Water Companies: Executive Bonuses

Steve Reed Excerpts

Tuesday 5th December 2023 Commons Chamber

[Steve Reed (Croydon North) (Lab/Co-op)]

I beg to move,

That this House regrets that 13 years of successive Conservative Governments have broken the water industry and its regulatory framework; is deeply concerned about the scale of the sewage crisis and the devastating impact it is having on the UK’s rivers, lakes and seas; believes it is indefensible that executives at UK water companies were paid over £14 million in bonuses between 2020 and 2021 despite inflicting significant environmental and human damage; condemns the Government for being too weak to tackle the crisis and hold water company bosses to account; calls on the Government to empower Ofwat to ban the payment of bonuses to water company executives whose companies are discharging significant levels of raw sewage into the UK’s seas and waterways; and further calls on the Secretary of State for Environment, Food and Rural Affairs to make a statement to this House by 31 January 2024 on the Government’s progress in implementing this ban.

I will continue, Mr Deputy Speaker.

[Mr Deputy Speaker (Mr Nigel Evans)]

Yes, otherwise that would be the shortest speech.

[Steve Reed]

I will not be that kind to you, Mr Deputy Speaker.

Our beautiful waterways have been polluted by the highest level of illegal sewage discharges in our history under this Conservative Government. Last year, there was at least one spill every 2.5 minutes—and that is just the spills that we know about, because not every spill is properly reported. Over a year ago, Vaughan Lewis, an Environment Agency whistleblower, warned the Government about serious failures of regulation. He said that

“it was impossible for the Environment Agency to know what’s going on”

because the Government had

“ceded the control of monitoring to water companies, which ended up being able to mark their own homework. They take their own samples and assess whether they are being compliant.”

Now, we have more evidence that that is precisely what has been going on.

Last night, the BBC’s “Panorama” investigation exposed yet another scandal—exactly what that whistleblower warned about in August 2022, which has been ignored by four Conservative Environment Secretaries since. According to the “Panorama” team, leaked records show that United Utilities deliberately downgraded and misreported severe sewage leaks, including discharges into Lake Windermere, one of the most beautiful places in England. Of 931 reported water company pollution incidents in north-west England last year, the Environment Agency attended a paltry six. It is as clear as day that the water companies are covering up illegal sewage discharges. That is a national scandal.

[Seema Malhotra (Feltham and Heston) (Lab/Co-op)]

My hon. Friend is making a powerful point. Does he agree that the failure of the Conservatives to prevent illegal sewage leaks has led to a drastic increase in illegal discharges, which has affected our communities, damaged nature, damaged tourism, and put the health of kids and adults at risk?

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[Steve Reed]

As always, my hon. Friend makes an important point very eloquently. I am sure that all our constituents up and down the country are appalled by what they have seen not just on “Panorama” last night, but when they have visited our beautiful waterways up and down the country. Raw human excrement polluting our waterways is not just disgusting; it destroys natural habitats, kills wildlife and damages tourism. Perhaps most appallingly of all, it makes people sick—children most of all—if they swallow parasitic bacteria and chemicals that should be nowhere near our rivers, lakes and seas.

How on earth did we get here? The Conservative Government cut the Environment Agency’s resources in half. That led to a dramatic reduction in monitoring, enforcement and prosecutions, leaving illegal sewage spills to double between 2016 and 2021.

[Simon Lightwood (Wakefield) (Lab/Co-op)]

My hon. Friend is making a very good speech. Like me, he will have noted that the Minister is in her place. She was strangely missing yesterday for the Lib Dem amendment on compensation for those harmed by the criminal handling of sewage, though she was present in the Division Lobby just 15 minutes later. Does my hon. Friend think that she was allowed to abstain, or should she be sacked?

[Steve Reed]

It is hard to know whether discipline has broken down in the Conservative party; its Members seem able to rebel with impunity. When the Minister speaks, I am sure she will enlighten the House about what happened.

Instead of acting on the warnings, the Government have turned a blind eye to what has been going on. Thanks to this Government’s wilful negligence, we see record levels of toxic sewage swilling through our rivers and lakes, pouring into our seas and lapping on to our beaches.

[Sir John Hayes (South Holland and The Deepings) (Con)]

I know that the hon. Gentleman would not want to make a partisan speech; he would want to make a balanced appraisal of the challenges, which we all regard with the seriousness that he has described. He mentioned beaches. Will he acknowledge that the proportion of bathing waters regarded as good or excellent has increased dramatically—from 76% to 93%, to be precise—since 2010, when his party was last in power?

