Thames Tideway Project: Contingent Guarantees
Lord Berkeley Excerpts(9 years, 7 months ago)
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Lord Berkeley
To ask Her Majesty’s Government why they have indicated the availability of contingent guarantees in support of Thames Water; and whether this complies with their policies on offshore financial instruments, governance and taxation.
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord De Mauley) (Con)
My Lords, to be clear, the Government are not providing a contingent guarantee to Thames Water. The Thames tideway tunnel project will be financed and delivered by a competitively tendered infrastructure provider which is an entirely separate entity to Thames Water. Details of a contingent government support package for this entity, which complies with all relevant government policies, were announced in a Written Ministerial Statement on 5 June.
Lord Berkeley (Lab)
My Lords, I am grateful to the Minister for that reply. Every week the Government tell us that they intend to outlaw aggressive taxation and leverage policies. The Minister says that Thames Water is not going to be in receipt of these funds but the Thames tideway tunnel project will be. Why are they allowing that to be financed in a tax haven while also promising it a government guarantee? Is there not a conflict of interest here somewhere?
Lord De Mauley
My Lords, I have comprehensively answered the noble Lord’s point about tax in earlier short debates on this subject. Perhaps we will come back to that later, but I will address his point about the appropriateness of offering a government support package. The contingencies covered by it are set out in the Written Ministerial Statement. It is common for Government to provide support of some kind to major infrastructure projects—for example, the PFI projects under the previous Government. The government support package here will cover low probability but high impact risks that the market could not take on at a reasonable cost to customers. The infrastructure provider will be incentivised not to call on it and it will exist only during the construction phase. The important thing to bear in mind is that the infrastructure provider will pay for the cover. Furthermore, the financing for the project is sought competitively to help minimise the cost—and that means the cost to customers.
Thames Tideway Tunnel
Lord Berkeley Excerpts(10 years ago)
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Lord Berkeley
To ask Her Majesty’s Government whether they have discussed with Thames Water the additional annual charge to its customers to fund the development and construction of the Thames Tideway Tunnel and the duration of this charge.
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord De Mauley) (Con)
My Lords, the Government have indeed been working closely with both Ofwat and Thames Water to ensure that the Thames tideway tunnel is delivered in a way which minimises the impact for customers and taxpayers.
Lord Berkeley (Lab)
I am grateful to the Minister for that Answer. Will he confirm that the latest figure for how much it will cost all Thames Water’s customers—from Swindon to Witney, and Newbury to London—is about £70 or £80 per year extra for the next 50 years? Is that reasonable, given the fact that the tunnel may become redundant in 20 years because of the Government’s own Flood and Water Management Act and the requirement for sustainable urban drainage systems? Is not the best thing now to abandon the tunnel completely and save all this taxpayer and government money?
Lord De Mauley
My Lords, of course not. Government estimates at 2011 prices were for a maximum bill impact range of between £70 and £80 per year. These figures remain valid as an upper bound and would take Thames Water customers’ sewerage bills to around the national average. The construction costs are currently out to tender with consortia of contractors. We also consulted last December on a competitive procurement approach for the financing costs, although no decision has yet been made.
Flooding: Somerset
Lord Berkeley Excerpts(10 years, 3 months ago)
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Lord De Mauley
I am sure that my noble friend did not mean exactly what the Opposition thought he meant. The Army is on standby if necessary, as I have said. High-volume pumps have been deployed from the National Asset Register and they are in place to prevent further increases in levels of flood water. The pumping operation is in fact one of the largest that the country has seen. My right honourable friend the Secretary of State has asked for a clear action plan for the sustainable future of the Somerset Levels and moors to resolve the problem for the next 20 years. Noble Lords will be aware that I am repeating a Statement later to deal with extra funds for repairs.
Lord Berkeley (Lab)
My Lords, has the Environment Agency got its priorities right on the floods? It says that it does not want to do any dredging. I was told by one of its officers that there is no point in dredging, because there is a high tide and the water is coming in, but it must understand that there is also a low tide and it can go out. I had an e-mail this morning from the Environment Agency about the Dawlish Warren, and as we know the railway will be closed for six weeks. The agency says that it will study the bird movement on the beach over the next year to see whether it can move any sand back there. Are we looking after birds before humans?
Lord De Mauley
My Lords, the agencies are working together to ensure that measures such as dredging can proceed as rapidly as possible and meet the existing environmental requirements. The Environment Agency, Natural England and the local authorities are working together to expedite this.
Peatlands
Lord Berkeley Excerpts(10 years, 4 months ago)
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Lord De Mauley
I was not quite sure which noble friend was going to ask me a question then. The point on greenhouse gas emission reporting is that the metrics and technology are at a relatively early stage. We are still working on that, but noble Lords may rest assured that it is a key focus for us, and we will not rest until we have achieved that.
Lord Berkeley (Lab)
My Lords, the Minister said that they were looking for sponsorship for the management of these peatland areas. Does that mean that the only new areas that will get managed will be those sponsored by McDonald’s, et cetera?
Lord De Mauley
No, my Lords; that is why I mentioned the new environmental land management scheme.
Thames Tideway Tunnel
Lord Berkeley Excerpts(10 years, 6 months ago)
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Lord Berkeley
Lord Berkeley (Lab)
My Lords, I am pleased to have the opportunity to debate this important project. It is not the most popular time in the House of Lords weekly calendar, but it is still good to have the opportunity. We have had a number of Questions in short debates over the months and years, but I think it is timely to put some markers down because the Tideway tunnel is at the IPPC for determination. There is a new report from the Environment Agency on SDS—it is interesting, the delay in publishing; I know it has been around for several months. Perhaps this debate has hastened its publication. There is a call by Thamesbank, the Environmental Law Foundation, supported by Sir Ian Byatt, the former director general of Ofwat, and many others for a review of the national policy statement for waste water. It seems a good time to have a debate.
I think the project of the Thames tunnel has become a kind of rollercoaster with its own momentum, but it is based on some seriously flawed and out-of-date data and the failure to properly consult or to consider alternatives which could put £70 to £80 a year on Thames Water’s customers’ bills for perhaps 100 years. It could also possibly incur a large amount of taxpayers’ money because Thames Water’s finances are in a pretty unhealthy state. Before the Government commit to such an expensive project, I believe it is essential that an independent and wide-ranging assessment be made of the alternatives using the latest data—and I mean the latest data. It should take into account the contribution that can be made by better sewer maintenance, the combinations of engineering solutions that can achieve the desired environmental objectives without involving excessive costs, the financial options available to pay for these solutions, the interaction between the choice of scheme and the method of financing, and of course the insertion of conditions that would prevent the recurrence of the payment of excessive dividends by Thames Water.
What are the issues? The first issue is that the data on which all these studies have been based are out of date, and I would suggest they are inaccurate. The baseline goes back to the Thames Tideway Strategic Study group, which worked between 2000 and 2005, when the chair was Professor Chris Binnie. On the basis of this information the Government in 2007 announced that they were going to promote this project and the national policy statement was based on the Thames Water 2010 needs report.
