For several decades, the water companies have been able to profit from failure.

There is a strong groundswell of opinion among the public, across political persuasions, that real action must be taken and that if there has been real failure, water companies must not just be allowed to carry on operating in the private sector. I welcome the hon.

Member’s amendment; mutual ownership is clearly one alternative model. Does he agree that full public ownership is another option that should be investigated in these circumstances?

What I really like about our proposal is that the companies are coming out of special administration, so it does not cost anybody anything: the equity of the shareholders has been written off. We often hear that it would not be a good idea, because it would cost too much to buy the companies out.

Under our proposal, we would not need to buy them out, because we are advocating this only where companies are going into special administration. We are advocating a mutual model and—I say respectfully to the hon. Member—only that. That is what is on the table today, and that is what we are after.

Does the hon. Member agree that it is lucky that within six months we will have the Cunliffe review, which will look in great depth at ownership, regulation and everything to do with the water industry? Maybe this is something that we could take further at that stage.

That may be a chink of light, because all I have heard from the Government so far is “Only private companies welcome here.” My understanding is that the Cunliffe review’s remit purposely excludes ownership.

If that is now on the table, it is great news, because it is one of the fundamental problems in the water sector. If the commission’s remit now includes ownership structures, I am delighted. I would love the Minister to clarify the point.

It is a pleasure to serve under your chairwomanship once again, Dr Huq. As promised, I have provided a fact sheet on the use of special administration. All Committee members should have received it by email, but hard copies are available on the table for their convenience.

Welcome to the last day of Committee.

On that point, may I intervene?

On the welcoming point? Of course.

We all welcome one another, but I meant the fact sheet. I really appreciate your going to the trouble of putting it together; I thank your team as well. I have read it diligently and done my best, but I have a quiz question for you.

The first bullet point refers to giving “the power to recover HMG funding should there not be sufficient funds to pay HMG back at the end of a SAR.

” Then, under the heading “Context”, the penultimate bullet point states: “If this shortfall occurred, and Ministers decided to use this new power, the Secretary of State and Welsh Ministers must launch a consultation prior to this power being used. This will ensure that those affected (e.g.

water billpayers) are able to provide their views. It will also ensure that the shortfall recovery mechanism is implemented in a way that means costs are recovered fairly.

” To me, that completely confirms paragraph 69 of the explanatory notes published by the Department for Environment, Food and Rural Affairs, which says that the Government will make the bill payers, as opposed to the creditors, pay for the costs. Please confirm, if you could.

Order. The Minister is not “you”: we do not use the word “you”.

We pushed the Minister earlier on the Cunliffe review. I thought it had been explicitly stated that ownership was off the table for that review.

By talking about mutuals being a potential outcome, is the Minister saying that what is actually off the table is full-scale nationalisation, but that mutualisation, public benefit companies and not-for-profit companies could be a serious option in the Cunliffe review and in whatever legislation might follow?

Yes. We have ruled out nationalisation, but all other forms of ownership are in the scope of the Cunliffe review.

I stress, however, that in a scenario in which a company was exiting special administration, it could go into mutual ownership if the organisation in question had sufficient funds and could ensure that the company, or parts of it, could continue to properly carry out its activities related to water.

Of course, no one would want, in any situation, to transfer to a company incapable of operating and providing water.

It is important to emphasise that it would not be appropriate for the Government to dictate the terms of exit from a SAR, as that would interfere with the conduct of the court-appointed administrator and their statutory objectives.

I thank the Minister for the helpful clarification that the Cunliffe review will consider ownership models, including those that the hon. Member for Westmorland and Lonsdale has advocated.

Will the Minister clarify why the Government are not permitting the Cunliffe review to consider full public ownership as one of the options?

Why would they not allow an open assessment of all the potential options, especially given that, as we have heard, public ownership is so common in countries around the world for what is a natural monopoly?

The commission will focus on reforms that improve the privatised regulatory model.

We have already been quite clear that nationalisation of the water sector is not in scope because of the high costs associated with that option, the lack of evidence that it would lead to improvements, and the delays that it would cause in achieving better outcomes for consumers and the environment.

The commission covers Wales and will review the model in Wales, where the largest water company operates a not-for-profit dividend model with no shareholders.

In addition, as I have previously noted, the scope of the independent commission will include the governance of companies and the operation of existing tools such as the special administration regime. In the light of my comments, I hope that the hon.

Member for Witney can see why the Government will not accept his new clause.

