Planning and Infrastructure Bill

Lord Cromwell Excerpts

Committee stage
Wednesday 17th September 2025 Lords Chamber

[Earl Russell (LD)]

My Lords, I rise briefly to speak to my Amendment 246 in this group on strengthening the NRF model and, most importantly, on the overall improvement test for environmental delivery plans under Clause 55.

This is a really interesting amendment, and I welcome the speech the noble Lord has just made. We recognise the amendments that the Government have made, but judging by the size and the number of them, and the uniformity of purpose across the amendments and across political parties, I think it is fair to say that concerns remain and that many Members are still looking for further reassurance and guidance from the Government on these matters.

My amendment makes it clear that the conservation measures must not merely mitigate or offset environmental harm but significantly and measurably outweigh it. That is important, because that is about delivering a genuine net gain on the conservation status of our natural heritage. Against that there are two things. First, we have the new policies and plans the Government have put forward. There is a background worry about the disregard for nature and the dangers inherent in some of the Government’s plans, but there is also a worry that the bar is too low and that too often in the past we have seen, with the best will, government intentions and legislation ultimately failing to deliver what they promise, particularly for nature.

It is therefore important to put in those measures, and other Members have picked up on them as well. It gives clarity to developers and those involved that they need to do something more than merely replace. The amendment would enshrine in law a clear principle that any harm caused by development must be more than compensated by concrete improvements. As my noble friend Lady Grender said, that aligns with the Government’s own biodiversity and net gain targets and sets robust, measurable standards.

We are all aware that we are already, famously, one of the most nature-deprived countries in the world and the few precious sites we have left are often not properly looked after and maintained. They are very disparate and very precious. Organisations and Members across the House have raised these issues, so while I welcome “materially outweigh” that the Government have put forward, there is a need to go further. I hope we can have further conversations on this area. These matters are important.

I support most of the amendments in this group. Again, what is important is the sense in this House that on these matters we seek reassurance.

[Lord Cromwell (CB)]

My Lords, this is my first intervention today and, of course, I am speaking personally. I wholeheartedly support what the Government Whip said about this being Committee stage and how it should be conducted, but this is a big Bill and it needs proper scrutiny. As the Minister has told us today, there are lots of things still to clarify and many questions still to be answered. Some speakers may need reining in, and I am sure the House will support the Whips when they attempt to do that, but I put it on record that I thought the crude attack yesterday in Oral Questions was inappropriate and unhelpful.

I support most of the amendments in this group, particularly Amendments 286 and 300 and others that have been raised such as those by the noble Baroness, Lady Grender, a few moments ago. These all seek to introduce some quantification, comparison and accountability into the EDP process. There will always be a temptation for implementing bodies, be it Natural England or those that it subcontracts, to introduce subjectivity—or, shall we say, optimism—into their results and reporting. Openness with data and debate will be essential to enable candour, challenge and particularly third-party professional scrutiny. EDPs are a new adventure, and lessons will need to be learned early and fully. I therefore support, as Amendment 300 puts it,

“a high degree of certainty based on an objective assessment”.

I also support Amendment 264 in this group from the noble Earl, Lord Caithness, and, to save time, Amendment 275 in the next group from the noble Earl, Lord Russell. Both seek to introduce some discipline and accountability via mitigation hierarchy and a stepped approach.

Finally, I have two related questions for the Minister. Will there be an independent audit process of Natural England and EDPs—not just of their finances but of the outcomes and results? If so, who will select these auditors and evaluators?

[Baroness Bennett of Manor Castle (GP)]

My Lords, I will speak to Amendment 290 in my name, which was tabled as Amendment 119 in the other place by my honourable friend Ellie Chowns. I agree with the noble Earl, Lord Russell, that the noble Lord, Lord Lansley, has clearly identified where this group has taken us, and we have heard powerful expositions from the noble Baroness, Lady Grender, and the noble Lord, Lord Gascoigne.

This amendment specifically addresses European sites, European marine sites, European offshore marine sites and Ramsar sites, so we are talking about the overall improvement test, but in a limited subset. Again, we are talking about the nature of the overall improvement test.

These sites are, of course, hugely precious and terribly important, and Ramsar sites are described as internationally important places. Amendment 290 says that the Secretary of State has to be

“satisfied that there would be no adverse effect on the integrity of the relevant site”.

That is part 1 of the test. Paragraphs (ii) and (iii) state some offsetting allowances if there is no alternative and if appropriate measures are taken, but the amendment sets a very high standard for these terribly important places, which is crucial for them.

I note that in Monday’s debate, the noble Baroness, Lady Hayman, talked about how, under Clause 89, Ramsar sites were previously protected by guidance rather than legislation. This is indeed legislation, but if the test is not sufficiently strong then it is not any kind of protection at all. Also on Monday, the noble Baroness said that SSSIs have protection under the Wildlife and Countryside Act. I have not had time to really absorb what this morning’s letter says. It refers to that protection, but I would be interested to hear from the Minister on how that interacts with the changes that the Government have made and how Clause 55 works.

It is worth focusing for a second on what we are talking about. When I think of Ramsar, I always think of Rutland Water. I am sure that many noble Lords have visited it and seen the amazing birds at that site—I am looking at the noble Lord, Lord Randall. I also think of the Inner Thames Marshes SSSI, which is part of the Rainham Marshes Nature Reserve. I think of that because I was there in 2018 on Hen Harrier Day, when we had the wonderful and amazing pleasure of a marsh harrier swooping over to inspect our event for defending their cousins. I can remember the sense of wonder and amazement in the crowd, many of whom were local people. It is important to stress how important those SSSIs are to nature but also to local communities. We might think, “That will always be all right. That will always be protected”, but in the 1990s, the site was a candidate location for a Universal theme park, which, happily, was not built.

--- Later in debate ---

The noble Lord, Lord Cromwell, raised the issue of an independent audit process for Natural England, which will be subject to audit, as all public bodies are. I will revert back to him on the issue of who selects the auditor. I do not have the answer to that in front of me, but I will come back to him on that.

[Lord Cromwell (CB)]

All the amendments in this group are basically trying to answer the question: what would success look like, and how do we measure it? I guess it is the old consultants’ cliché, I guess. The point I was concerned about was not just a financial audit but measuring the performance of EDPs. Environmental change is fantastically difficult and subjective to measure, so is there a commitment to use external third-party expertise to evaluate their success, or will Natural England mark its own homework?