There are a number of serious errors in these reports. It is extraordinary that the Thames Tideway Tunnel website says there are going to be 39 million tonnes of untreated sewage flushed into the Thames in a typical year. Professor Binnie, in his latest report—which I think the Minister now has—points out that, after the various upgrades already in hand, and when the lead tunnel is complete, this will fall to 17 million tonnes. That is less than half. The problem has halved. So why is Thames Water still saying it is 39 million?
Mogden sewage works has been upgraded. It originally had about 110 CSO spills a year. It now has about nine. That is quite surprising because the European Commission has suggested a maximum of 20 spills a year as acceptable, so Mogden passes the test. Binnie also states that Thames Water assumes that sewer flows will increase by about 13% up to 2021. This of course depends on the water delivered to customers which then go to sewage flows, and there is the issue of leakage in the sewer systems. The Thames Water Resources Management Plan says that, despite the population rising in 2021, the water delivered—hence, the discharge to the sewers—will go down, as will the leakage and, presumably, the sewer infiltration. This is another 23% reduction.
Professor Binnie states:
“In my view … the sewer system model should be looked at again to see what would be needed to meet the EC criterion, particularly with the water delivered to households and non-households, and water pipe leakage reducing, and hence sewer flows, reducing in the years ahead. This would provide more sewer capacity available to cater for storm flows, hence spill frequency would reduce further”.
The problem is that Thames Water seems to be in denial about the volume of leakage and the effect of meter installation. It is also failing to maintain the sewers properly to maintain the necessary storage capacity. I recently met Dr Jean Venables, former president of the Institute of Civil Engineers, who commented about the Kingston “fatberg”—noble Lords might like to know was made of wrongly flushed festering food fat mixed with wet wipes—which reduced the capacity of the sewer to 5%. Is Kingston special or is this a common occurrence? We do not know but perhaps we should.
I am convinced that Thames Water and the Government have failed to look at alternatives. The only study of alternatives relied upon was the SuDS Evaluation for Example Areas by Professor Richard Ashley, which is included in the planning application but is not for comment. Professor Ashley recently stated very clearly that the terms of reference were too narrow and the time and resources dedicated to it were inadequate. I could go through the terms of reference but I think that in the time available I should not. He said they were really too narrow and the results could not be relied upon.
Now we have this Environment Agency report, published just yesterday. It needs careful study, but it appears to repeat many of the errors that have made since 2005. Most importantly, it presents SuDS as the only solution. I do not think anybody has really said that SuDS is the only solution; it is a contribution to the solution but there are other things, some of which I have mentioned and some of which Professor Binnie has mentioned, which could also be used. The report does not really help in either way. Before embarking on a £4 billion-plus project, there should be an obligation on government to provide up-to-date and independently verified data, along with an objective comparison with alternatives. We do not have that at the moment.
So what is to be done? I have outlined the strongly expressed views of a number of experts who believe that the problem is much smaller than was originally believed. It is possible to start SuDS in a way that would work in this country. It is a pity that the Environment Agency did not talk to the people in the US—maybe it did but it is not in the report—about the successes in Philadelphia: technical, engineering, and of course the legal and property issues as well. I have talked to the Americans and I think it could be done in this country. Thames Water could lead, fund and organise it, overseen by Ofwat, using separate arrangements for domestic properties, commercial properties and local authorities, with incentives built in through their sewerage charges. I suspect that Thames Water would be highly unenthusiastic about this but it is a regulated industry.
This leads to me to Thames Water the company, and what Ofwat is doing to ensure that the company is fit for purpose. We have discussed its financial situation in this House several times before, but it is odd that there is a problem over who will actually do the work, who will fund it and what the risks are. Martin Blaiklock, an independent consultant who has worked on this, believes that the Government and Ofwat will face an uphill task in financing such an expensive and long drawn-out project with a very high construction/completion risk. Of course, there is also the revenue risk and one has to ask: who is the customer? How much will the tunnel be used? Where is the revenue stream? Should there be a separate tunnel company? If so, what should be its relationship with Thames Water? What happens if the customers do not pay?
I think there is a question of whether such claimants, if they did or did not happen, would be seen as a contingent liability for Thames Water? That could have an indirect negative impact on its financial strength and threaten its investment grade status. Mr Blaiklock even suggests that because the tunnel option is a Thames Water concept derived out of its licence, many will say that the liabilities for this, as an independent company, should reside with Thames anyway. Any proposed structure as set out above may have echoes of Enron economics, which I am sure we do not want to see.
Perhaps it is not surprising that the Government, Thames Water, Ofwat and the others are taking so long to decide how this should be done. Martin Blaiklock concludes that given the alternatives to the tunnel option, which are gaining reality daily, for example SUDS variants, a prudent Government should forget the tunnel and choose the course of lowest financial risk and cost to Thames' customers and the taxpayer. I cannot but agree with him. It really is time for a wide-ranging study of the alternatives.
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord De Mauley) (Con)
My Lords, this has been a most interesting and informative debate, with a good exchange of views on many aspects of the Thames tunnel project. I thank the noble Lord, Lord Berkeley, for his assiduousness in pressing the Government on this subject. I will try to address as many of the issues raised as I can, but before I do that, I also thank the noble Lord, Lord Stoddart, for his thoughtful contribution, but no one do I thank more than the noble Lord, Lord Grantchester, for confirming that the Opposition support the project.
I believe that there is widespread acceptance that it is unacceptable for a leading European city in the 21st century to have a major river flowing through it that is increasingly taking on some of the characteristics of an open sewer. However, this situation in London is not new. We have known about it for well over 10 years. In that time, there has been much consideration and study of possible solutions to the problem, from all angles by a range of experts.
The noble Lord, Lord Berkeley, asked what assessment the Government have made of the proposals for the Thames tideway tunnel. A tunnel-based solution first emerged from the Thames tideway strategic study. That group, which was established in 2001 and reported in 2005, comprised the Greater London Authority, Defra, Thames Water, the Environment Agency and Ofwat, in an observer capacity, with an independent chairman. The group considered a range of alternative solutions, drawing on the technical expertise of numerous bodies and professional advisers, before arriving at its conclusion that a full-length tunnel was the preferred solution for reducing the number of combined sewer overflow spills and meeting the environmental objectives for the river.
In 2007, the then Government published a regulatory impact assessment of sewage collection and treatment for London which examined these and a range of other proposed options. The overall conclusion was that only a full-length tunnel would provide a cost-effective solution that met the tideway environmental objectives for the river within a reasonable timescale. Accordingly, the then Government asked Thames Water to proceed with developing detailed proposals for a tunnel. Since then, Thames Water has refined its proposals and consulted extensively on them.
Defra officials are working closely with Ofwat and Thames Water to ensure that the costs are tightly controlled, so that customer bill increases over time to pay for the financing of the tunnel are kept as low as possible and provide value for money. In addition, in November 2011 Defra published an updated assessment of the proposed options to address sewage in the Thames and an updated cost-benefit assessment. These were entitled Creating a River Thames Fit for our Future—A Strategic and Economic Case for the Thames Tunnel and Costs and Benefits of the Thames Tunnel.