I am happy to hear that mutual ownership is being considered. I am very grateful for that. I will take my chances and try to clear up one point.

I completely agree with what the Minister read out from the last page of the fact sheet: “Would the shortfall recovery mechanism be used to compensate financial creditors or shareholders following a SAR? No.” Absolutely, but my point is not remotely about that.

I am not asking about compensating creditors. Let me take the Committee back to the first paragraph on page 1. Where there is a recovery to be made, who pays for it? We are not talking about compensating creditors; we are talking about taking money off them.

Rather than the money being taken from the customers, which is exactly what the bullet point that I read out three minutes ago states, we believe that it should be taken from the creditors. It is not about compensation.

I am surprised that there is confusion on the point, because that is not where I am coming from. It is about the shortfall and who pays for it.

It is clearly stated twice—both in DEFRA’s explanatory notes and in the bullet point, which I can read out again as desired—that the bill payers will pay for it. Question put, That the clause be read a Second time.

I thank the hon. Member for giving way and I thank you, Dr Huq, for your excellent chairmanship; it is a pleasure to serve under you today. The Bill already introduces a duty on water companies to produce and publish pollution targets and a reduction plan.

We can also get data fairly straightforwardly on how water companies are performing overall. However, what my residents in North West Leicestershire want to know is how their water company is performing week in, week out on the sewage outlets that they are interested in.

I believe we already have plenty of ways to monitor performance, and this addition is unnecessary.

I thank the hon. Member for her intervention. What we are talking about, though, is a toolkit that is being provided for the voluntary sector and for activists up and down the country, including ourselves. It is a great addition—this is a good new thing that the Government are proposing.

I have some examples of why this toolkit is necessary. About 10 months ago, at the Glebe Road pumping station water treatment works at Windermere, we had a significant deluge of untreated sewage going into the lake, and we found out only because a whistleblower told us.

The Environment Agency was notified 13 hours after the incident took place. The good thing about what the Government are proposing is that there will be a live database so that we can see what is happening there and then, and we can be on it.

However, unless we include the new clause—I would be happy to accept clarification from the Minister if something similar is going to happen anyway—the assumption will be that there is someone on it.

Matt Staniek, who leads Save Windermere, works every hour God sends, but he is allowed to sleep sometimes, and what if something happens at 3 o’clock in the morning and he is tucked up? Do we miss it?

I am simply saying that we should put in the Bill that this very good toolkit, which I commend the Government for, should be historically searchable, so that we can really hold the water companies to account.

I am sympathetic to quite a lot of the intention behind the new clause, but as ever, the devil is in the detail. Proposed new section 272B(2)(d)(ii)(a) contains a duty to publish the start time, end time and duration of all sewage spill events. Does the hon.

Gentleman accept that there has already been a duty to publish that information for some time? All undertakers have a duty to publish information from event duration monitors within—from memory—60 minutes of an event being triggered. Will the hon.

Gentleman give a bit more detail on what he has in mind for the authority to publish? Proposed new subsection (2)(c) says that the database must “contain such data or information as the Authority thinks is necessary”.

Such a bland statement will be open to challenge and interpretation, with all sorts of committed parties deciding that their “independently collected and analysed information” should be in the database, and other people saying it should not.

Is this not just a charter for judicial review of the authority?

I will not rehash the debates we have had in Committee already, but we are talking about more than just event duration monitoring, as set out in proposed new section 27ZB(2)(d)(ii)(a); we are talking about flow and volume, and it is right to specify those things.

That may be the hon. Member’s intention, but the drafting does not say that. Part of the problem is that (ii)(a) deals the with start time, end time and duration, not flow. Does that particular sub-paragraph not duplicate the existing legal requirements for publication within 60 minutes?

We dealt with that with other amendments; even though they are not part of the Bill, that would be covered by the suite of things we have proposed. Fundamentally, all we are asking for is that the information and the evidence that is put out there will be searchable historically.

That cannot be beyond the wit and capability of the very clever IT specialists who I am sure are already working for the water companies.

This is important, and it is part of what those of us in this corner of the Committee Room are trying to do, which is to take the Government at their word when it comes to the elevation—and we support that elevation—of the role of volunteers and citizen scientists, equipping them to do their job properly and not expecting them to be at their computers 24/7 without sleep.

We are not going to push this to a vote. I beg to ask leave to withdraw the motion. Clause, by leave, withdrawn.

