”.

What can be done to encourage an improvement in our rivers? As the Office for Environmental Protection clearly states in its report, the Government’s ambitions can be achieved only with

“effective management of the farmed landscape and engagement with the nation’s farmers and landowners”.

Unfortunately, the rollout of the environmental land management schemes has been slow, and this will have impeded the reduction in the pollution in our rivers coming from agricultural activities. We have been slow in dealing with the slurry from intensive farming systems located in certain river catchment areas.

However, the inexcusable cause of river pollution is the continuing discharge of raw and untreated sewage. This has been happening for decades, and planning authorities throughout the country have been insufficiently insistent on improvements to sewage treatment plants to cope with new housing developments and so many house improvements. The various parts of central and local government have been insensitive to the scale of sewage pollution entering rivers and lakes. With hindsight, I think it is now clear that the regulatory structure created when the water companies were privatised over 30 years ago has been shown to be inadequate.

In the short term, it will be necessary to enforce to a greater extent compliance with new regulations for slurry management and the control of other farm waste. For the water companies, it will probably be necessary for Ofwat to insist on an even greater level of investment in sewage treatments—including, where possible, nature-based systems. I know that many ambitious investment plans have been announced, but I fear they are not adequate for the dire situation in which we find ourselves. I also fear—and it is uncomfortable to say this—that all this may involve increases in water charges greater than the rate of inflation. This must be coupled with a reduction or elimination of dividends until the discharges have been reduced to a minimum.

In the medium term, we must review the structure of regulation. I realise that this would be complex and that the transition could be disruptive. As the Minister and all the party spokesmen are here participating in this debate, I ask them to discuss with their respective colleagues whether all parties should include in their manifestos at the next election a commitment to an independent review of the structure of the regulation of the water industry. Such a review might well conclude, as I have, that it is necessary to have a single regulator, rather than the continuing splitting of responsibilities between the Water Services Regulation Authority—Ofwat—and the Environment Agency. The water companies are, of course, monopolies in their own geographic areas, and must therefore be regulated. I cannot think of other monopolies where the regulation is divided between two different agencies.

I do not suggest that it would not be complicated, and have other consequences, to change the manner in which water companies are regulated and held to account, and any change would not have an immediate effect. But the present system of regulation has meant that it has taken us decades to realise the full extent of the pollution damage, while the industry has become increasingly indebted and yet has paid out regularly dividends to shareholders, who in many cases are not the public shareholders who originally bought shares from the Government but private equity firms that may not share the same environmental objectives as the Government or the public. Some noble Lords have mentioned bonuses. I agree that it is rather shocking how much has been paid out in bonuses to companies which have been polluting regularly our rivers.

I realise that there is no quick fix for the current state of our rivers, lakes and beaches. But we must continue to keep pressure on the Government, local authorities and the regulators to reduce the discharges of sewage and the agricultural waste entering our river systems. A greater sense of urgency is now required.

Water and Sewage Regulation (Industry and Regulators Committee Report)

Duke of Wellington Excerpts

Monday 16th October 2023 Lords Chamber

[The Duke of Wellington (CB)]

My Lords, I declare my registered interests that are relevant to this debate. I welcome the Industry and Regulators Committee’s report and congratulate its members, particularly the chairman, the noble Lord, Lord Hollick.

When the water companies were privatised in 1989, I cannot imagine that Ministers then thought that so many of them would pass into the hands of private equity groups, many of them based outside the United Kingdom. As the water companies are monopoly suppliers of essential water services to households and businesses, it is clear that they must be regulated. Regulation is divided between the Water Services Regulation Authority, known as Ofwat, and the Environment Agency. In paragraphs 2 and 3 of its recommendations, the committee suggests that there should be much closer co-operation between the two agencies. I ask the Minister whether it might not be more effective to merge into Ofwat the parts of the Environment Agency that currently regulate the water companies.

There have clearly been failings over the past 34 years in how the water companies have been regulated. The Environment Agency, for its part, pleads lack of resources. I am not convinced by that, although the committee appears to accept the argument. The problem has been that addressing the discharge of sewage into rivers and on to beaches has not been a high enough priority for the Environment Agency and, therefore, not enough of its extensive resources have been directed to oversight and monitoring of these monopolies. If all along there had been a department within Ofwat responsible for environmental regulation, in addition to financial regulation, for which it is responsible, the growing problem of sewage discharges would have been detected and understood much earlier and corrective action could therefore have been taken some decades ago. Will the Minister and his colleagues give serious consideration to whether the structure of the regulation of water companies is correct, and whether there should not in future be a single regulator?