In 2012, Parliament considered and approved the Government’s National Policy Statement for Waste Water, with debates in both Houses. This set out the need for major wastewater infrastructure, compared the alternative solutions for the Thames, and concluded that a tunnel was the preferred solution. The National Policy Statement for Waste Water will be used by the Planning Inspectorate in considering Thames Water’s current application for a development consent order for the tunnel. In 2012, my department also published its Thames Tunnel evidence assessment, to ensure that due consideration had been given to the full range of evidence available on all the proposed options to address the problem of sewage pollution in the River Thames. This included an annex listing all 36 of the relevant supporting studies and reports.
Earlier this year, in view of representations being made by the noble Lord, Lord Berkeley, among others, that some US cities were implementing sustainable urban drainage systems, or SUDS, and green infrastructure to address their overflow problems, we asked the Environment Agency to carry out an assessment of the evidence on whether SUDS could deliver the environmental standards set for the River Thames. The review, published last week, concluded that all the available evidence, comprising more than 70 relevant studies, shows that SUDS alone could not achieve this.
The noble Lord, Lord Berkeley, referred to Philadelphia. If I may, I will dwell for a moment on what some major US cities are doing, because the US has federal standards which are not dissimilar to those set by EU law. Washington DC has just started boring a deep five-mile tunnel of similar dimensions to the Thames tideway tunnel. This is part of a 12-mile tunnel system that aims to reduce combined sewer overflows by 96%, a similar standard to that proposed for the Thames tideway tunnel.
Major storage and transplant tunnels are also a key feature of solutions put in place to tackle combined sewer overflows in Milwaukee and Wisconsin. Pittsburgh is attempting to achieve a similar standard through the 25-year implementation of sustainable drainage systems. In Portland, Oregon, SUDS have been used to remove approximately 8 million cubic metres of storm water a year. This is 35% of its total sewer overflow volume, but tunnels still prove necessary to meet the required levels of control. Philadelphia aims to tackle 85% of its sewer overflow discharges using SUDS over a 25-year period. The work has been going on for five years now, but a tunnel solution may still be necessary to meet the required environmental standards.
Unlike London, Philadelphia and Portland have a geology which is suitable for SUDS. The soils underlying the cities’ SUDS areas are more porous and more able to soak up excess rainwater. The main point is that each solution reflects the particular building density, geology, rainfall patterns and existing sewer system of that city.
There does not therefore appear to be any case to revisit the case for the tunnel as it is set out in the national policy statement. I have also seen compelling recent evidence of the scale of the problem with wastewater discharges into the Thames, and I am advised that the serious rainfall event last weekend resulted in more than 1 million tonnes of wastewater being discharged into the river over a very short period of time. A tunnel would have captured these discharges, and transferred them for treatment in time to handle any subsequent heavy rainfall events. I do not believe that supporters of SUDS as an alternative to the tunnel have demonstrated how they would handle events of this type.
The noble Lord, Lord Berkeley, also referred to the work of Professor Binnie. We believe that the environmental criteria set in 2007 remain robust, are not gold-plated, and should not be downgraded. Alternatives such as a shorter western tunnel combined with SUDS would not meet the environmental objectives for the Thames tideway in an acceptable timeframe or at lower cost than the full-length tunnel.
A further important factor is the 2012 European Court of Justice ruling that the UK was in breach of the urban waste water treatment directive in London, which means that there is an increased likelihood of very significant infraction fines if we do not comply within a reasonable period of time. The risk of fines has been reinforced by the very recent fines ruling against Belgium for not complying quickly enough with a previous adverse court judgment with regard to waste water collection and treatment.
The noble Lord, Lord Berkeley, asked what the tunnel solution will deliver. The Thames tideway tunnel would reduce the frequency of spills from the 34 combined sewer overflows in London intended to be caught by the proposed tunnel from around 50 to 60 to just three or four times a year during extreme rainfall events, with the estimated overflow volume falling from around 18 million to 2.5 million tonnes. That would improve water quality, with benefits for wildlife and river users. It will also ensure that we continue to meet the UK’s obligations under the urban waste water treatment directive and the water framework directive. We are clear that the overflow volume to be addressed by the tunnel is 18 million tonnes, not the 39 million stated by the noble Lord, Lord Berkeley, as quoted by Thames.
The noble Lord, Lord Berkeley, also asked about the financing of the project. The Government believe that the private sector can and should finance this project. Although the Government can provide financial assistance in any form in relation to the tunnel, we have stated that this will be contingent financial support for exceptional project risks, to help ensure the cost of financing the project is kept to a minimum and offers best value for money for customers and taxpayers. However, we will want to be assured, when offering this contingent support, that the taxpayer is appropriately protected by measures that minimise the likelihood of these exceptional risks materialising.
The noble Lord, Lord Stoddart, asked about customers outside London paying for the tunnel. It is worth saying that London customers have helped to finance major sewerage investments outside the capital that serve a much smaller population. When improvements are needed, for example, in rural Oxfordshire, the cost is spread among all customers of sewerage services, including those living in London. This approach, which is supported by Ofwat, is standard across England and Wales and is the fairest way of apportioning the costs of investment in water and sewerage services.
The noble Lord, Lord Stoddart, suggested that Thames Water should pay for the tunnel from existing funds. Paying for the project from any accumulated reserves would neither reduce the cost to customers nor remove the requirement for some type of government support. This is a major tunnelling project and has a risk profile significantly beyond that typically expected of a water and sewerage company. That is why the tunnel is expected to be financed and delivered by an independent infrastructure provider with its own licence from Ofwat and backed by some form of government support related to exceptional project risks.
The Government believe that the private sector can and should finance the project but accept that there are some risks that are not likely to be borne by the private sector at an acceptable cost. The Government are therefore willing, in principle, to provide contingent financial support for exceptional project risks where that offers best value for money for customers and taxpayers.
Lord De Mauley
My Lords, I am sure I will in a minute. We will want to be assured that when offering contingent support, taxpayers’ interests remain a top priority. The taxpayer must be appropriately protected by measures that minimise the likelihood of these exceptional risks. We are working on the detail with Ofwat, Infrastructure UK, Her Majesty’s Treasury and Thames Water to ensure that there is a minimal likelihood of contingent government support ever being called on.
The noble Lord, Lord Grantchester, asked about the status of planning. Given that Ministers have a quasi-judicial role in the planning process, I hope the noble Lord does not expect me to go into detail at the moment.
The noble Lord, Lord Stoddart, asked about bill increases. We have always made it clear that the estimate of £70 to £80 is, indeed, only an estimate and should not be used, as it was in a recent paper, to reverse engineer a notional investor return. If the project is delivered through an infrastructure provider, the actual figure that appears on Thames bills will be set following the competition for the financing of the project. That will ensure best value for money for customers and keep bill increases as small as possible.
The noble Lord, Lord Berkeley, asked just now what contingent financial support really means. The support will occur in the case of unlikely events such as severe debt market disruption, significant cost overruns due to extreme tunnelling conditions and any caps on commercially available insurance.
Over the past 10 years, the Government have undertaken lengthy and thorough assessments of the Thames tideway tunnel project and alternatives. They have concluded that the tunnel represents the most cost-effective, timely and comprehensive solution to the problem of sewage pollution in the River Thames in London.