I thank the hon. Member for Westmorland and Lonsdale for the intention behind new clause 32. On a personal level, I welcome the scrutiny and the level of detail that we have gone into.

As the Bill started in the other place, there was a lot of cross-party work and the Government have taken onboard some of the recommendations. I gently push back on the idea that this is not a necessary or valid way to examine legislation.

The Government agree that competitive procurement can be a successful way to provide better value for money for consumers, and greater innovation within major infrastructure projects.

In the 2019 price review, Ofwat developed the direct procurement for customers approach, or DPC, building on the success of the Thames tideway tunnel. The DPC allows the water company to competitively tender for services in relation to the delivery of major infrastructure projects.

At price review 2024, Ofwat noted that, by default, all projects with a total life cost of over £200 million should be delivered through a DPC.

Following final determinations in December 2024, Ofwat announced that 26 major water company projects would be delivered by competitive tendering processes, including a DPC, with a total whole-life cost of almost £50 billion.

Two-hundred million is a really big number. In my patch in Witney, we have sewage treatment works as far as the eye can see that are undercapacity and are leaking sewage all over the place—at Bampton, Cassington, Carterton, Witney, Milton; you name it.

It is awful, and I am sure that is the case in other constituencies, too.

Two-hundred million pounds is miles higher than any of their spend, so—correct me if I am wrong—all those sewage treatment works are going to carry on without the new procurement processes because they are below the £200 million threshold.

The point is that competitive tendering processes were introduced back in 2019, including looking at where money is being used and how that money can be used most effectively. As I have just mentioned, we have £50 billion-worth of competitive processes in the next price review determination.

Water companies are already actively using competitive procurement processes. This is something that Ofwat already encourages through the price review process. I therefore hope that the hon. Member is content that this amendment is unnecessary.

We will not put this to a vote, but I will continue to highlight the point that £200 million is too high a benchmark and we should drop it, because that would serve us all, and our customers, better. I beg to ask leave to withdraw the motion. Clause, by leave, withdrawn.

New Clause 33 Responsibility in relation to planning issues “(1) The Water Industry Act 1991 is amended as follows.

(2) In section 37 (General duty to maintain water supply system etc), after subsection (1) insert— “(1A) When participating in a planning consultation, or when otherwise providing advice in relation to a planning matter, a water undertaker must provide— (a) full and accurate information, and (b) an honest assessment, in relation to its current and future ability to fulfil its duties under subsection (1).

(1B) An undertaker which fails to provide information required under subsection (1A) will be subject to such penalties as the Authority may impose.

(1C) Where, in providing information required under subsection (1A), an undertaker expects not to be able to fulfil its duties under subsection (1), the undertaker must establish a plan to meet its requirements by a relevant time.

(3) In section 94, after subsection (2) insert— “(2A) When participating in a planning consultation, or when otherwise providing advice in relation to a planning matter, a water undertaker must provide— (a) full and accurate information, and (b) an honest assessment, in relation to its current and future ability to fulfil its duties under subsections (1) and (2).

(2B) An undertaker which fails to provide information required under subsection (2A) will be subject to such penalties as the Authority may impose.

(2C) Where, in providing information required under subsection (2A), an undertaker expects not to be able to fulfil its duties under subsections (1) and (2), the undertaker must establish a plan to meet its requirements by a relevant time.

(2D) An undertaker which fails to carry out a plan established under subsection (2A) will be subject to such penalties as the Authority may impose.””—(Charlie Maynard.) Brought up, and read the First time.

Is it not the case that the water companies used to have more power to object? Did they have a veto which the previous Government removed? Do they now have to cope with whatever the planning authority decides?

I thank the hon. Member for that intervention. I do not know when that changed. [Interruption] In 2015, was it? There we are: maybe it was changed in 2015. Perhaps all of us, or most of us, recognise that is not a good situation.

Time and again—I have seen this in Witney, Ducklington, Bampton, Aston and Carterton—this is just waved through. When I quiz people from Thames Water about why they have waved it through, they say, “We have a duty to connect.

” They do have a legal duty to connect, which they take seriously, but they take their duty to add capacity to match that increase much less seriously.

This is a request for information on my part. In my conversations with Anglian Water, one of its key asks relates to the imbalance in which the company has a legal duty to connect any planning application that is passed, yet it is not a statutory consultee.