[Baroness Taylor of Stevenage (Lab)]

As if by magic, I have the answer for who audits Natural England, so I can answer the noble Lord’s question. The accounts of Natural England are audited by the Comptroller and Auditor-General under the Natural Environment and Rural Communities Act 2006. It is the National Audit Office, so I hope that is helpful.

[Lord Cromwell (CB)]

That is helpful, and I am sure that it will look deeply into the financial performance, but I am worried about how the actual performance of the EDP will be measured.

[Baroness Taylor of Stevenage (Lab)]

I was just coming to that. The performance of EDPs will be monitored in the ways that have been set out. There will be oversight from the department and a process for monitoring the EDPs. It might be helpful if, between Committee and Report, the noble Baroness, Lady Hayman, and I can set out exactly how that process will work, and we will aim to do that.

The noble Baroness Coffey talked about the environmental principles policy statement, and I can confirm that the Bill must have regard to that statement, in line with the Environment Act 2021. With all those comments, I hope that noble Lords will not press their amendments.

--- Later in debate ---

[Lord Cromwell (CB)]

I will speak very briefly in support of Amendment 293 on the annual report. Put simply, if the department is not required to produce an annual report, will it do so and, if not, how is Parliament to be made aware of progress or difficulties, unless, perhaps by chance, a Select Committee calls in Natural England to tell it?

[Baroness Hayman of Ullock (Lab)]

My Lords, I thank noble Lords for introducing their amendments and for the wider debate. I will speak first to Amendment 293, tabled by the noble Lord, Lord Roborough. That requires Natural England to produce annual reports on EDPs rather than just at the mid- and endpoint of an EDP’s lifespan. We think that our Amendment 325C, on the new reporting requirements, partly speaks to this issue. Our concern is that Amendment 293 would bring a disproportionate burden, given the strengthened reporting requirements that we have introduced in government Amendment 295A.

The noble Lord asked whether we were happy with these levels of reporting. It is important that the frequency of reporting strikes the right balance. Natural England will still be carrying out appropriate monitoring throughout the EDP’s life cycle and will retain the power to publish a report at any time. Similarly, requiring EDPs to include an assessment of their impact on the local economy and community in the relevant area, as is proposed by the noble Lord’s Amendment 295, would add a significant burden to the reporting requirements for EDPs. Of course, communities will be involved during the consultation process; I wonder whether it might be an idea to circulate the consultation guidelines to noble Lords, because obviously the consultation process is an important part of what we are proposing.

On Amendment 285A, I hope I can satisfy the noble Lord, Lord Randall, that requiring a biodiversity survey of an EDP area is already accommodated in the existing drafting to an extent that such a survey is not necessary. I was pleased to hear about his love of birds. He may be interested to know that I am a member of the RSPB, so perhaps I could be described as a minor “birdo” alongside him. Clause 57 already requires an EDP to describe the conservation status of each identified environmental feature at the EDP start date, setting out the relevant baseline. In doing so, as is the case for all duties carried out in relation to Part 3, Natural England will be required to take account of the best available scientific evidence. It is also important to remember that these are targeted plans to address the impact of development on a specific environmental feature. Requiring a full survey of all the biodiversity in an EDP area risks adding cost and burden that go far beyond what is required to consider the impact of development on the environmental feature.

Amendment 258C, tabled by my noble friend Lady Young, would add a series of additional requirements for Natural England when preparing an EDP. I know from discussions with my noble friend that she wishes to ensure that the NRF is as rigorous as possible while ensuring that it is an effective tool to support development to come forward. Specifically in respect of the supporting evidence base for EDPs and the consideration of the environmental principles, I assure my noble friend that these matters are already captured through the drafting and amplified by the Government’s amendments to Part 3.

My noble friend also asked about further evidence collection. Where it is necessary to gather additional ecological evidence to prepare and monitor an EDP, the associated costs may be recovered through developer contributions. Clause 57 already requires an EDP to set out why conservation measures are considered appropriate, and new Clause 87A(2) requires the Secretary of State and Natural England to take account of the best available scientific evidence when exercising functions in relation to EDPs. Clause 57 also requires an EDP to describe the conservation status of each identified environmental feature, again with regard to the best available scientific evidence. This means that there is already a requirement for Natural England to ensure that there is a solid base of scientific evidence, including adequate baseline data, to inform the preparation of the EDP. My noble friend asked why Natural England is required to have regard to environmental principles as it refers to Ministers. I reiterate that the Environment Act requires the Secretary of State to take them into account when making their decision to approve or make an EDP.

I recognise the desire to ensure that EDPs deliver as much for the environment as possible, but we must also ensure that we are not asking developers to address more than is reasonable or that we are allowing EDPs to replace the important wider programme of work which is under way to protect important sites and species as part of our ambitions in the overall environmental improvement plan. We have to get that balance right. We have to make sure that the environment supports development and at the same time does not stop important development where we need it.

The noble Lord, Lord Lucas, asked quite a lot of questions about the baseline and other things. It is probably helpful if I put my answers in writing to the noble Lord. I hope that with these explanations and assurances, noble Lords will not press their amendments. I beg to move.

Independent Water Commission

Lord Cromwell Excerpts

Wednesday 23rd July 2025 Lords Chamber

[Lord Cromwell (CB)]

My Lords, the Minister and I have a long and mainly happy history of trying to reform the water industry, including the replacement of Ofwat. I read with interest the 88 recommendations in this very timely and useful report. There is a lot to discuss, much of it welcome, but for now I will focus on two questions.

First, the report underlines the need to recognise the very long-term nature of water infrastructure investment. It says that the strategic policy statements have been too short term and that water company plans, typically of five years, encourage short-term thinking. I have often asked successive Ministers to make it clear that there is no quick fix here. This will be very disruptive to consumers, cost billions of pounds and, crucially, will take at least 25 years to implement. That is five parliamentary terms. The Government need to be honest with the public on this, so I ask the Minister to underline this and to make clear the likely timeline for this refurbishment of the water and sewerage infra- structure.

Secondly, the report summary on page 29 calls for more

“senior engineering and financial expertise”

on its board. I agree with that, but a key problem at Ofwat was that it lacked the financial engineering skills to grasp what private equity investors were up to, which led to so many of the debt problems and other issues in the finances of the water companies that we see today. Will the Minister be pressing for expertise in financial engineering in this area to be included in any new board?