Thames Tideway Tunnel
Lord Berkeley Excerpts(10 years, 10 months ago)
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Lord Berkeley
To ask Her Majesty’s Government what steps they are taking to ensure that any support provided by HM Treasury for financing the Thames tideway tunnel project has minimal impact on customers’ bills and provides value for taxpayers.
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord De Mauley)
My Lords, we believe that the private sector should finance the tunnel. However, there are some risks that it may not be able to bear at an acceptable cost. We are willing in principle to provide contingent financial support that encourages private sector investment and offers an incentive to delivery partners to manage project risks and minimise costs. The Government are working to ensure that the tunnel offers value for money for customers and taxpayers, while being financed and delivered efficiently.
Lord Berkeley
I am grateful to the Minister for that Answer. But how will the Government explain to 6 million households that they are required to pay £80 a year extra on their water bills for 100 years or so to a company which last year paid no corporation tax but managed to pay £231 million in dividends to its offshore owner and which has reduced its assets to the extent that it cannot fund the project, with the Government not only guaranteeing it but agreeing to pay for it if they have to? How can this really be good for customers or the taxpayer?
Lord De Mauley
My Lords, we are faced with the problem of London’s sewers being at or close to capacity and millions of tonnes of sewage overflowing each year. The solution costs a great deal of money—more than £4 billion—so we need a sophisticated way to finance it. Thames Water pays its tax, and the entity which builds the tunnel will pay its tax, but water and sewerage companies have to make huge investments in infrastructure, the tunnel being a classic example. Therefore, while all companies are eligible for capital allowances, water companies perhaps appear to benefit more from them than others. We expect Thames Water’s customers’ bills to rise by about £70 to £80 a year to pay for the tunnel, which would still leave them paying below the national average. Removing capital allowances would of course mean that those bills would increase further.
Thames Tideway Tunnel
Lord Berkeley Excerpts(11 years, 4 months ago)
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Lord Berkeley
To ask Her Majesty’s Government what will be the costs to the consumer of the Thames Tideway Tunnel.
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord De Mauley)
My Lords, for Thames Water’s 13.8 million domestic sewerage customers, the tunnel is estimated to have an average maximum annual impact on bills of £70 to £80 at 2011 prices. This includes the cost of financing the project. The exact profile and duration of the cost to customers continues to be analysed. Spread over several decades, bills could gradually be affected from 2014-15, with the maximum impact estimated from around 2019.
Lord Berkeley
I am grateful to the Minister, and glad that they are still looking at the finances. Does he agree that if Thames Water had paid a reasonable dividend appropriate to a utility for the past 12 years and Macquarie Bank had not taken £48 million a year on management fees, this project could have been funded out of Thames Water’s assets without any extra charge on the customers? Will he therefore instruct the regulator Ofwat to look at all this again—to look at alternatives such as a sustainable drainage system—so that customers can perhaps get a reduction in their fees rather than this horrendous increase?
Lord De Mauley
My Lords, Ofwat has ensured that the regulatory ring-fence in Thames Water’s licence was tightened following its acquisition by Macquarie. The ring-fence licence conditions on Thames Water already include a condition requiring Thames Water to ensure that its dividend policy will not impair the company’s ability to finance its functions. As for alternatives to the tunnel, studies have looked at all kinds of alternatives over the past decade but none has shown a viable cheaper solution that would simultaneously address the current sewer overflow problems within a decade, deliver value for money and meet environmental objectives.
EUC Report: EU Freshwater Policy
Lord Berkeley Excerpts(11 years, 5 months ago)
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Lord Berkeley
My Lords, I am grateful for the opportunity to comment briefly on this report. I congratulate my noble friend Lord Carter of Coles on chairing the committee. It emphasises the serious issue of water resource shortage in certain parts of Europe. I propose to concentrate my remarks on London, where there is a growing shortage of water, as we all know. First, as my noble friend said, there are large volumes of leaks, which do not help the situation. However, if the current plans for the Thames tunnel are implemented, the Government are losing a great opportunity to deal with water shortage and the water quality of the Thames as one policy, rather than disjointed plans for dealing with the Thames, the tideway tunnel and dabbling in water conservation. I was grateful for the meeting with the Minister last week to discuss this issue and no doubt it will continue.
The tunnel from Hammersmith to somewhere near Becton will cost £4.2 billion, which will apparently put £80 on each Thames Water customer’s bill. Originally I heard this would be for 30 years, but recently I have heard it will be for much longer. Thames Water originally said this was needed to deal with 39 million tonnes of water a year, but last week, apparently, it revised its estimates down to 18 million tonnes a year. This is quite a surprising reduction. I hope the capital costs and annual bills will not be subject to 100% variation. It is a worry. My concern is that the problem with most of the demand for this tunnel is the high peaks of rain run-off during heavy rainfall. Even with a tunnel, overflows will still occur, so to me the obvious solution is to collect the rainfall and store it individually or collectively, rather than allow it to go into the sewers in the first place. I am told this is done very effectively in Philadelphia in the United States. I know that some people are coming across from there next week to demonstrate what they have done—there are many similarities between here and Philadelphia.
The system is called SUDS and the idea is to store the heavy rainfall in pervious surfaces, such as asphalt, water butts or lots of small things, which they say works even in an urban environment such as London. The water will then either drain more slowly into the sewers or, even better, be collected and treated for reuse as fresh water—so one is almost killing two birds with one stone. It works, and I believe that it would work in London. It would certainly obviate the need for the Thames tunnel and the horrible idea of £80 a year on our bills.
The report provides a challenge and an opportunity for the Government to follow the recommendations, as the noble Lord, Lord Cameron, said, to create integrated catchment management as the key.
I know that all Ministers of all parties love big projects because they think that in future years they will cut the ribbons when those projects open. The “future year” for the Thames tunnel is 2023, I am told, which is probably beyond the lifespan of any Minister in their present job. However, in this case, before committing to £4.2 billion of expenditure, the Government ought to follow the committee’s recommendation and investigate the alternatives to bring together water conservation, treatment and waste water as a coherent whole before it is too late.
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord De Mauley)
My Lords, I start by thanking the noble Lord, Lord Carter of Coles, for initiating this debate, and his committee for its report, An Indispensable Resource: EU Freshwater Policy. We are also debating the recent publication of the European Commission’s communication, A Blueprint to Safeguard Europe’s Water Resources.
Like the noble Lord, Lord Granchester, I declare an interest as the owner of a farm, through which a tributary of the Thames flows. I am also the proud possessor of a bore-hole.
As our recent weather has shown, in many parts of the United Kingdom we currently have too much water, but noble Lords will recall—and several have referred to—the position we were in last winter, heading into spring with parts of the country facing severe drought. As the noble Lord, Lord Carter, said, how quickly the rain came, and that position changed. While we cannot, as the noble Lord, Lord Cameron, said, change the weather, we can ensure that we are in the best position to deal with its implications and plan appropriately for those times when there is too much or too little of this essential resource available for both humanity and the environment.