[Steve Reed]

Heaven forfend that anyone would make a partisan speech in this place. I do not believe that the quality of water on our beaches is acceptable. Many campaign groups, such as Surfers Against Sewage, regularly point out the very low, even toxic, quality of the water that their families and they wish to enjoy. Many constituents of Members on both sides of the House will share those concerns. I hope that this debate is a time for us to come together to collectively identify the problems and move forward with proposals to tackle them. The right hon. Member, just like me and Members from all parts of the House, will share the concern that our once pristine waterways have been polluted by stinking, toxic filth. However, I hold the sewage party opposite responsible. The Prime Minister would not put up with raw sewage in his private swimming pool, so why is he happy to treat the British countryside as an open sewer?

[Mrs Flick Drummond (Meon Valley) (Con)]

Let me remind the hon. Gentleman that when Labour was last in power, it produced a draft Flood and Water Management Bill in 2009 that aimed to reduce red tape and other burdens on water and sewerage companies. The uproar at the time forced the Labour Government to change their mind. This Government have tightened regulations and made water companies start paying for the pollution.

[Steve Reed]

The hon. Member can be as much as of an apologist as she likes for the filthy, toxic sewage swilling through our rivers, but her constituents will hear what she says, contrast it with what they see and draw their own conclusions when the election comes, I am sure.

Whistleblowers and leaked documents give us a very clear explanation of why the water companies are behaving in the way they are. If they downgrade and cover up sewage spills, they are rewarded with permission to increase their customers’ bills, which boosts their profits. Fewer reported spills—not actual, but reported—and more profits mean bigger bonuses for the water bosses. Profiteering from covering up lawbreaking is corruption—corruption to which this Conservative Government have turned a blind eye.

Labour will crack down on rogue water companies and strengthen regulation to clean up our waterways. We will place the water companies under special measures. As a first step, Labour will ban self-monitoring by water companies. Instead, we will require water companies to install remote monitors on every outlet, with the result overseen by regulators. That way, we will know exactly what is being discharged into our waterways. Any illegal spill will be met with an immediate and severe fine—no more delays, no more appeals, and no more lenient fines that are cheaper than investing to upgrade crumbling infrastructure. Rogue water bosses who oversee repeated, severe and illegal sewage discharges will face personal criminal liability. And we will stop the Conservatives’ disgraceful collusion in this national scandal by reinstating the principle that the polluter pays.

[Mike Amesbury (Weaver Vale) (Lab)]

I welcome those strong interventions and regulations. One of the companies the shadow Minister is referring to is United Utilities, which made 27 sewage dumps—nearly 3,000 hours of sewage—in my constituency last year. Those are only the 27 that we know about. We need strong intervention and we need to get the referee on the pitch. Ironically, United Utilities is putting bills up by £110, so I welcome those measures.

[Steve Reed]

My hon. Friend rightly expresses the anger his constituents feel. Their bills are going up to pay bonuses to water bosses who have allowed this situation to continue to deteriorate. As I said earlier, there is a proposal in the motion, which I hope Members of all parties might consider supporting, to deal with the situation and demonstrate to the chiefs of those organisations which are responsible for the sewage outpours that Parliament and the people of this country will not continue to accept what they are doing.

[Munira Wilson (Twickenham) (LD)]

The hon. Gentleman outlines very effectively all the failings of the water companies and of this Conservative Government to take action. Thames Water has been dumping billions of litres of raw sewage in the River Thames and there are hundreds of millions of litres of water leaks every single day. That has undermined trust in water companies among bill payers and our constituents. Does he agree with me that, when they have extremely controversial proposals in my constituency and in the constituency of my hon. Friend the Member for Richmond Park (Sarah Olney) to take water out of the river and replace it with treated sewage, there is a huge amount of distrust? Given the construction impacts they will cause in the area and the potential environmental impact on the river, how can people trust them when they give assurances about the safety of such schemes?

[Steve Reed]

The hon. Lady makes a very important point very eloquently. She is a tireless campaigner on these issues and I am sure that many people who care about the state of our rivers will be grateful to her for leading on that work.

I am sure all Members will be concerned about this point as well. Despite some of the highest levels of illegal sewage discharges in history, water bosses awarded themselves nearly £14 million in bonuses between 2021-22. At the same time, they were planning to increase average household bills by £156. All that was signed off by a broken regulator and Conservative Ministers. That is an absolute abuse of consumers and Labour will stop it. Labour will give the water regulator the power to ban bonuses for water bosses until they have cleaned up their toxic filth.

The Conservative dogma that regulation is anti-business is economically illiterate. Fair regulation applied across a sector is pro-business and pro-growth, as well as being pro-nature in this instance. Businesses want certainty and predictability. If they are left to compete against others who undercut regulation and get away with it, we end up with a race to the bottom. Good businesses and investors need and deserve a level playing field, but this Conservative Government have distorted that. A regulator that is too weak to regulate leads to weak self-monitoring, cover-ups, financial corruption, and our waterways awash with stinking sewage.