There are several other recommendations in the report which I completely support. Paragraph 24 recommends banning the sale of non-biodegradable wet wipes. I was pleased to see that, finally, the Government on Saturday launched their latest consultation on this, but I am not sure why they think that further consultation is necessary, as the overwhelming majority of this House and the other place, and of members of the public, are in favour of banning those products.

I also welcome paragraph 35, in which the committee questions whether the 2050 targets in the storm overflows discharge reduction plan are sufficiently ambitious. I hope that, when that plan is reviewed in 2027, the then Ministers will be more ambitious.

I support paragraph 47, in which the committee recommends that it should be part of water company licences that bonuses and performance-related pay of executives be linked to environmental performance. I also support paragraph 49, requiring that water companies, even though they may now be owned by private equity groups, should still be subject to the same level of transparency as they were originally, when they were publicly listed companies. This must surely be right for monopolies formerly owned by the state.

There are two final recommendations of the committee that I strongly support. Water metering should be compulsory for all households and businesses where possible. For households, the cost of meter installation must be borne by the water company. This will clearly help many consumers to reduce their water consumption.

The last recommendation of the committee is that there should be more stretching targets for reduction of water leaks. A few months ago, I asked the Minister why the Government’s target was to reduce leaks only by 50% by 2050. That does not seem sufficiently ambitious. Ofwat currently estimates that leaks amount to 51 litres per person every day. The idea that in 27 years’ time, the companies will still be leaking 25 litres per person per day does not seem in any way justifiable.

I very much hope that this excellently titled, excellently written report will cause Ministers seriously to review how the water companies are regulated.

Water Companies: Customer Bills

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Tuesday 23rd May 2023 Lords Chamber

[Lord Benyon (Con)]

My noble friend is right to a point. The Government give direction to Ofwat and have given it very clear direction in terms of resolving issues in relation to sewage overflows into rivers. We have a system where, like all utilities, it is extremely attractive, not least to pension companies—which are the recipients of dividend payments—that invest in our water industry. Having that balance between making sure we are being fair to bill payers, and how much they pay, and getting that investment is absolutely crucial. That is why we work regularly with Ofwat to achieve it.

[The Duke of Wellington (CB)]

My Lords, none of us underestimates the complexity and magnitude of this problem. We have had years of underinvestment in our sewage disposal and treatment systems. Such is the size of the problem today that I think we must all accept that the strain will have to be taken by a combination of higher bills for the consumer, shareholders receiving smaller dividends and—I know that it is difficult for politicians to even contemplate—general taxation, with the Treasury sharing part of this burden.

[Lord Benyon (Con)]

I thank the noble Duke for his continued interest in this issue. Undoubtedly, we could resolve the situation by spending somewhere between £120 billion and £600 billion separating clean water from dirty water, retrofitting an entirely new sewerage system and creating additional storage equivalent to 40,000 Olympic swimming pools, but that would add between £271 and £817 per annum to bills. It is important that we are honest with customers—with the people who get water into, and have sewage taken out of, their homes every day—that this comes at a price. Some of the promises being made that this is a simple solution are entirely fallacious. We have to be honest with the people who pay these bills.

Water Companies: Licences

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Monday 24th April 2023 Lords Chamber

[Lord Benyon (Con)]

My Lords, that is just part of a great many things that the Government are doing. The new power that the Environment Agency has to link the companies’ licences to ring-fence provision on infrastructure spending is important. This comes as part of a plan that includes the Environment Act, as I said earlier; the Storm Overflows Discharge Reduction Plan; a strategic policy statement for Ofwat, in which the Government required very stringent new standards; and our recently published plan for water. No Government are doing more to tackle this issue.

[The Duke of Wellington (CB)]

My Lords, I also commend Ofwat on its recent announcement that it will seek to take some powers over dividends, but what it actually says is that the company boards will be required to take account of their performance towards the environment. What worries me—I wonder whether it worries the Minister—is that it is up to the company to assess its own performance. Is that really a strong enough power?

