Peers are seeking to amend the Government’s flagship water bill to beef up the regulator’s powers to force water firms to put the environment above shareholders.
If passed, the amendment could see water companies forced to spend more money on improving the environment and reducing sewage spills, with less profit being diverted to shareholders in the form of dividends.
On Wednesday, the Water (Special Measures) Bill will be debated in Parliament for the first time, at which point members of the House of Lords will have their say on Labour’s plans to fix the sewage crisis.
Labour has said the bill will deliver its manifesto commitment to put water firms on “special measures”, but campaigners argue it does not go far enough. Some peers have labelled the bill “disappointing”.
A cross-party group of peers plan to introduce a number of amendments to the legislation, including the introduction of new duties for the regulator Ofwat that would force it to place a greater emphasis on the environment when making decisions over water company business plans.
i has been campaigning for this change to be introduced in a pre-election manifesto published as part of its Save Britain’s Rivers campaign.
The Water (Special Measures) Bill, announced by the Government as part of the King’s Speech earlier this year to end the sewage crisis, will bring in automatic fines against water companies for wrongdoing, give regulators tougher powers to bring criminal charges against CEOs and block bonuses.
Campaign groups have broadly welcomed the changes but call for the legislation to go further.
“We believe the current draft of the Water Bill falls short and requires essential amendments,” said James Wallace, CEO of the campaign group River Action.
“Where is Ofwat’s duty to prioritise the environment and penalise pollution? When will failing water companies, such as Thames Water, be placed into special administration not only for financial failure but for their pollution threatening wildlife, human health and our water security?”
The Water (Special Measures) Bill has been introduced in the House of Lords, meaning it will be debated by peers before entering the House of Commons at a later date.
Campaign groups are working with peers to introduce amendments to the bill. MPs would need to agree on any amendments before they became part of the legislation.
The Liberal Democrat peer Baroness Kathryn Parminter is tabling the amendment that would see Ofwat given new environment and clean water duties. It is being backed Green peer Baroness Jenny Jones of Moulsecoomb and Tory peer Lord John Randall of Uxbridge.
Ofwat is responsible for deciding how much money water companies must invest in their infrastructure and how much they are allowed to increase bills by in order to do this.
The regulator has been widely criticised for allowing firms to underinvest in their sewerage systems while paying high dividends to shareholders.
Ofwat is independent but must operate within a framework that is set by the Government.
Environmental groups argue this framework is weighted too heavily towards the financial performance of water companies, rather than their impact on the environment.
“I think most people would be incredibly surprised to realise that Ofwat has absolutely no duty to ensure that there’s clean water or that the environment is improved,” Baroness Parminter told i.
“What they have is a series of legally binding duties that effectively allow companies to sweat the assets and put profit before pollution reduction.”
Ahead of July’s general election, i published a five point manifesto that the new Government must enact to protect our waterways from sewage and other forms of pollution.
Some of Labour’s pledges to date align with the manifesto, including plans to introduce tougher fines and restrict bonuses for water firms. However, the Government is yet to meet all of i‘s demands, including a new green duty for Ofwat and increased funding for the regulator and farmers.
How Labour’s policies compare with i‘s manifesto
1. RIVER HEALTH: 77% rivers in good health by 2027
What i says: Within its first six months in power, the Government must publish a roadmap on how the UK is going to achieve its legal target of 77 per cent of rivers being in good ecological health by 2027. This must include increased funding for the Environment Agency.
What Labour says: Under the new legislation, water companies will have to cover the costs for any investigation into them, which will significantly improve resourcing for the Environment Agency. Officials have refused to put a timeline on bringing the waterways back into health, but have said it will take years to improve.
2. SEWAGE: Sewage spills will not damage high-priority areas – including bathing spots and nature sites – by 2030
What i says: Untreated sewage should not be causing damage to high-priority sites (bathing spots, protected nature sites, National Parks and chalk streams) by 2030. Water companies who fail to meet this target will be prosecuted.
What Labour says: While there is no specific target relating to high-priority sites, the Government has announced plans to imprison water executives if they persistently obstruct investigations into sewage spills, which is a dramatic strengthening of regulators’ powers.
3. WATCHDOG: Regulators will stop water companies destroying the environment in pursuit of profit
What i says: The Government must publish a plan to reform the regulation of water companies, including tougher powers for Ofwat to restrict dividends and bonuses for underperforming water companies. A “green duty” will be placed on Ofwat, which will force the regulator to place greater emphasis on the environment when making decisions over companies’ business plans.
What Labour says: It has set out plans under its new Water (Special Measures) Bill that will hand the Environment Agency and the Drinking Water Inspectorate powers to bring criminal charges, which could lead to two years in jail for water bosses. It will also impose automatic and severe fines for wrongdoing. Ofwat has already been asked to ensure customers are refunded if infrastructure money is not spent, so that it cannot be diverted to pay for bonuses or dividends. Labour has not committed to a “green duty” for Ofwat.
4. BATHING: Create 100 clean bathing spots in rivers by 2030
What i says: 100 clean bathing spots must be created in England by the end of the parliament, and the Environment Agency must start monitoring water quality throughout the year at these sites.
What Labour says: The Government has not mentioned bathing spots specifically, but there are further plans to look at water regulation at a more localised level.
5. FARMING: Farmers must be funded to improve water quality, and face enforcement action if they damage the environment
What i says: Within its first year in power, the Government should strengthen its Environmental Land Management scheme so farmers are given more grants, support and advice to undertake activities that will improve water quality.
What Labour says: It says it will ensure “environment land management schemes work for farmers and nature”, but is yet to provide more detail on what that will entail. Environment Secretary Steve Reed will set out plans to further legislation that will seek to deal with agricultural run off into the waterways.
In addition to the new duties for Ofwat, Baroness Jones is tabling an amendment that would see water companies put into special administration if they breach their environmental obligations.
This process would put a water company into government control, with the current directors removed. Their assets could then be transferred to new owners.
Campaigners have long been calling for failing companies, most notably Thames Water, to be placed into special administration, but ministers have so far resisted calls for any form of public ownership of water companies.
Baroness Jones said she was “very disappointed” in the Water (Special Measures) Bill as it stands, describing it as “rehashing old ideas that didn’t work the first time round”.
She said the legislation does not “stop the water companies dumping sewage in the waterways” or stop “shareholders from pocketing billions of pounds of our money in future years”.
The Environment Secretary Steve Reed has vowed to carry out a review that he said “will deliver a radical, long-term approach to reform the water sector”.
