Environment Bill — House of Lords, 2021-07-07
Topic: Environment
Anne McIntosh (Conservative, Centre-right): My Lords, I am delighted to move and speak to Amendment 188 in my name and to speak briefly on the other amendments in this group. I revert to what my noble friend said in summing up two groups ago. He said: "It is for water companies to improve their act and, indeed, under the Act, they are required to do so." I put in an early bid, because I am starting to feel left out. I am one of the few who has not actually met the Minister, so I should like to meet him to discuss this point, together with the others who have already expressed interest I shall briefly sum up what the water companies are being asked to do. I am grateful to the Minister for referring to Clause 78(3)(a) to (g) and all the measures set out therein, which are not insubstantial. I also refer to my earlier remarks, which I shall not repeat, about the fact that we are grappling with Victorian infrastructure, combined with intense climatic changes, leading to sewage overflows. Not inconsiderable new expense is required to replace that infrastructure, so that is a new expense In my Amendment 188, I ask my noble friend to say at the outset that the Government will have regard to the constraints of the periodic price review to which water companies are bound. Essentially, non-regulated companies and regulated companies alike, such as water companies, which are regulated, are able to raise funds in the financial markets from either debt or equity investors. Non-regulated companies might typically do so to invest in additional capacity or new products or services so that they can increase future revenue from higher sales or higher prices, from providing a higher value service to customers and, from this increased revenue fund, the additional investment on a sustainable basis. However, regulated companies such as water companies, may be providing services largely on a monopoly basis, as here. Water companies are, rightly, being required to reduce water consumption—that is, sales of their core product—rather than increase it and cannot increase prices beyond the limited set at price reviews. This means that ensuring that price reviews focus sufficiently on the investment needed to meet long-term challenges is crucial I am asking for an acceptance that many of the obligations which water companies are required to meet are outwith their control. I referred earlier to the fact that they are not, as yet, statutory consultees. I welcome my noble friend’s reference to them being consulted on the new drainage and water management plans. I think we will all watch like hawks to see that that is the case I remind the Committee that houses built on floodplains after 2009 are not covered by Flood Re for insurance purposes if they flood. People frequently overlook that. Also, connections should be made only if the infrastructure is securely in place to carry the raw sewage safely away and not cause it to flow into combined sewers, which will lead to spillage, such as we discussed in previous amendments My question to my noble friend is precisely how much water companies can raise as part of the periodic review to cover that essential expenditure. He is absolutely right to say that the water companies are just about to embark on the next stage price review, so this is very timely My noble friend referred to the Explanatory Notes. Did the Government consult on the content of the Explanatory Notes and Clause 78 as regards the expenditure the water companies are being asked to make? Also, if we are unable to raise the money through the price review, or there is a limit on what we can raise, how can the Government encourage more private partners into flood prevention schemes under ELMS? I commend the partnership schemes that the Government have encouraged, but there is that little niggle On Amendments 188A, 188B and 188C, and Amendments 189 and 189A on water efficiency, there were three substantial reports in the 1990s. The Cave report on competition has largely been considered in relation to the competition aspects of retail and household delivery. I referred earlier to the Pitt review, all but a few recommendations of which have been actioned. Then there was the Walker review, under Anna Walker, on water efficiency, which has largely been overlooked. Much of that can be achieved by building regulations or, as we see in the amendments before us, labelling as well as building regulations I make a plea to the Government about how important it is to encourage the use of labelling. Without an accompanying label, with changed building regulations and minimum appliance standards, it is simply not possible to get household consumption down to the levels we need, which is the Government’s target. Introducing a labelling scheme alone will save 13 litres per person per day, but by accompanying it with minimum standards, that increases the saving to 27 litres per person per day. The difference between those numbers equates to about 1,000 megalitres per day by the second half of this century. That is roughly equivalent to a third of the current leakage losses. On their own, without any labelling initiative, changes to building regulations reduce consumption by a further 14 litres per household per day by 2065, equivalent to another third of current leakage losses I welcome those amendments and hope the Government will focus as much on water labelling and water regulation as on giving the water companies the ability to raise money they need through the price review.