[Baroness Hayman of Ullock (Lab)]

Any new board must have the right expertise if it is to deliver what we want for the industry. The noble Lord makes a very important point that whatever that expertise is, we must ensure that any future regulatory systems are set up to do the job they are supposed to do and that they have the knowledge, ability and skills to do that effectively. Otherwise, we will end up with a regulator that is, again, ineffective, which is not how we want to move forward.

The noble Lord makes a good point—this will take a long time. I hope the general public recognise that this is a long-term rebuilding programme. We are rebuilding a lot of a very old system, and we must get it right. This is also why will be bringing out the White Paper in the autumn, as quickly as we can, following the publication by the committee. From that, we will do the consultation, which must inform the public of what we are looking to achieve and what the timescales will be.

We want to bring in new legislation as swiftly as practically possible following that White Paper. That will also be part of the discussion on how we bring people with us, because people want to see the water industry cleaned up.

Agriculture (Delinked Payments) (Reductions) (England) Regulations 2025

Lord Cromwell Excerpts

Wednesday 30th April 2025 Lords Chamber

[Lord Roborough (Con)]

My Lords, I thank the Minister for a thorough introduction to this SI. I have tabled a regret amendment on behalf of my Benches, but, in reality, it is on behalf of all English farmers. Regret is too gentle a word to describe the mood among the farming community.

Before I address the issues, I first draw the House’s attention to my registered interests as a farmer and landowner. I am directly impacted by this SI, with a 90% reduction in my delinked payments. I am at least sheltered by the SFIs that I have signed up to; that is not the case for the majority of farmers.

When in government, we replaced the basic payments scheme with delinked payments based on historical BPS claims. This was intended to be gradually phased out by 2028 in favour of environmental land management schemes, where farmers and landowners receive payments only for public goods. The reductions we put in place put these delinked payments on a gradual glide path to zero in 2028. This Government have dramatically accelerated that decline. This effectively ends the seven-year transition that English farmers had been led to expect three years early, upending their budgets.

The Government promised that this abrupt reduction would release more funding for sustainable farming incentives, Countryside Stewardship schemes and large-scale landscape recovery schemes—collectively known as environmental land management schemes. Despite a commitment to give up to six weeks’ notice of a planned closure of SFI applications, the Secretary of State abruptly closed applications with 30 minutes notice at 6 pm on 11 March, as the noble Baroness, Lady Grender, has said, apparently breaking two commitments at once.

Only a minority of farmers who were previously receiving BPS had actually signed up to SFIs. Today, I am speaking particularly for two cohorts of farmers who are bearing the brunt of this SI’s excessive reduction. The delinked payments cut is particularly painful for those who were unable to apply for SFIs as they were already in environmental schemes that were less profitable but designed to work alongside this phased reduction in delinked payments. Those farmers were simply abandoned, with no compassion from anyone.

When the SFIs were closed to new applications, this affected another cohort of farmers, who were expecting to replace old environmental schemes and the delinked payments with SFIs but who had not yet completed their SFI applications. These farmers are simply in despair. There is no transparency over the timing of the payments under new SFIs, nor what their nature will be. There is certainly no confidence that they will enable these farmers to continue delivering environmental goods as they had planned, or even, potentially, to remain in business.

The Minister earlier stated that the details of revised SFIs will be released this summer. Many farm businesses are in crisis after delinked payments and the cut of SFI applications. Could the Minister please indicate how much has been identified within the existing farming support budget for these new SFIs?

Our actions in government demonstrated our commitment to paying farmers with public money for the public goods they delivered, as well as allowing them to plan ahead financially with certainty. This Government have acted in a way that allows for no financial planning by farmers and have created incentives for those farmers now so disadvantaged to compromise environmental principles and push for greater output in order to remain in business.

Farming is a competitive industry. Food production is largely commoditised, and our farmers compete not just against their neighbours but also against farmers across our country, our continent and the world. Although many of our farmers are capable of competing effectively, smaller farms, particularly in less-favoured areas, can find this competition too much. When we rightly include our high demands for animal welfare and environmental protection, this competitiveness is further undermined. Is it any great surprise that the average age of farmers is 60, and there appears to be limited interest in the next generation engaging?

Farmers in Wales, Scotland and the rest of Europe continue to enjoy much higher levels of financial support. Even the great prairie farmers of the US enjoy heavily subsidised crop insurance and the massive ethanol blending mandate supporting corn prices. Where are the hedgerows, wild birdseed belts and woodlands on these prairies, protecting and enhancing the environment? How does the Minister expect our farmers to be able to provide competitively priced food, protect and enhance the environment, and provide all the other public goods, as well as supporting their families, when the Government slash support and environmental payments at a moment’s notice?

In answer to my question on Monday in your Lordships’ House, the Minister said that diversification and improvements in the environment are two of the three central pillars of the 25-year road map that the Government are developing for farming. Cutting SFIs at a moment’s notice seems a strange way to demonstrate that commitment. My question was about how nature restoration levies in the Planning and Infrastructure Bill as drafted will go to Natural England, rather than farmers and landowners, and be used for developing its environmental development plans, potentially on land that it will compulsorily purchase. This is a prime opportunity for the Government to help farmers diversify and supplement ELMS. Why does the Minister not want this opportunity to be offered to farmers?

I am pleased to see that the party to my left have followed my regret amendment by tabling a fatal amendment. It is good to see noble Lords from many, if not all, Benches working together to support our farming community. As is the long-standing custom of this House, we on these Benches will not support the fatal amendment. In this case, this would undermine the Government’s power to control their finances and, as the Minister rightly pointed out, undo the previous transition from delinked payments to ELMS. However, I strongly urge the Minister and all members of her Government to understand the terrible position this SI is putting many farmers in, and to act quickly to help those affected. Either moderate the impact of this SI or reinstate the existing SFIs. I intend to test the opinion of the House.

[Lord Cromwell (CB)]

My Lords, I declare an interest in this matter, as I have been involved in UK agriculture for my whole life. Normally, I try to be helpful and even occasionally to inject some humour into my remarks—with varying degrees of success, admittedly. But I am sorry to say that, tonight, I am cross—not with the Minister, for whom I have great respect and indeed affection. But the fatal amendment and regret amendment in the names of the noble Baroness, Lady Grender, and the noble Lord, Lord Roborough—which they have so devastatingly put to us tonight—highlight the frankly chaotic and opaque financial position for UK agriculture. SFI, Defra’s flagship scheme, ran out of money and slammed shut without any warning. The House of Commons Minister called this a “cause for celebration”. I wonder what would happen if DWP ran out of money and tried announcing something like that to the House.