[Mr Ian Liddell-Grainger (Bridgwater and West Somerset) (Con)]

I have been here for quite a long time, and the situation has been the same for the 23 years for which I have been a Member. I accept that things have got worse. What I suspect we need to do is take the main board of each water company and hold them accountable. South West Water, for instance, which serves Devon and Cornwall and the edge of the Minister’s constituency of Taunton Deane, covers up by using a sub-board which runs the company. It is the main board with which we should deal, and the same goes for Wessex Water and every other company that we need to go after. I agree with the hon. Gentleman that action must be taken, although the situation including bonuses has been the same for the past 23 years.

[Steve Reed]

I am grateful for the hon. Gentleman’s recognition that the situation is indeed getting worse. That should stimulate all of us to find ways of taking action to protect water quality for all our constituents, who really do deserve better.

I was talking about uncertainty in the regulatory field. The current level of uncertainty does not attract much-needed investment in our water industry; on the contrary, it deters it.

[Jim McMahon (Oldham West and Royton) (Lab/Co-op)]

I congratulate my hon. Friend on the impact he is making on an important issue that affects almost every community in the country. I am glad that he has taken such a robust line on the regulator, because it is the elephant in the room. We have focused our fire on the Government because they have failed and on the water companies because they have taken money and failed, but the regulators have failed as well, because it was on their watch that this has been allowed to happen. In the midst of all that, it cannot be right for consumers to end up paying twice, first for the dividends that have already gone out of the door and then for putting the system right.

[Steve Reed]

I am grateful for the work that my hon. Friend has led in exposing some of the same problems as my predecessor in this post. He clearly knows an awful lot about these issues, and he makes his point very well.

Let me move on to the broader issue of nature. The destruction of nature that this Government have encouraged is unacceptable. As a party, they increasingly position themselves against nature. On their watch, we now have one of the most nature-depleted countries in the world, yet they have rowed back on their net zero commitments. They have broken their promise to fund farmers fairly to maintain environmental schemes on their land; they have tried to weaken environmental standards relating to nutrient neutrality to allow building alongside estuaries where the increased pollution would tip habitats beyond the point of recovery while refusing to build where the environmental impact could more easily be mitigated; and now they are turning a blind eye while our rivers are turned into sewers.

Economic growth does not have to stand in opposition to protecting and restoring nature. The two must go hand in hand. Labour’s mission to make this country a clean energy superpower will create thousands of good, well-paid, secure jobs, and part of it is a national mission to restore nature, including our polluted waterways. It seems that the longer the Tories are in power, the more nature suffers. They have little concept of the pride that the British people take in our countryside, of its importance to our sense of who we are as a nation and to our sense of belonging.

[Neil Coyle (Bermondsey and Old Southwark) (Lab)]

My hon. Friend is making an excellent speech. Were the British people not told by Minister after Minister in this Government that environmental standards would be enhanced and improved as a result of Brexit, and have they not been betrayed again by this shabby Administration?

[Steve Reed]

My hon. Friend makes an accurate observation. People were promised one thing but the Government then tried to do the opposite.

[Sir John Hayes]

I share the hon. Gentleman’s passion for wildlife. We need a diverse countryside of the kind that he describes and I make the case, as he does, for hedgerows, trees and so on. Among the things that blight the countryside, however, are onshore wind turbines, which kill bats and birds and which are anchored by hundreds of thousands of tonnes of concrete, and widespread onshore solar, which eats up agricultural land and turns the countryside into an industrial place. Would he oppose those things?

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[Steve Reed]

The right hon. Gentleman’s intervention started off well but it tailed off towards the end. If we can shift to a reliance on clean energy rather than on fossil fuels, we will support, enhance, protect and conserve nature, which is what we should all be seeking to do.

There can be no more graphic a metaphor for 14 years of Conservative failure than the human excrement now swilling through our waterways—the visible desecration of our countryside and the toxic legacy of Tory rule. It has often been the case in history that Labour has had to clean up the Tories’ mess, but rarely quite so literally. It is time to turn the page on 14 years of decline and to embrace a decade of national renewal with nature at its heart. That is why Labour has a plan to clean up our waterways by ending self-monitoring; introducing severe and automatic fines for illegal sewage dumping; criminal liability for water bosses who repeatedly and severely break the law; and no more bonuses for water bosses who profit from pollution. Conservative Ministers have sewage on their hands. This debate—and the vote that I hope follows—is a chance for them to show whose side they are on: the water companies or clean water. If they refuse, the next Labour Government will clean up their mess and restore pride in our rivers, our lakes and our seas.