I confirm that nothing in the Lords message engages Commons financial privilege.

I beg to move, That this House insists on Commons Amendment 1 to which the Lords have disagreed, disagrees to Lords Amendment 1B, to the words restored to the Bill by the Lords’ disagreement to Commons Amendment 1, and proposes Amendments (a) and (b) to the Bill in lieu of the words left out by Commons Amendment 1.

With this, it will be convenient to consider the following Government motion: That this House insists on Commons Amendment 2 to which the Lords have disagreed, and proposes Amendment (a) in lieu of the words so left out.

I am delighted to have another opportunity to debate this transformative Bill in this Chamber. I thank all Members for continuing to take an interest in this important piece of legislation, which demonstrates our shared commitment to improving the water sector.

Today, this House will consider amendments made in the other place. I recognise that there is huge interest across this House in wider issues relating to water.

Though our debate today is solely focused on the changes made to the Water (Special Measures) Bill in the other place during the Lords’ consideration of Commons amendments on 5 February, I look forward to future opportunities to discuss wider concerns and actions, for example through work relating to the independent commission.

I turn first to the changes made in the other place that would require water companies to regularly report to Ofwat on their financial structure, and to ensure that that information could be readily accessed and understood by the public.

It is important to highlight that water companies are already required under their licences to publish by a set date financial performance metrics within their annual performance reports. That includes the interest on their borrowings, their financial flows and an analysis of their debt.

If water companies do not comply with these licence conditions, Ofwat can take enforcement action, including issuing fines. However, the Government recognise that there is an opportunity to make financial data more accessible for members of the public.

The Government have therefore worked at pace with Lord Cromwell and Ofwat to develop a way to achieve our shared objective of improving the transparency and accessibility of reporting on key financial metrics.

The insertion of a new section 35E into the Water Industry Act 1991 will make it clear that water companies should provide an intelligible overview of their financial position at least once a year.

That overview should include a summary of the significant changes that have taken place over the past 12 months, and will cover key aspects of water companies’ financial position, such as their share capital and debt.

Ofwat has said that it believes that the right level of debt should be 60%, yet it has taken no action against those companies whose level of debt has risen to as much as 80%.

Can the Minister assure us that under the Bill, Ofwat will not only have the power to act when companies’ debt levels are too high, but will use it?

I call the Liberal Democrat spokesperson.

The hon. Gentleman put forward a veritable smorgasbord of amendments in the Bill Committee, and all those issues were discussed. It is so important that Ofwat retains its independence.

It is extremely relevant to point out, however, that during the coalition years and the 14 years the Conservatives were in government, no Bills were passed to ban water company bonuses, and this Bill will do just that.

The hon. Lady is right. Previous Governments of all parties have not tackled these issues as they should have done—including, of course, the previous Labour Government, under Gordon Brown and Tony Blair. There is no doubt whatsoever, however, that we are now looking at a massively changed situation.

Why do the public care so much more about this issue than five or six years ago? It is because—I say this neutrally—we were in the European Union before then, and we had different levels of scrutiny.

It is also because this House went through the process of basically lifting the bonnet to see what was already acceptable, at which point people in this place and around the country became utterly outraged at what was permissible.

Yes, parties of all sides bear a responsibility, and not least the party that privatised the industry in the first place and let the cat out of the bag. Ofwat does need to be scrutinised; that is what I find most frustrating.

Now that the UK is not in the European Union, our own regulations are not scrutinised from outside—so if we do not do it, who will?

We have heard many times of Ofwat’s failure to scrutinise properly and hold to account the water companies; we heard on more than one occasion in Committee, as well as in this Chamber, of the £164 million in fines that Ofwat has levied against three water companies, of which, four years on, it has collected precisely zero pounds and zero pence.

Our argument throughout this process has been that Ofwat, despite containing many very good and valuable people who are working their hardest, is nevertheless a regulator not fit for purpose.

The amendment seeks to force Ofwat to give six months’ notice of bonuses it has signed off, rather than the seven days that the Government want, which is inadequate.

I am slightly curious as to why, at the eleventh hour, the third party is now changing its position. In the other place, when this amendment was pushed to a vote, the Liberal Democrats abstained on two occasions, but now they are playing political games and actually risking the progress of the Bill.

The amendment, as it stated, was to introduce a statutory instrument to increase parliamentary scrutiny and accountability.

The Government have moved some way—although not as far as we would like—but the third party is now playing political games, and risks the progress of a Bill that is trying to improve the state of our waters.

I am very grateful to the hon. Gentleman for giving way again. He talks about a number of fantastic amendments the third party made in Committee, many of which were so poorly worded that they were not actually worth voting on.

It did.

It did not. It did not set out how much it would cost or how long it would take. While we want Ofwat to have the teeth to hold water companies to account, the third party proposes getting rid of it. Again, is it the party of protest that is not offering any credible solutions.

Well, first of all, if the hon. Gentleman had paid more attention, he would know that we proposed a clean water authority, which would gather up all the powers of Ofwat and the environmental and water regulatory powers of the Environment Agency.

I say this gently, but, again, there is a pattern here. Both in opposition and in government, the Conservative party shows greater levels of fury and anger over Liberal Democrats campaigning to clean up our waterways than over the fact that our waterways are full of poop in the first place.

Will the hon. Gentleman give way?

I have already taken two interventions from the hon. Gentleman, so I will not. My simple comment is that this Bill will do good, and we are supportive of it. We wish only to trouble the House a short time to ensure greater scrutiny is brought in.

We have accepted throughout this process, with some reluctance, the Government’s position that this is part 1, and that part 2 is to come, and that the review led by Sir Jon Cunliffe will potentially consider more radical action.

We hope that is the case, and we shall engage with things on that basis. I have in my hand some pieces of paper that I propose to send to Jon Cunliffe, which tighten up some of the smorgasbord of amendments, as they have been called. We care deeply about our waterways.

I am honoured to represent the bulk of the English Lake district, with so many lakes and rivers, as well as our coastal areas in Morecambe bay. The quality of our waterways is deeply personal to me and to my communities.

We shall continue to campaign unashamedly for something far better for our constituents, and indeed for our water right across the United Kingdom.

I am slightly concerned that the Minister is raising questions about my honesty. The water restoration fund exists, but where is it now? What has happened to it? Are the Government going to use it again?

That is why we wanted to push, at every stage of the Bill, the point that the water restoration fund needs to be used to ringfence money so that fines on water companies can be ploughed back into restoring local waterways.

I will be very happy if the Minister says today that the water restoration fund is carrying on, and then my honesty will be intact.

I am sure the Minister did not meant to imply that the shadow Minister was in any way dishonest, and she might perhaps seek to correct the record to say she felt that he was mistaken or incorrect.

I am very happy to issue that correction. Question put. A Division was called.

Division off. Question agreed to.

Resolved, That this House insists on Commons Amendment 1 to which the Lords have disagreed, disagrees to Lords Amendment 1B to the words restored to the Bill by the Lords’ disagreement to Commons Amendment 1, and proposes amendments (a) and (b) to the Bill in lieu of the words left out by Commons Amendment 1.

Motion made, and Question put, That this House insists on Commons Amendment 2 to which the Lords have disagreed, and proposes amendment (a) in lieu of the words so left out.—(Keir Mather.