The Minister mentioned the existing higher-level stewardship agreements, of which my family holds one. These were acknowledged by the Defra House of Commons Minister as having punitively low rates, and it was announced weeks ago that these would be updated before now, but nothing has been heard since. I am afraid that the Minister was wrong when she told us earlier that they have been increased. I have just checked the Defra website, which says that we agreement holders will be written to “by April” with increased rates. I ask noble Lords to check their diaries: today is 30 April, and nothing has been received.

The next iteration of the SFI, we are told, will be after the spending review, which probably tells us all we need to know about it. Meanwhile, the accepted tapering down to zero, over time, of payments under the BPS, as UK agriculture exited EU support, has been out of the blue cut by a totally unexpected 76% for smaller farmers—all of this while speechifying about environmental schemes, food security and a grand-sounding 25-year plan for UK agriculture, which no farmers I have spoken to have even heard of.

I am sorry to say this, but Defra’s credibility—and I have been involved in agriculture my whole life—has never been lower in the eyes of the sector it is supposed to support, and what little trust remained has now evaporated. All that said, while these Motions are both accurate and justified, I shall, given my involvement in the industry, with great sadness abstain if they are put to the vote.

Ancient Trees: Protections

Lord Cromwell Excerpts

Thursday 24th April 2025 Lords Chamber

[Baroness Hayman of Ullock (Lab)]

That is a really good question. I do not know the reason why the council has put a TPO on it, but common sense suggests that the tree may not actually be dead. You could say that it has been extremely heavily pollarded, as opposed to chopped down at the base, as was the case with the Sycamore Gap tree. On that basis, it could potentially sprout again. It will not exactly recover quickly to its former glory, but that is potentially the reason that the TPO has been put on it.

[Lord Cromwell (CB)]

My Lords, can the Minister tell the House whether TPOs are easy to find online through digital mapping? That would remove the excuse for cutting down a tree with a TPO; it would also give people in the local community the opportunity to identify trees that perhaps do not have TPOs but they feel should, as part of the local plan.

[Baroness Hayman of Ullock (Lab)]

The noble Lord asks an interesting question, to which I do not actually know the answer. I shall look into it and get back to him.

Sustainable Farming Incentive

Lord Cromwell Excerpts

Tuesday 18th March 2025 Lords Chamber

[Lord Cromwell (CB)]

My Lords, the Minister in the Commons told the House of Commons that he knew for five years that the money was going to run out, but he said nothing. Instead, he waited until the money ran out and slammed the door— overnight—on more than half of English agricultural holdings, in breach of the six-week notice period that was cynically, overnight, airbrushed off the Defra website. His only reason for this was that there might otherwise have been a rush of applications. His only advice to farmers was to apply immediately for any new SFI that is opened, which is surely itself a recipe for a precipitous rush. It also ignores that inquiries to Defra by farmers seeking to get their applications right take months to get a reply. It took me three years to get answers, and those were still incomplete when the scheme was shut in the face of my family farm.

Finally, the Minister then tells hard-pressed rural communities that his department running out of money should be “a cause for celebration”. I cannot help but recall the rustic expression, “Don’t piddle down my back and tell me that it’s raining”. Can the Minister tell the House what lessons have been learned from this latest disaster for so many family farms?

Water (Special Measures) Bill [HL]

Lord Cromwell Excerpts

Consideration of Commons amendments and / or reasons
Wednesday 5th February 2025 Lords Chamber

Moved by

[Lord Cromwell]

1A: Leave out from “House” to end and insert “do disagree with the Commons in their Amendment 1 and do propose Amendment 1B to the words so restored to the Bill—

1B: Clause 1, page 2, line 8, at end insert “, and to present such information on structuring and debt prominently, including on the website of the undertaker, in a format that can be readily accessed and understood, including by bill payers.””

[Lord Cromwell (CB)]

My Lords, I will speak to Motion 1A and Amendment 1B together and would like to put on record how very grateful I have been for the discussions with the Minister and her team, her recent letter to all Peers about my amendment and the nice things she has said today—although I thought there was a bit of a threat to the noble Lord, Lord Blencathra, at the end there.

Although there is much that we agree on in principle, and what the Minister has outlined today is not obstructed in any way by Motion 1A and Amendment 1B, it is my firm belief that the amendment as presented today in Motion 1A and Amendment 1B, in plain language, needs to be included in the Bill. I suggested that the Government bring forward their own amendment setting out what she has suggested today, but they have chosen not to do so.

The original amendment required water companies to report annually on their financial structuring or restructuring and their debt levels and associated risks. I therefore regret its deletion by the Commons which, as I will address in a moment, perhaps misunderstood the need for and purpose of the amendment. That is why I have added the further wording at Amendment 1B to ensure that the information is sufficiently prominent and accessible.

The background to the amendment remains the same. The water industry and, in particular, several companies within it have both failed to invest sufficiently and got into financial difficulties because of distorted financial engineering, including overloading with debt and what I might politely call accounting sleight of hand. This has come to light not because of the regulator Ofwat, which went along with these corporate behaviours either because it simply did not understand them or, so long as the water kept flowing and the prices were low, chose not to look closely at what was going on. What was going on was an almost complete failure to invest at anything like the rate that was needed to secure a sustainable water and sewerage management system, while at the same time extracting moneys conveniently rebadged so that they were not classed as dividends. It was not Ofwat that blew the whistle on this but rather civil society, individuals and some in the media. The Industry and Regulators Committee of this House, on which I had the honour to serve, also played a part in highlighting the matter in its critical report on the water industry.

Noble Lords will be familiar with the rest: polluted rivers, excessive executive bonuses and some water companies close to bankruptcy. Once the scale of underinvestment came to light, we were told that the water companies would raise money from investors and the City to catch up—albeit over a 25-year period—on the neglect of the water and sewerage infrastructure, but we have seen that protestation fail to reach anything like the scale of money needed. Indeed, in the case of Thames Water, different classes of bondholders have fallen out with each other and the company is in court seeking £3 billion more of expensive debt, in part from hedge funds, to add to its existing £19 billion of debt, to which should be added an estimated bill of £800 million to £900 million in interest by next year.