Direct Payments to Farmers (Reductions) (England) Regulations 2023

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Tuesday 28th March 2023 Lords Chamber

[Lord Taylor of Holbeach (Con)]

I ought perhaps to draw the attention of the House to my interests as in the register. I am also president of the Institute of Agricultural Management and I have the good fortune to be involved in a horticultural and farming business. I consider it good fortune because that business has grown. As my noble friend Lord Caithness would say, we are in some of the most fertile parts of England, and we have flexibility available to us that is not available to everybody involved in farming.

It is inevitable that we will talk about farming in general as we talk about this SI. The noble Baroness, Lady Boycott, spoke particularly about the strains that face farmers—the difficulties that they have in marketing their produce—but we can all agree that we want to take the industry forward. We want to see the agricultural and horticultural industries going forward.

There may be a certain amount of frustration in the criticism of this SI. Change is, of course, difficult. Nobody likes change, least of all farmers, but we are blessed in this House in that I always feel that we generally have a consensus on this issue. I am slightly distressed to suddenly find that we are talking about a “fatal Motion” and a “regret Motion”. We have in my noble friend the Minister someone who was a colleague of mine in Defra some 11 years ago and whom we can rely on to make sure that the interests that we express here this evening are expressed within government.

I know that change is a difficult matter, but what are we trying to achieve? We are trying to achieve a diversity in farming that has not existed before. We are trying to induce a situation where farmers realise that what is environmentally beneficial to this country is also part and parcel of the way that the state, the Government, funds farming and gives farmers a chance. This SI is a step on the way. It is only the beginning of a continuing process, but we should support it at this stage. This change will be to the benefit of the country and to the benefit of the industry of which I consider myself through my family connections to be a part, and I consider it to be to the benefit of the world in which the majority of our fellow citizens want to live.

I am sorry that the noble Baroness, Lady Bakewell, has proposed this amendment. I cannot agree with her. I think it is looking backwards when we need to be looking forwards. I know that we and the Labour Party are both anxious to make sure that we have a policy for agriculture and horticulture which builds on where we are and what we want to achieve; it is something that I think we share.

[The Duke of Wellington (CB)]

My Lords, I declare my farming interest as detailed in the register.

Last week, the environment committee of your Lordships’ House—of which I am a member, as are some other Peers present—heard a very interesting presentation from one of our witnesses. She was a lady farming in the Yorkshire Dales, I think. It was a small family farm, and she was farming with her son. She explained that, in the past, they had received £12,000 per annum in farming support under the basic payment scheme. However, they were now due to receive £5,000, under the new schemes. I tell this story only because it is a very realistic assessment of what is happening to small family farms in the uplands, which are trying to farm in an environmentally sensitive way but not really being supported by the support system to which we are moving.

Like others, of course I support the idea that there should in future be payments that help the environment. In fact, I believe that most farmers already want to farm in a way that is friendly to the environment. Nevertheless, I understand that public money should be directed towards environmentally friendly systems of farming.

We all know that our Minister, who is so widely respected in this House, is not the author of the details of this transition. I do not think he was the Minister when we were debating two or three years ago the then Agriculture Bill. Many Members of this House at the time warned about the effect of phasing out the basic payments before the development of the ELM schemes and how it would affect particularly family farms in the uplands. That is indeed what is happening.

It is an uncomfortable truth for a Member of the United Kingdom Government that the Scottish Government are treating their farmers rather better than the English farmers are being treated by the centrally directed schemes here. In Scotland, they have decided to retain the basic payments until such time as the new environmental schemes properly kick in. We have been told many times in this House and in Grand Committee that there will be alternative ways in which farmers can apply for public money. We all accept that and nobody is disputing the principle. What worries me, and should be of concern to the Minister, is that there is a serious funding gap between the diminution of the basic payments and the access to and development of the new environmental schemes.

Although I of course support the direction in which the Government are taking farming, I do not rate the announcement by the Minister in January of £1,000 for helping all farms to receive advice. I am sure the Minister is aware, even though I have heard him suggest otherwise, that the complexity of the various schemes on offer quite often requires rather expensive advice. I have even been told that the expense of the advice is likely to be as great as the payments that people might possibly receive under some new schemes. It is complex—I think the Minister probably realises that—but I do not think the offer of £1,000 is really very significant or indeed very generous.