The Government welcome the European Union committee inquiry into the blueprint and its recommendations as a helpful contribution to the debate. The Government are committed to improving the quality of our waters and we welcome the committee’s conclusion that the water framework directive has been a force for good. We are committed to implementing the directive, not merely from a legal point of view but because we believe we have a clear moral imperative, and an economic one. Many of the committee’s recommendations have also found their way, in some form, into the recently published blueprint communication.
A Blueprint to Safeguard Europe’s Water Resources outlines a three-tier strategic approach: first, improving implementation of current EU water policy by making full use of the opportunities provided by the current laws; secondly, increasing the integration of water policy objectives into other relevant policy areas; and thirdly, filling the gaps of the current framework, particularly in relation to the tools needed to increase water efficiency.
The UK Government have welcomed the communication and are pleased that, by and large, new regulatory tools are not proposed as the method for filling in the gaps. We strongly believe that the right framework is in place and efforts must be made to make that work, rather than automatically turning to the regulatory toolbox to provide the magic wand to solve a particular problem.
The majority of the blueprint actions are voluntary measures, such as new guidance documents to be developed with other member states. Other actions involve calling for the integration of EU water policy into other EU policies and improving the enforcement of EU legislation. There is only one possible legislative proposal on developing standards for water reuse. While we would prefer not to assume that regulation is the most appropriate vehicle for achieving this, we can understand the potential benefits for doing so, particularly with regard to meeting commercial and food production requirements on ensuring food safety.
In responding to the committee’s recommendations, I would like to highlight the following developments. We have committed to delivering improvements to our aquatic environment through a catchment-based approach, to which the noble Lord, Lord Carter of Coles, referred. We have established 66 pilots with a range of hosts, including charities, private water companies, established partnerships, and of course the Environment Agency and Natural England. These hosts are engaging with interested parties, and planning water improvement actions at the local level. The evaluation of these pilots will inform the approach for wider national adoption from April next year.
Water catchment plans will help target and share delivery of the measures we need to tackle both urban and agricultural diffuse sources of pollution. This will make a very real difference and up our game in improving the environmental status of our waters. We have recently published a consultation on how to address urban sources of diffuse pollution.
In the rural sector we now have various options available under agri-environment schemes to protect water quality. We will also have invested over £70 million within this spending review period, giving practical advice and grants for water quality improvements to farmers, through the catchment-sensitive farming project.
Last year we published the water White Paper setting out our vision for a resilient water industry that can meet future demands, and we are well on our way to achieving our goals through measures to tackle water efficiency, leakage, pollution, unsustainable abstraction and more. The draft water Bill published in July is another of the tools we are using to help us deliver the water White Paper’s vision for an efficient, resilient water sector that can attract long-term investment. The Bill will reform the water market and remove barriers to competition.
Our reform package will drive forward both innovation and efficiency by bringing in new players and new ways of thinking and by using market forces to keep down customer costs. This will not only benefit customers and stimulate growth, but will also contribute to our future resilience, and the environment.
As regards abstraction, which the noble Lord, Lord Carter, and others spoke about, we know that damaging over-abstraction is happening. We are reforming the abstraction regime to ensure that it is fit to meet the challenges of climate change and increasing demand. These are complex long-term issues. We need to make sure that we get this right. We will be consulting on proposals next year. It is worth saying that the Environment Agency’s “Restoring Sustainable Abstraction” programme is returning around 55 billion litres of water per year to the environment in England and Wales, which represents the domestic water use of a city the size of Leeds. We are also working with Ofwat and the Environment Agency to develop better tools and incentives to help water companies manage their abstractions sustainably.
Noble Lords have raised a large number of questions. I will do my best to address them. The noble Lords, Lord Carter and Lord Grantchester, raised the question of reuse. At this stage the Commission is considering developing a regulatory instrument setting EU standards for reuse of water for irrigation and industrial purposes. This could help remove obstacles to the free movement of agricultural produce irrigated with reused water, encourage reuse, and reduce pressure on water resources. No proposal is likely before 2015. There is not enough information available on the Commission’s thinking to form a view, but any initiative to reduce pressure on increasingly scarce water resources is worth consideration.
The noble Lords, Lord Carter, Lord Cameron and Lord Giddens, all asked about our attitude to metering. Metering can have advantages for some customers, cutting their bills and encouraging efficiency. Although many customers would see reduced bills if they were on a meter, others, especially large families in properties with low rateable values, would see their bills rise. For some, water might seem cheap and for them metering could have a perverse impact; they may say, “I am paying for it, so I shall use as much as I like”. Metering is not a solution in itself; it needs to be supported by good information and help to drive down water use. In view of those complexities, the Government do not propose to put in place a blanket approach to universal metering across the country. Water companies are best placed to find the appropriate local solution in discussion with their customers. They need to consider it as an option in water-stressed areas. As the climate changes and the population grows, the case for universal metering may change, but our view is that it will do so at different times in different areas.
The noble Lord, Lord Carter, asked how we would take forward our plans to deal with enforcement. The Environment Agency and the Rural Payments Agency, where appropriate, enforce the existing suite of regulations that are in place to protect our aquatic environment. In regard to abstraction, we are using a power in the Water Act 2003 to enable licences causing serious damage to our rivers to be removed or altered without compensation.
The noble Lord, Lord Carter, asked about the pricing of water. The independent regulator, Ofwat, sets price limits for water and sewerage companies every five years through a price review. The Government are not involved in price setting, although the Secretary of State uses a strategic policy statement and social environmental guidance to Ofwat to inform the price review process. That sets out policy objectives that Ofwat must have regard to in the performance of its functions. Currently, the Government are consulting on their guidance to Ofwat ahead of the next price review in 2014. That will reflect the Government’s policy objectives set out in the natural environment White Paper and the water White Paper. He also asked how we are making water pricing more transparent. As part of Ofwat’s price review, stakeholders, including the Consumer Council for Water, are working with water companies as part of customer challenge panels with the aim of improving the transparency of water bills.
The noble Lord, Lord Carter, asked about reporting. Domestically, the Environment Agency will improve reporting procedures by publicising the number of chemical and ecological components that show an improvement in status each year. That information will better reveal the level of progress that is often hidden by the aggregated description of overall status. Work is already under way to develop a statistically robust system for reporting the number of improved individual components. At EU level, the water framework directive sets out what has to be reported to the Commission and current reporting information systems are structured accordingly, reflecting the method for assessing the state of the water environment. Updates of the river basin management plans will contain an assessment of progress towards the achievement of environmental objectives and the European Environment Agency is publishing data that show the individual components of good status. Changes to the formal reporting system would require amendments to the directive and restructuring of the information systems, so that may not be achievable in the short term.
The noble Lord, Lord Carter, and my noble friend Lord Caithness asked about urban diffused pollution. We have just published a consultation on how to address pollution from urban areas. A strategy will be developed in 2013 in light of feedback from the consultation and of the views of and report by the committee. There is a wide range of issues in the urban environment and it would be key to work with local authorities to develop solutions to them.