--- Later in debate ---

[Baroness Hayman of Ullock (Lab)]

My Lords, I thank all noble Lords for their further contributions to this debate. I am grateful to the noble Lords, Lord Cromwell and Lord Blencathra, for providing further detail around their concerns. I would like to make it clear that the Government have carefully considered all non-government amendments tabled throughout the passage of the Bill, and that, where we agree with the intent behind a given amendment, we have worked hard to find an appropriate way forward.

It is in that spirit that I reviewed Motion 1A and Amendment 1B, tabled by the noble Lord, Lord Cromwell. As previously explained, the Government agree that it is of utmost importance to ensure that members of the public can easily access and understand information on water company finances. However, I do not agree that the approach proposed by Motion 1 A and Amendment 1B is the most effective way of achieving this outcome. I am disappointed that, after considerable engagement on the Government’s alternative approach, the noble Lord, Lord Cromwell, is still dissatisfied with the suggested way forward.

The noble Lord has previously spoken to me about the need to specify how data is presented. I want to be clear that the specific metrics that he wants to see in reports are already required to be included through licence conditions. Indeed, he has pointed that out himself; the information appears in the annual Water Company Performance Report. What is missing, and what we agree with him on, is better formatting and clearer presentation with this information readily available right at the front of these reports, which is exactly what we propose can be achieved through regulatory accounting guidelines.

The noble Lord’s amendments require only that the data is presented in a format that can be “readily accessed and understood”, which is arguably open to interpretation by water companies. Having listened closely to him, we agree that data should be presented in this way, but the approach proposed by government would be more specific and could include, as I mentioned before, a summary table of financial information right at the front of the annual Water Company Performance Report. As such, while I am grateful to the noble Lord for bringing this important matter to the attention of the House, I maintain the view that primary legislation is not the most effective means by which to achieve the intended outcome. I therefore urge Members of the House to support Commons Amendment 1 and the non-legislative proposal put forward by government and Ofwat.

I am also grateful to the noble Lords, Lord Roborough and Lord Blencathra, for continuing to raise the need for sufficient parliamentary oversight of Ofwat’s rules. These rules will be central in driving improvements in the culture of water companies, which of course we all want to see. As such, it is right that we, as parliamentarians, do what we can to ensure the rules are robust, without compromising the regulatory independence of Ofwat. That is why I was pleased to receive Ofwat’s offer of a drop-in session, which would give noble Lords and MPs an opportunity to further understand and raise concerns on the rules before they are finalised. I therefore urge all members of the House to support Commons Amendment 2 and enable Ofwat to move forward with arrangements for that session.

To finish, I reiterate that the Government strongly agree with the need to ensure increased transparency and accessibility of water company data and ensure sufficient scrutiny of Ofwat’s rules on remuneration and governance. I believe that the approaches that I have outlined today demonstrate the commitment of government and Ofwat to effectively and comprehensively address the concerns raised by noble Lords on these topics. I therefore ask that all noble Lords support Commons Amendments 1 and 2 and, in conjunction, the non-legislative proposals put forward by the Government.

[Lord Cromwell (CB)]

My Lords, the hour is late. I thank the Minister for her kind, helpful and almost persuasive words. I do not think that anything that she has proposed is precluded by my amendment—in fact, it could be a way of implementing it. Had I put it down in such detail, I would have been told that it was too prescriptive. However, for the reasons I set out earlier, I am afraid that my amendment needs to be in the Bill, and I wish to test the opinion of the House.

Thames, Yorkshire and Northumbrian Water: Ofwat Proposed Fines

Lord Cromwell Excerpts

Wednesday 29th January 2025 Lords Chamber

[Baroness Hayman of Ullock (Lab)]

The Government have been clear that we urgently need to restore public trust in the water sector, and the bonuses issue is an important part of that. We have been completely clear that, where company performance is poor, executives should not be receiving large bonuses, which is why we are giving Ofwat the power to prohibit bonuses where performance is poor. Like my noble friend and other noble Lords, I have read the reports that Thames Water is saying that it would put up executive pay if this came to pass. We are bitterly disappointed that a water company would react like that. It should be taking responsibility for its behaviour and the standard it sets, so we will be taking this extremely seriously and looking at how we can manage such situations.

[Lord Cromwell (CB)]

My Lords, I am even gladder than usual that I came in, only to find my previous amendment being debated without any advance notice to me. I say to those who have raised it that I am in fruitful discussions with the Minister, but I am certainly not ruling out bringing that amendment back again, when the House will have its chance to express its views.

Foot and Mouth Disease

Lord Cromwell Excerpts

Thursday 16th January 2025 Lords Chamber

[Baroness Hayman of Ullock (Lab)]

The current policy reflects our experience of responding to past outbreaks and is in line with international standards of best practice for controlling the disease. Alongside culling and immediate movement controls, we are now looking at deploying vaccination as a control option. In order to achieve that, we now have a vaccine bank for a range of foot and mouth disease stereotypes.

[Lord Cromwell (CB)]

My Lords, this is a highly infectious disease and no respecter of borders. The illegal meat trade has already been referred to. Is the Minister satisfied that limiting these restrictions entirely to Germany is appropriate, rather than also including its bordering countries?

Water (Special Measures) Bill [HL]

Lord Cromwell Excerpts

Report stage
Wednesday 20th November 2024 Lords Chamber

[Lord Remnant (Con)]

My Lords, I declare an interest as having been a non-executive director of Severn Trent, the largest of the listed water companies, for eight years between 2014 and 2022. I chaired the board’s remuneration committee for that time.

I thank the Minister for taking the time to meet me last week to discuss my concerns about key aspects of this Bill. I am only sorry that her apparent sympathy for at least some of my arguments has not translated into accepting any of my amendments. I have three amendments in this first group. I will be as brief as I can, but each addresses a completely separate issue.

I will take them in order. My first is Amendment 4. New Section 35B(2)(a) addresses performance-related pay. The rules will set standards that companies will have to meet in a financial year in order to be able to make awards of performance-related pay to chief executives and directors for that year. However, the Bill extends the scope of this section, in new subsection (5)(c), to holders of such other description of role with the water company as Ofwat may specify.

