Water and Sewage Companies: Directors’ Remuneration

Viscount Stansgate Excerpts

Thursday 22nd February 2024 Lords Chamber

[Viscount Stansgate (Lab)]

My Lords, I am very pleased to make a brief contribution to this debate. I congratulate my noble friend on securing it and on how he introduced it. It is very well timed. This is an election year and this is an issue that is not going away. The problems have not yet been solved and a change of government is likely to bring a welcome and overdue change of policy. To go to the heart of what I want to say, the country has reached the end of its patience with the current situation. Sewage continues to pollute our rivers and coastlines, and those in charge—the directors of water and sewage companies, mentioned in the title of today’s debate—continue to be paid handsomely and, in too many cases, continue to receive bonus payments which seem absurdly large and utterly unjustified in view of the failures over which they preside. Since 2019, about £26 million has been spent in bonuses.

I have two straightforward observations. First, water is essential to life and access to clean and safe water is a basic human right. Therefore, those engaged in companies that provide water and sewage services are engaged in a business unlike any other. I personally do not support a privatised water system, but that is not the subject of today’s debate. Secondly, not a single member of this House on any side wants sewage to be spilt, but it is still happening. We know that sewage discharges mostly occur during heavy rain, when sewer capacity is overwhelmed. Sewage releases are often the result of geography and water company infrastructure, but have the water companies been doing enough about it? In my view, they have not.

I am sure that the Minister will reply referring to the improvements being made, the role of Ofwat being beefed up, that there is consultation going on and so on, which is all very well, but that is not enough, When William Blake wrote his poem about England’s green and pleasant land, even his vivid imagination could not comprehend the capacity of modern water companies to degrade our landscape. What we are talking about here is neither green nor pleasant.

Shortly after I arrived in the House, having been elected, I found myself listening to debates on the Environment Bill. I remember in particular the amendment tabled by the noble Duke, the Duke of Wellington, which sought

“progressive reductions in the harm caused by discharges of untreated sewage”.

I thought to myself, “What a modest amendment”, but I remember the outcry because of the Government’s opposition to it. As the House will recall, fearful of being defeated, the Government introduced their own amendment, which they claimed would satisfy public opinion and the noble Duke’s original intentions. However, the Government’s version was weaker. First, it was confined to storm overflows and not the sewerage system as a whole. Secondly, there was no specific duty on Ofwat or the Environment Agency to ensure compliance. Thirdly, it referred to adverse impacts rather than reductions in harm, which gives water companies plenty of wiggle room to keep polluting, which is exactly what has happened.

I can give an example too; I hope that the House will not mind. I found this on the website of a Government Back-Bencher whom I have never met. She says that

“a number of constituents have raised the issue of sewage being dumped in our waters. Along with others, I am horrified by the images from across Teignbridge showing this taking place and I believe we are all in agreement that steps need to be taken to resolve this troubling issue”.

Well, your Lordships may have read in the Times on Monday that nearly 39,000 sewage spills have been recorded in marginal constituencies held by the Conservative Party in 2022—more than the marginal constituencies of MPs from any other political party. That will concentrate the mind. The Times concluded that 56% of people would consider raw sewage discharges when they vote in the next election. No wonder this is likely to be an election issue. There are plenty of examples.

In 2020, I believe there were more than 400,000 raw sewage dumps into England’s rivers and seas or more than 3 million hours of spillages. In one incident, in June 2022, raw sewage spilled into Windermere lake for three hours. In 2020, Severn Trent was fined £2 million by Cannock magistrates for illegally spilling more than 260 million litres of raw sewage into the River Trent. Finally—I think I am right about this—in the High Weald of Sussex, Surrey and Kent, almost 27 hours of sewage releases took place in a single year. If we cannot protect the vital ecosystems of our areas of outstanding natural beauty, we are failing badly. I could go on, but I will not. The bad news is that they still continue.

Who is responsible for not having a proper system of planning—who, if not the directors of water companies? People increasingly feel that there is something really wrong in a system that does not apportion any meaningful responsibility for what is happening on those who are legally most responsible. In short, is it not time to get tougher with the role of directors of water and sewage companies? I think the answer is yes, and this debate is well-timed to put the directors of water companies on notice.

The next Labour Government should, and I think will, take decisive action to expand the regulatory powers of Ofwat to ensure that directors of water companies that fail to meet high environmental standards on sewage pollution will not profit from breaking the law. How can anyone seriously argue that they should benefit by doing so?

I am sure that the Minister will tell the House about the action being taken and improvements being made. The House of Lords Library briefing helpfully tells us a bit more about that, but I would like the Minister to confirm that the proposed bonus ban will cover directors and board members. Finally, can he say when the proposed changes will come into effect? I am sure that the Government are as aware as anyone of the political sensitivity of the issue; the Government have been behind public opinion on this, and we will know soon enough whether the electorate decides to place its faith in a future Labour Government to tackle these issues.