The noble Lord, Lord Carter, asked about sharing experience between catchments. My department and the Environment Agency have put in place processes to foster the sharing of best practice and the things that have not gone so well between catchments. We also promote the work of the catchment-based approach at the European level through the various fora that exist.
My noble friend Lady Miller of Chilthorne Domer asked about public participation in implementing the water framework directive. The UK was complimented by the Commission on the steps that it took to engage people in the first river basin management plans. However, we recognise that we could do more and the development of the catchment-based approach is one step towards engaging more interested people at a more local level.
My noble friends Lady Miller and Lord Caithness asked about control at source of pharmaceuticals. The control of sources is generally more cost effective and better for the environment than trying to clean up after the event. However, current EU pharmaceuticals legislation does not allow for authorisation of a human medicine to be withheld on environmental grounds. DG SANCO is drafting a report into the effect of pharmaceuticals on the environment, which is expected to be published mid-2013. We expect that report to contain recommendations for possible amendments to the current regulatory framework for medicines.
The noble Lords, Lord Cameron and Lord Berkeley, spoke about integrated river basin management. The water framework directive, and its delivery through river basin management plans, essentially forms the basis of adopting an integrated river basin management approach. However, the Government recognised, after the publication of the first set of river basin management plans in December 2009, that we needed to adopt a more local-level approach to water management that brings together quantity and quality issues as well as flooding. That is why we are currently piloting the catchment-based approach to see whether that could form a stronger basis on which to bring together the various parts of the water cycle and to consider issues in a more integrated way.
My noble friend Lord Caithness asked about the Commission’s policy on taking action against member states which do not meet their obligations. The Commission has commenced proceedings against some member states in regard to non-conformity with the water framework directive, such as those that did not publish their river basin management plans by the deadline of 22 November 2009. My noble friend also asked whether we will have a water security task force, as the whole area of water covers so many government departments. We do not propose to have a water security task force, but a cross-government network already exists to deal with water security issues and it was called upon most recently, this year, to deal with our drought problems.
The noble Lord, Lord Giddens, asked about our attitude to the European innovation partnership. We aim to use the participatory process of the catchment-based approach to ensure that those working at practitioner level have the opportunity to engage with the European innovation partnership on water. The Water Sector Innovation Leadership Group will also consider ways in which practitioners and other stakeholders can make the most of the opportunities offered by the water EIP. He also asked about innovation. We are in the process of refreshing the Water Sector Innovation Leadership Group. That comprises representatives from my department, Ofwat, the Environment Agency and the water sector and provides leadership and direction to drive innovation to meet future challenges. It will meet in January 2013. We have provided £1 million towards a water security competition, run by the Technology Strategy Board.
The noble Lord, Lord Giddens, asked how we can develop a national programme despite privatisation. Privatisation does not stop our aim to meet our future resource requirements. We are considering the possibility of water trading between companies and look forward to working with other member states and the Commission to consider how we could use that mechanism. He asked how we can measure virtual water, and several noble Lords spoke about that. My department has commissioned a research project to evaluate the resources that are available to businesses to assess and understand the impacts of their water use. It will be published very soon. We are developing new guidance for businesses on how to measure and report environmental impacts. That will encourage organisations to consider their water use, including along the supply chain and to report against that. He also asked how we can change people’s behaviour to increase efficiency. That is an important point. A number of campaigns have been undertaken by water companies, the Consumer Council for Water, the Environment Agency and others to increase efficiency in water use by the public and by industries.
The noble Lord, Lord Berkeley, raised the issue of the Thames tunnel. He mentioned that we had a meeting recently. It is unacceptable on environmental and health grounds that about 20 million tonnes of untreated waste water currently enter the Thames in London when we receive as little as 2 millimetres of rain. Thames Water’s Thames tideway tunnel project offers the most cost-effective, comprehensive and timely solution compared with all the other solutions that we have seen. We are working with Ofwat, Infrastructure UK and Her Majesty’s Treasury to ensure that the financing and delivery costs of this large and complex project provide value for money for Thames Water customers and UK taxpayers. We are conscious of the impact on local communities and we welcome Thames Water’s two public consultations, which were an opportunity to hear from those affected. Thames Water’s planning application to the Planning Inspectorate is expected to be made in early 2013 and local communities will continue to be able to voice concerns on the proposals within the 18-month process.
Lord De Mauley
My Lords, I am sorry but I am running out of time and I have a number of questions still to get through. I am sure that the noble Lord, Lord Berkeley, and I will have further discussions on this subject.
My noble friend Lady Byford asked for an update on the chemical status of water samples. Across the EU, the Commission is focusing work under the common implementation strategy in regard to chemical monitoring and reporting for the next phase, commencing next year. This is an area where there is wide variability across the EU. The UK is in a stronger position than a number of other member states, but we recognise that we have more work to do in this regard. That is why the Environment Agency has made reducing uncertainty in classifications a priority in the first half of this river basin planning period. More than 12,500 investigations will be completed by the end of this financial year, which will improve significantly our understanding of the aquatic environment and provide the building blocks for taking decisions and developing the next set of river basin management plans.
My noble friend asked what the Government are doing to improve the “one out, all out” principle. The Government believe that this is essentially a sound way of assessing the state of the water environment. Domestically, the Environment Agency will improve reporting procedures by publicising the number of chemical and ecological components that show an improvement in status each year. This information will show the level of progress that is often hidden by the aggregated description of overall status. Work is already under way to develop a statistically robust system for reporting the number of improved individual components.
My noble friend asked about the £21.5 million available this year from the RDPE. This contributes to the Catchment Sensitive Farming project, which offers practical advice and capital grants to the farming community to make changes on-farm. The majority of this funding goes into the small capital grant scheme to make actual on-farm changes. The farmer also contributes 50% of the payment. This year the £7.9 million that Defra invested in the Catchment Sensitive Farming project has brought in £22 million per annum from European funds and £20.5 million from farmers.
Noble Lords have asked a large number of questions. I have done my best to answer as many as I can. I am trespassing upon the Companion already and I hope that noble Lords will allow me to write in response to any questions that I have not so far answered. I thank again the noble Lord, Lord Carter of Coles, and all noble Lords who have spoken. I will take away the words that they have given me today and think carefully about them.
British Waterways Board (Transfer of Functions) Order 2012
Lord Berkeley Excerpts(11 years, 11 months ago)
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Lord Berkeley
My Lords, when I first heard about this transfer by way of what I still call the quango cull Bill, I welcomed it. I agree with the noble Lord, Lord Smith, that the settlement seems pretty good. The Parliamentary Cycling Group, of which I am a member, was taken along the towpath from Islington to a very nice cycle repair café on the canal called Lock 7. We were given a very interesting briefing about the changes taking place on the waterways. It was an excellent presentation and I came away thoroughly impressed. It is a great place to pedal along in the winter because there is a high-voltage cable under the towpath, so when everything else is snowy you can still go along without slipping into the canal.
The Minister said that the British Waterways Board had a prudent track record in property management, but that is not the view of the people who sent me e-mails—other noble Lords may have received similar messages—which I presume reflect the tenants’ view. The National Bargee Travellers Association, many of whose questions the Minister sought to answer, states:
“These families live on the waterways lawfully by virtue of s.17(3)(c)(ii) of the British Waterways Act 1995”.