My Amendment 4 would remove this extended application to individuals below board level. This extension will be difficult to implement in practice, as different water companies will have individuals described differently by title and role. Nor would such an extension be consistent with general remuneration under the corporate governance rules for listed companies, which do not extend to individuals below board level. If we wish to attract and support the next generation of leaders in this vital industry from middle management, this will not be achieved by extending these restrictive remuneration practices to them.

As the noble Duke, the Duke of Wellington, has just said, those in this House are better qualified than Ofwat in certain aspects, and this is one of them: to decide on how far down the management chain these rules should apply. My amendment draws the appropriate and proportionate line in balancing the objectives of the Bill with the interests of those most directly impacted by it.

I appreciate that Ofwat is consulting on the scope of the Bill and its application to individuals. It asserts that it is minded to apply the rule to any executive director who is a member of the regulated company board in receipt of performance-related pay, because that is where ultimate accountability and leadership responsibilities lie. I look forward to the Minister’s response to my concerns in tabling this amendment. In particular, I would be interested to know whether she agrees with Ofwat’s current stance that only executive directors should be brought within the scope of the performance-related pay prohibition, and, if so, whether she will communicate that view to Ofwat.

Amendment 7 is my second amendment and very much relates to what the noble Duke, the Duke of Wellington, has just been talking about: the duty for water companies to have arrangements in place to involve consumers in decisions. New subsection (6) in Clause 1 allows this in regard for

“persons representing the views of consumers to be members of a board, committee or panel”,

as we have heard. My amendment adds a sentence which ensures that it is for the boards of water companies, not Ofwat—for very much the reasons that the noble Duke raised—to decide on which of those three forums best suits their own requirements. I am grateful to him for adding his name to this amendment, and I agree with all his arguments in support of it and his own amendment. The Minister commented at Second Reading that it always pains her to disagree with him on anything, so I am working on the assumption that she will wish to spare herself further agony by accepting this amendment. I fully support strengthening the voice of consumers. This can be achieved in a number of different ways, as the Bill accepts, but each company in the sector is best placed to judge what is most appropriate for its own circumstances.

I was surprised to read in the Explanatory Notes to the Bill, in the overview prepared by Defra, that one of its provisions is to

“ensure consumer representation on water company boards”.

I should be grateful, when the Minister responds, if she could confirm that this is not indeed the position of the Government, irrespective of the choices which this Bill purports to give and the consultation exercise to be conducted by Ofwat.

There should be no highly prescriptive one-size-fits-all approach. Those best equipped to represent consumer interest may not wish to, or be equipped to, sit on corporate boards, with all the responsibilities and liabilities that entails. For Ofwat even to be given the option of this route risks alienating such experts and losing completely their valuable contribution. Nowhere in its consultation document does Ofwat point to the disadvantages of consumers sitting on boards, to which I have drawn your Lordships’ attention. I am therefore concerned that prospective respondents to the consultation may be being given an unbalanced view of the options.

We should not give Ofwat the power to require companies to appoint representatives of the consumer interest to their boards. Maybe some companies would opt for this route, but equally they may feel that stakeholder interest would be better served through the mechanism of panels or committees. My amendment would ensure that it was the boards of water companies which made that decision, not Ofwat. It would be helpful if the Minister, in her reply, could confirm not only that all identified options are, in reality, properly on the table, but that she recognises the disadvantages of board representation in this regard, which would represent a very suboptimal solution.

My final amendment in this group is Amendment 10. Clause 1(4) provides that the rules about performance-related pay can be applied in respect of the financial year beginning 1 April 2024 and for subsequent years. In effect, they can be applied retroactively. My amendment would change that date from 2024 to 2025 so that they would first be applied from the financial year beginning 1 April 2025. If we do something today, we believe that the law applying to it should be the law enforced today, not tomorrow’s backward adjustment of it. I would argue that the application of these rules retroactively is even more egregious.

One might at least expect your Lordships to know precisely what it is that they are passing and the resultant retrospective impact, but that is not the case. We are delegating the power to make such rules under this legislation to a third party, Ofwat, and I have already expressed severe reservations about its expertise in doing so, given that this is outside the core competence of an economic regulator. We know not what the rules will be, how they will be applied and what impact they will have. Further, it is not intended that they be subject to further scrutiny by this House before being brought into force, as I say, with retrospective effect.

The retroactive application of rules yet to be drafted will undermine investment and increase the cost of capital, raising prices for consumers. Over the next five years, the sector needs to raise £20 billion of new finance, much of it equity, to deliver the largest investment programme in the sector’s history. Investors are already nervous and can earn better returns in other sectors and in other countries. We need to provide confidence that the UK is open for business. Retrospective action destroys that by creating uncertainty about how their investments will be treated.

It will undermine new talent and the sector clearly needs talented individuals to deliver the amount of improvement we all want. Retroactive changes of this sort will undermine employees’ trust in a career. Why choose water when other sectors do not face this risk? If we cannot attract the best people into the water sector, we will not see best performance.

This Water (Special Measures) Bill is designed to drive better future performance. It is too late to change performance by applying rules to a year when two-thirds of it is already over. The water sector is characterised by assets, with 100-year asset lives and performance challenges that require multiyear investment programmes. That is what we should be concentrating on and incentivising management to achieve, not changing the rules of the game retrospectively as punishment for perceived failings. Many noble Lords, including the Minister herself, have made the point that not all water companies are the same—there are good ones and bad ones. I am concerned that the effect of these rules, when drawn up, will draw no such distinction.

Amendment 10 is about as simple as it gets. It requires the replacement of the number 4 with the number 5 so that the performance-related pay provisions come into effect for the beginning of the next financial year, 1 April 2025, and not the beginning of the current financial year, 1 April 2024. Can the noble Baroness confirm whether these rules are intended to apply to three-year LTIPs, not only those beginning in 2024 but also those beginning as far back as 2022 and 2023, of which 2024 is a part? Her reply on this will be important to me. I urge the Minister to accept this amendment. If she does not, I am minded to test the opinion of the House.

[Lord Cromwell (CB)]

I will speak to Amendment 2 in my name, and I am most grateful to the noble Baroness, Lady Jones of Moulsecoomb, and the noble Lords, Lord Roborough and Lord Sikka, for adding their names to it. I will speak also to Amendment 8 in my name, and again I am most grateful to the noble Baroness, Lady Jones of Moulsecoomb, for adding her name to this amendment. Finally, I am sincerely thankful to the Minister and her officials for discussing with me these amendments and the two other amendments in my name, which will come up later.

Probably the most fundamental failure in our water industry is that the regulator either did not understand or was unwilling to investigate sufficiently the financial structuring of the water companies: how these structures and indebtedness were altered over time beyond all recognition from the original enterprises, and what the risks and impacts would be. If anyone is in any doubt about the results, they need only look at Thames Water, which is now all but drowning in fetid pools of ever more expensive debt, adding to its existing £16 billion of net debt so as to limp along from day to day and racking up huge future interest liabilities in addition to the principal £3 billion it is seeking.

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Moved by

[Lord Cromwell]

2: Clause 1, page 2, line 3, at end insert—
“(d) requiring a relevant undertaker to report not less than annually to the Authority on actual or planned financial structuring or restructuring of the undertaker, including debt levels, commercial strategy and any associated risks, including to the long-term sustainability of the undertaking.”Member’s explanatory statement
The amendment requires that financial engineering becomes a regular focus area for timely reporting in order to assist in regulators’ understanding and alert them in good time to risks or distortions in a water company.

[Lord Cromwell (CB)]

I very much appreciate the Minister’s comments, but as she will expect, I am unable to agree. She said that Ofwat is closely monitoring water company finances. Well, we are nearing panto season and all I can say is, “Oh no it isn’t!” I have had numerous meetings with Ofwat in committee and frankly, I do not think it even really understood them. What is required by this amendment is a potentially very short report that simply outlines what financial restructuring has happened and what new debt has been taken on. It is a modest but vital amendment to make transparent the financial engineering and prevent the shenanigans of the past. I therefore wish to test the opinion of the House.

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Moved by

[Lord Cromwell]

39: Clause 3, page 6, line 18, at end insert—
“(e) the date by which an explanation of reasons why the discharge occurred is expected to be made publicly available.”

[Lord Cromwell (CB)]

My Lords, I shall speak to both Amendments 39 and 40 in my name. I am grateful for the kind support of the noble Baroness, Lady Browning, on Amendment 39 and of the noble Baroness, Lady Jones of Moulsecoomb, on Amendments 39 and 40.

I am told that Amendment 39 is unwelcome because it is hard to determine when explanations can be expected. As the Minister knows, my catchphrase in Committee was “modest and proportionate”. I think that this very small amendment is modest and proportionate, but it is my further understanding from discussions that management plans will, once a year, give explanations of such discharges as part of their pollution plans. With numerous discharges happening across the year, that annual document will be a mighty task to compile and to read through. More importantly, it seems that people living with the discharges might have to wait 12 months or more simply to find out why a discharge has occurred and, presumably, what has been done to deal with it and prevent a recurrence. This invites not only discontent but accusations that nothing is being done and that people are being kept in the dark. Can the Minister take this away and see whether a government amendment can do better in addressing the concerns and rights to information of the public?

Amendment 40 in my name is essentially about trying to get information all in one place so that anybody from the public can access it. Since tabling this amendment, I have been advised by the Minister that Water UK, the body that represents the water companies, is to create a map of discharges that can be accessed by the public. That is very welcome, but unless the mapping is presented and run in a comprehensive and timely way, is sufficiently detailed to provide meaningful information and is periodically assessed for its quality of delivery, it will be of little use.

I have a number of questions which I would be very grateful if the Minister can address, either from the Dispatch Box or by letter. There are six of them—brace yourselves. Can the Minister clarify what information exactly this map will show? When will it be up and running? At that start date, will all future discharges be shown in close to real time? Who will have the responsibility for ensuring that Water UK receives the necessary information in real time? What will be the penalties for failure to supply the information and doing so in good time? Who will have the responsibility for auditing the online mapping performance of Water UK over time? Somebody needs to watch the watchers to ensure that this potentially rather colourful and enjoyable map is accurate, sufficiently detailed and up to date in real time.

[Baroness Jones of Moulsecoomb (GP)]

I support these amendments. It is obvious that the public have a right to know when sewage is being dumped. Would the noble Duke, the Duke of Wellington, like to speak to his amendment first? If not, I shall carry on.

The water companies have this as real-time data and there is no reason why they cannot publish it in real time so that the public know whether the waterways are clean enough to swim in, paddle in, kayak in or even let their dogs run in. I simply do not understand why the water companies cannot provide that information. Well, I do know why—they will fight this tooth and nail because the true level of leaks of sewage discharges is so ridiculously high.

[Lord Cromwell (CB)]

I thank the noble Baroness for supporting my amendment. To be clear, it requires an explanation of why the discharge has occurred, not that it has. The Minister pointed out that that might take quite a long time to establish.

[Baroness Jones of Moulsecoomb]

In that case, the noble Lord’s amendment is not radical enough for me, but I hope it passes anyway.

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[Baroness Hayman of Ullock (Lab)]

I thank the noble Lord, Lord Cromwell, and the noble Duke, the Duke of Wellington, for tabling their Amendments 39, 40 and 41, which speak to the publication of data from monitoring networks and emergency outflow permits. I also thank the noble Lord and the noble Duke for the time they took to meet with me between Committee and Report to discuss these topics and the wider industry that they were concerned about.

Amendment 39 in the name of the noble Lord, Lord Cromwell, was supported by the noble Baronesses, Lady Browning and Lady Jones of Moulsecoomb. We agree that it is essential for companies and the regulators to have a clear understanding of the cause of discharges from emergency overflows. That information is important to ensure that the regulators can assess the compliance of emergency overflows and for companies to invest in the right improvements to prevent discharges from reoccurring.

It is important to note that all discharges from emergency overflows should be reported as pollution incidents. Once the Environment Agency has been notified of a pollution incident, it will request follow-up information as to the cause of the incident and any remedial action being taken.

For some discharges, establishing the cause may be straightforward. However, for more complex or more serious incidents it may take longer to identify the cause. When more serious incidents occur, the Environment Agency may need to complete on-site visits and investigations into the cause of the discharges. Since it will not necessarily be known at the time of the incident occurring how long these investigations will take, it is not practical to set a date by which the cause will be identified.

Furthermore, Clause 2 will also require companies to provide information on the causes of pollution incidents annually, as the noble Lord referred to from our discussions, as part of their pollution incident reduction plans. That is to ensure that water companies are transparent about the causes of pollution incidents and the measures they have taken to reduce the likelihood of further incidents.