Will the same rights of occupancy exist even if those families have to move under the new trust? They are clearly worried, saying:
“The assurances given by British Waterways of greater public accountability exclude itinerant boat dwellers”.
That is quite worrying, because there is no way in which they can seek parliamentary discussion as they could when BWB was state-owned. I hope that the Minister can give an assurance that nothing is going to change in that regard, even if there is less parliamentary scrutiny.
I heard also from a man who is one of apparently some 200 people who are in litigation with the British Waterways Board. I do not want to go into the detail of individual cases, but there are allegations of “criminally extracted licence fees” during the past 20 years on the Grand Union Canal and talk of costs reaching £500 million, which seems surprising. What will happen to cases that are pending or currently being heard in court when the transfer takes place? It is clear that people are worried about that. The Minister said that the Government would provide a Written Statement on the Canal and River Trust in two years. It might be useful to include in it a progress report on outstanding court cases from the old regime. I hope that these matters can be resolved without any more uncertainty. I look forward to the Minister’s response.
Lord German
My Lords, I, too, welcome the orders, which I believe are the result of long and very hard negotiation. If the preparedness of the new trust to handle the financial affairs of our waterways is an issue, satisfaction should be drawn from the number of noble colleagues and noble Lords opposite who have congratulated it on the amount of money that it has been able to extract from the Government. It is indicative of the robust way in which the new trust has engaged that it has brought to a conclusion financial matters that started some way back from the £800 million which the Minister mentioned. That protection over 15 years will enable the new trust to make plans, and the asset base along with that will provide it with a very useful way of driving forward change.
The issues I am slightly concerned about, and about which I seek some clarification from the Minister, concern the way in which the new governance structure will run and the ability of the new trust to ensure that it is inclusive and serves those who use our waterways. From the documents before us, it appears that the trust has decided not to go for a membership-base as an organisation, unlike the National Trust, which some people have suggested fulfils a similar task. Could my noble friend tell us what was the reasoning behind not going for a membership organisation, when this is clearly an opportunity to develop the uses of our waterways both for leisure and health purposes—not to mention the tourism benefits, which are obviously very important to us? The current structure of the organisation is that we have trustees, a national council and 12 waterways partnerships. I would like to congratulate those involved in the negotiations to secure an all-Wales waterways partnership in addition to that—and here I declare my interest as president of the Monmouthshire, Brecon and Abergavenny Canals Trust, part of which is affected by this order, part of which is not because it remains in local authority and other ownership.
The third issue I would like to raise, apart from governance, is that of safeguarding for the users. Paragraph 8.5 of the Explanatory Memorandum to the British Waterways Board (Transfer of Functions) Order 2012 talks about access to towpaths and refers to an explicit safeguard in the trust’s obligations. While it states that the transfer protects the status quo, a sentence or two further on it states:
“As the majority of towpaths are not currently public rights of way and access is permitted at British Waterways’ discretion, this is a significant new protection”.
There seems to be a contradiction here in that the status quo may prevail, but it is not clear whether it is the intention of this order to extend towpath access or simply to transfer the status quo and give the Canal and River Trust discretion over access? I would be grateful if my noble friend could explain this.
The other safeguarding issue relates to the by-laws, which I believe my noble friend referred to earlier. It is a requirement that they should be approved by the relevant Minister. Could my noble friend explain the publication procedure that the Canal and River Trust will undertake prior to these by-laws being submitted to the Minister and what the process will be for ensuring that this happens?
My final question, which again is a bit of a cheeky one but I am going to ask it anyway, refers to paragraph 8.13 of the same memorandum, which reports that the Government sought views on a name for the new charity. The most popular was the National Waterways Trust, “waterways” being the most popular word in the consultation. The trustees subsequently named the charity the Canal and River Trust. However, in Wales it will be known as Glandwr Cymru, meaning Waterways Wales, which seems an unusual choice when it is to be called the Canal and River Trust. I do not understand whether Canal and River Trust/Glandwr Cymru is the title of the new trust in its entirety, or whether waterways in Wales will come under a trust that is a subset of the Canal and River Trust known as Glandwr Cymru. Perhaps my noble friend could explain the translation, and indeed why the word “waterways” will be used in Wales but not in England.
I have one further point, which the noble Lord, Lord Smith, reminded me of: the Environment Agency transfer of navigation rights, which, as the noble Lord says, is part two of the agenda here. The Canal and River Trust as it now stands does not manage large-scale infrastructure in our waterways or large-scale weirs. Is that a necessary part of the exercise in this interim phase on what that transfer should do and where the expertise should come from in order that the Canal and River Trust can then manage these larger structures, which, like Teddington lock, are very important to the security and safety of our land in this country?
Infrastructure Planning (Waste Water Transfer and Storage) Order 2012
Lord Berkeley Excerpts(11 years, 11 months ago)
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Baroness Parminter
My Lords, there is clearly widespread support for this order, as the Minister said. The Environment, Food and Rural Affairs Committee in another place recommended that the Government go down this route and the responses to the consultation contained widespread support, including from the local authorities that would be affected by the Thames tunnel proposals. Therefore, on this side of the coalition, we support the order. It is important to remind ourselves why it is being brought forward. It is not about trying to speed up any decisions; it is about making a process that is timely and minimises unnecessary cost but remains democratically accountable.
This is a new type of engagement for the public in terms of how they respond to major sewer proposals; in the past DCLG has been very good at public education campaigns about how the public can engage which allays fears that these are processes that are somehow to speed things up and stop them being involved. Will the Minister be speaking to his colleagues in DCLG to ensure that a proper public consultation campaign is undertaken so that people realise how they can engage in this new major infrastructure order?
Lord Berkeley
My Lords, I spoke about this project—well I did not actually speak, my noble friend made my speech for me because I was on the sleeper to Scotland. He did an extremely good job especially when it apparently diverged from our party policy, but there we are. I do not have a particular problem with the concept of an order such as this amending the planning process because I have always supported the Infrastructure Planning Commission and its successor. I did, however, have a chuckle when I read the impact assessment for this project: in answer to the question of what was the CO2 equivalent change in greenhouse gas emissions in millions of tonnes of CO2 equivalent, the answer was “not applicable”.
When I worked out that for the Thames tunnel— I do not know whether Thames Water is still going to move all the spoil away by road—that was going to be 500 trucks a day, the idea that that would not produce any CO2 was laughable. Of course, many other bits of CO2 will come out of the construction, let alone the operation. The matter might be a little detailed but it needs looking at again.
Since the debate on 27 March, things have moved on and Thames Water has produced a second consultation report. It has made some changes but I do not think it has recognised that it may have an unnecessarily expensive scheme. The eminent water engineer, Chris Binnie, produced a report, about which I shall speak in a minute and which could reduce infraction fines by obtaining improvement much sooner than 2023, which I believe is the latest date for the scheme to be completed. We must not forget that the cost is now something like £4.2 billion, plus I think that the estimate of infraction has gone up to £1.5 billion. There is, of course, always a risk of cost overrun in tunnelling. Further, there is the estimated £80 per annum for 30 years that every Thames Water customer will have to pay, with or without the extra subsidy from the Government that was agreed a couple of months ago. Therefore, I suggest that the Government ought at this stage to take a step back and reflect before spending nearly £6 billion of taxpayers’ money, which may not even satisfy the European Commission’s requirements. Indeed, we do not yet know what those requirements will be until the Court has concluded its deliberations.