Requiring water companies to publish a date by which they would inform the public of the cause of an individual discharge would likely result in water companies either rushing investigations to meet an arbitrary deadline or setting themselves lengthy timelines that they know would be achievable. Following our discussions and what I have said now, I hope that the noble Lord understands why we consider the amendment unnecessary and that he will be content to withdraw it. I am of course always happy to discuss matters with him further.

[Lord Cromwell (CB)]

I am sympathetic to the reasoning given, but will the Minister take on board that this means the citizenry may not know for a year why there was a spillage in their area?

[Baroness Hayman of Ullock (Lab)]

I am happy to take that on board and back to the team for further discussion.

I turn to Amendment 40, also in the name of the noble Lord, Lord Cromwell, and supported by the noble Baroness, Lady Jones of Moulsecoomb. I thank him for proposing it, as the Government agree that it is important that water companies make information about emergency overflow discharges as easy to access as possible.

Clause 3 explicitly states that information on discharges from emergency overflows will need to be both readily accessible and understandable to the public. That duty will be enforceable by Ofwat, which will be able to access the underpinning raw data from emergency overflows to inform its enforcement responsibilities under the Water Industry Act.

Water companies have already begun to publish information on storm overflow discharges in near real time, ahead of the Water Industry Act duty coming into force in January next year. Furthermore, Water UK, in collaboration with water companies, is shortly due to publish a new centralised map of storm overflows—as referred to by the noble Lord from our discussions—which is designed to present real-time discharge data from all storm overflows in England on one website. I am sure that he will be delighted to hear that we are making good progress on this. The Minister for Water received a demonstration of the website only yesterday, and the Government understand that it is due to be published shortly.

A similar approach is intended to be followed for monitoring data for emergency overflows to meet Clause 3 requirements. In addition, if needed, guidance could be issued from the Government or the regulator to the sector to further support the implementation of the emergency overflow publishing duty. Therefore, since the industry is already planning to centralise data on sewage discharges on one website, the Government do not believe that an amendment to mandate publication on a centralised website is necessary.

The noble Lord asked a number of very specific questions. If I have not answered any of them, I am happy to come back to him in writing with more detail.

Amendment 41 is in the name of the noble Duke, the Duke of Wellington. I thank him for raising this important issue. The Government are clear that emergency overflows should be used only as an absolute last resort. We are talking about emergency overflows here, not storm overflows. Emergency overflows are different from storm overflows. They operate in response to an emergency event at a sewage pumping station, whereas storm overflows are designed to operate in combined sewer systems during heavy storm events. Discharges from emergency overflows should therefore only occur in much more limited circumstances.

As previously explained, environmental permits for emergency overflows already require companies to put in place strict protection measures to prevent, as far as possible, discharges due to power failure. That can include back-up generators or duplicate power supplies.

The Environment Agency will consider enforcement action if a company operates an emergency overflow and it can be proven that the discharge could have been avoided if the company had complied with the protection measures set out in its permits. Electrical power failure is an acceptable reason to discharge only when it is fully—I repeat, fully—outside the water company’s control and not due to any failure on its part to maintain protection measures.

The unintended impact of the amendment could be that we fail to provide for discharges that are outside a company’s control and that are necessary to protect upstream homes from flooding—for example, if a back-up generator failed or did not last long enough. For these reasons, we do not believe this amendment is necessary and are concerned about the unintended consequences.

Having said that, I appreciate that the noble Duke feels strongly on this point, so I extend an invitation to him that I hope he will take me up on. I offer him to join me on a visit to see some of the overflows in person, to enable him to look at the varied scale and types of infrastructure and protections that are already in place, to help him understand and, I hope, to put his mind at rest. I am sure that the noble Duke has never had an invitation from a noble Baroness to look at a sewage plant before and that this is an exciting first for him.

I once again thank noble Lords for their constructive engagement on the important matters of data transparency across water industry monitoring networks and the permitting of emergency overflows.

[Lord Cromwell (CB)]

The Minister is right that I am delighted to hear about the centralised provision of information, and I eagerly anticipate her reply to my six questions. I am bitterly disappointed that I have not also been invited to go with her to a sewage farm. What has the noble Duke got that I have not? I do not know and I do not want to know. Anyway, I wish them joy. I thank the Minister, and I beg leave to withdraw the amendment.

Amendment 39 withdrawn.

Biodiversity Net Gain

Lord Cromwell Excerpts

Wednesday 6th November 2024 Lords Chamber

[Baroness Hayman of Ullock (Lab)]

The noble Baroness is referring, I assume, to the exemptions in place for applications that have no or a very limited impact on biodiversity. That was brought in to ensure proportionality and to keep the planning system moving. However, Defra is working with the Ministry of Housing, Communities and Local Government to review planning statistics and specific applications.

[Lord Cromwell (CB)]

My Lords, I am currently involved in negotiating with a developer on biodiversity net gain. This involves boxes of huge and very expensive files, which have to be redone every time Defra changes the metric and locks the land into a commitment of 30-plus years. The developers tell me that their traditional landscaping required under planning often exceeded what is required under biodiversity net gain. Can the Minister give us any data on what real net gain is being achieved?

[Baroness Hayman of Ullock (Lab)]

Clearly, this is still fairly new for planning applications. It came in only eight months ago, so we are considering how we move forward. I do not have data on that to hand, and I am not sure we would have it available at present, as it has been only about eight months, but I will check and get back to the noble Lord.

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[Baroness Hayman of Ullock (Lab)]

Yes, the Government have committed over £35 million in ring-fenced funding to local planning authorities to help them prepare for and implement biodiversity net gain. We have confirmed funding up to the end of next year and further funding will be in the next review.

[Lord Cromwell (CB)]

As we have some time left, may I ask the Minister to look into why farmers in the higher-level environmental protection scheme—the HLS—are being excluded from joining the SFI scheme, both of which she will be familiar with? I have been asking Defra for months why Ministers are not being advised of this discriminatory approach and I have yet to receive an answer.

[Baroness Hayman of Ullock (Lab)]

I am happy to go back to the department on this. We are going to open up the high-level applications next year, as I am sure the noble Lord is aware, and we are also looking at what we do with the legacy payments. I am happy to discuss this issue with him further, because we are making quite a lot of decisions on how we move forward.