Mr Binnie’s report refers to a possible fine of £1.5 billion. He believes that the fish issue can be addressed much more cheaply and that the same applies to the problems of sewage, litter and health impacts in the London docks. He says that these rather smaller issues could be addressed within two or three years, although one of them will not be resolved until 2023, which is more than 10 years away. However, all this is dependent on the European Court’s judgment, which will go back to the European Commission. Therefore, I argue that it is well worth trying to introduce some interim measures. That would probably reduce the fine significantly as the matter is assessed on a five-point basis and if you make improvements, the fine goes down.
This project has gained a momentum of its own, as do many big projects, some of which one likes and some of which one does not like. This theory of mine as regards projects gaining a momentum of their own goes back many years. Ministers like to put their names to big projects but these projects do not always survive political pressures. That is true of Governments of all parties, and 2023 is a very long time away, although I am sure that the Minister opposite does not fall into that category. However, I am concerned about where the independent advice is to be found in all this. I understand that the person in Ofwat who is responsible for this project used to work for Thames Water and that the person responsible for the technical advice on this scheme used to be responsible for the Mogden sewage works. I also understand that during the hearings that the noble Earl, Lord Selborne, held a few months ago, Thames Water referred to Ofwat and the Environment Agency as its team. This should not be a team. The regulator has an independent role. It is all wrong that they should all be one happy family when they are spending £6 billion of taxpayers’ money. Nobody is looking at alternatives. The Minister said in his introduction to the debate that this was the best scheme, having considered alternatives, but who is considering the alternatives?
I suppose it is not surprising that people are not looking at alternatives but this needs to be done. If one looks at some of the mitigating measures produced by Mr Binnie and others, there are probably many of them. We also need to make sure that if the Thames tunnel scheme goes ahead, it achieves the results we want. However, we do not know what the Commission will decide in this regard. I hope that the Minister will advise his colleagues that it is time to take a step back and look at alternatives. I would very much welcome a quick meeting with him to go through this in more detail. In the mean time, I shall not oppose the order and wish it well. However, I am not sure that I wish the project well at this stage.
Lord Taylor of Holbeach
My Lords, it has been an interesting if fairly brief debate and exchange of views that I hope will inform your Lordships for future occasions. I tend to agree with the noble Lord, Lord Berkeley, that perhaps it might be useful to have a meeting of Peers and those at Defra some time in the autumn where we can bring together all those matters. A debate such as this has helped considerably to bring to the fore some of the issues that are being considered by government. After all, there is a contingent liability to government in the Water Industry (Financial Assistance) Bill in these matters, and those are not undertaken lightly or without the Government having a proper care of what is involved.
As I said in my opening speech, it is appropriate that the issue of this order amending Section 14 of the Planning Act 2008 should be separate from the specific matter of the Thames tunnel. However, I do understand that the Thames tunnel is the only one that fits the Bill at the moment. So we have two elements to the debate today—one about the statutory instrument before us, which I have commended to the Committee, and the other about the broader issues. I hope that I can indulge the Grand Committee by talking about Thames tunnel matters, because it is clearly a public platform.
I am very grateful to my noble friend Lady Parminter for her general support for this project. As I say, it is not something that the Government have entered into lightly. Indeed, it is of course Thames Water that is entering into the project; the Government are providing a framework against which they can make their application. I assure her that Thames Water expects to commence its publicity notice in mid-July, which will publicise the impending planning application in early 2013. There has been a lot of public liaison by Thames Water itself, but of course that will mean that the consultation on the planning process opens up formally at that time.
The noble Lord, Lord Berkeley, whose professional and parliamentary expertise on matters of tunnels I respect, mentions the Binnie report. Our view is that the environmental criteria set in 2007 remain robust; they are not gold-plated in any way, and we cannot afford to downgrade them. Alternatives such as a western tunnel or a piecemeal approach—and I do not mean that in a derogative sense—which the noble Lord recommended, showed that there can be considerable problems. None of the alternatives identified during the extensive studies carried out over the past decade has been able to deal swiftly and adequately with the true environmental and health objectives of the Thames Tideway, while at the same time complying with statutory obligations. For example, separate rainwater from foul water sewerage systems would be far more costly, possibly £12 billion. It would be extremely disruptive and would take far too long to complete.
The shorter west London tunnel coupled with green infrastructure measures would still not fully reduce the volume and frequency of discharges either sufficiently or quickly, so we would not, in fact, be able to meet the environmental and health objectives.
Lord Berkeley
I am grateful to the Minister for that response. I have heard that statement from him and others before. But this kind of thing needs debating. Nobody is quite sure what standard is trying to be achieved that would meet either UK or European legislation because we do not know what the European Court will say. I hope that that is something we can talk about in the meeting in the autumn and I am grateful to the Minister for agreeing to that meeting.
Lord Taylor of Holbeach
It would be useful. I am satisfied that Defra has thought this matter through. Clearly, at the current stage of the economic cycle, we are not looking to spend money that it is beyond the capacity of this Government to endorse. I will come on to the European Court in relation to that. The interim measures, as I said, will not meet the waste water directive. That is one of the difficulties. We have to consider the urban waste water directive. The proposal to construct a tunnel should be sufficient to avoid fines completely if it is delivered to the planned timetable.
Within that process, it is important for the noble Lord to understand that although we expect a judgment concerning London in the next few months, if we lose and the European Commission wishes to pursue fines because it does not think that we are addressing the issue properly, it needs to return to the Court for further judgment. The Court has wide discretion about the levels of fines depending on several factors including the seriousness and the duration of the breach. In this case, we would expect the level of fines against the UK to be significant and set at a level to act as an incentive to remedy that breach as quickly as possible. But fines would be levied until the breach is rectified. Currently, the proposed Thames tunnel offers the solution most likely to rectify the problem within the shortest time.
We cannot prejudge this issue, but clearly we are seeking to address it. It has arisen over a century or more of the growth of London and the growth in its sewage. Much of our sewerage infrastructure was built by Bazalgette 150 years ago and is clearly no longer capable of coping.
I think that I have covered those questions raised by the noble Lord, Lord Berkeley, and I now wonder if I have some points to help the noble Lord, Lord Grantchester. I am grateful for his contribution, which was supportive of the process that the statutory instrument is trying to bring about. Indeed, he is grateful for the Government tabling this debate because it is something that the Opposition have supported in the past.
There is no question of us seeking to curtail debate. I hope that the noble Lord will accept that. The money Bill was a money Bill and we were not able to debate that further. I hope that he is happy with the suggestion I made to the noble Lord, Lord Berkeley. There were a number of detailed questions that he asked me and I hope that he will forgive me if I write to him on those matters. I can make sure that other noble Lords who spoke in the debate get a copy of that letter.