It is therefore not required—not able, in fact—to take part in the planning process. Until the companies are made statutory consultees, all this is irrelevant, so should not the new clause focus on their becoming statutory consultees? While I am on my feet, I have a query about the drafting.

The hon. Gentleman defined a “relevant time”, but I do not see that definition in the new clause. Is it contained somewhere in the draft legislation? If it is not, what might the effective definition be?

I thank the hon. Member for the new clause. We all recognise the situation he describes. In East Anglia, planned housing growth over the coming decades outpaces available water resources.

In my constituency, we already have a water resource zone in Hartismere where business operations and planned business growth are being restricted by the water available.

He is addressing some of the important points about water companies’ being able to take responsibility, but do we not also need a joined-up approach?

The planning system must be used to address the issues by means of stricter water efficiency requirements, sustainable drainage systems and housing plans that are realistic given the available natural resources.

Is there not a problem with just putting the ball in the water companies’ court, rather than taking a more joined-up approach?

I completely agree with the hon. Member. Using West Oxfordshire as an example again, we have installed Grampian conditions, which I encourage other Members to look into, where we have said, “You may not occupy this house.

” We could not stop the houses being built by arguing that there was insufficient capacity, but we could put a Grampian condition in force that says, “Those houses may not be occupied. Any buyer knows this, so they will not buy them.

” It is flagged to any buyer so that they do not buy a house they cannot occupy, which will continue until the capacity has been added. That puts some heat underneath the water companies to get on and increase their sewage treatment works capacity.

I really encourage the Government to look into those. We have vast amounts of housing that will be built, and under the current law, they will be steamrolled through and the capacities will not keep up. That is a real problem for everybody, and it puts more pressure on our rivers.

I thank the hon. Member for his kind words, and I look forward to his support in some of the votes at some point. In the meantime, if he has recommendations on the wording that he would like to put forward, I ask that he please do so.

These new clauses are already in place, so maybe that is impossible, but let us by all means try to improve them.

I will say a brief word on the new clause. This is important, and I would like to add to the detail that my hon. Friend the Member for Witney has set out. Essentially, we have two problems here, one of which is that water companies are not statutory consultees, and they should be.

I take the point that it could be more clearly stated, but the new clause does say “When participating” more than once, not “If participating”.

Without pointing fingers—well, maybe a bit at water companies in certain parts of the country, including mine—the key thing is that there is an incentive for a water company, when giving its advice to a planning committee, whether it be in the national parks, the dales, the lakes or a local council, basically to say that everything is fine, and why would it not?

If a water company says, “We have no capacity issues. You can build those 200 houses on the edge of Kendal and it won’t cause any problems for our sewer capacity,” two things happen, do they not?

First, the water company is not conceding the need to spend any money on upgrading the sewerage network.

Secondly, it is guaranteeing itself 200 households that pay water bills, in addition to the ones it already has, so it has a built-in incentive—maybe not to be dishonest, but to not really give the fullest and broadest assessment of the situation.

I thank the hon. Member for the intervention; I am sure that is the case, and the two are not mutually exclusive. I want to see houses built.

The great frustration in our communities in the lakes and dales and just outside is that we desperately need homes that are affordable, and we want homes to be zero carbon. We want to be in a situation where the local community is able to hold developers to account.

The danger is that developers who are going to build stuff on the cheap that is not affordable to potential buyers or renters are able to get themselves off the hook because the water companies will not really test the resilience of the existing infrastructure.

It is true that both things can happen.

We feel that this is about giving planning authorities the power to say, “The developer is seeking to do this, but the community as a whole does not have the resilience or the capacity to cope with 200 extra bathrooms; so what resources will the developer or the water company put in to ensure that the facilities are upgraded to make that possible?

” This is about ensuring that planning does its job.

I thank the hon. Member for Monmouthshire for her excellent point. It is very interesting that a mutually owned water company is taking that very sensible decision and approach. It highlights that that is a benefit. They are not trying to make money hand over fist.

They are trying to do the right thing.

With your indulgence, Dr Huq, I will clarify something that I should have mentioned in the previous debate. Ofwat reserves the right to explore the use of DPC for major projects below the £200 million threshold where it offers value for money for customers. I just wanted to put that on record.

I thank the hon. Member for Westmorland and Lonsdale for tabling new clause 33, which would increase the responsibilities of water companies where they participate in the planning process. As we all do, I genuinely recognise the intent behind the clause and where the hon.

Member is trying to get to. We absolutely recognise concerns surrounding water and sewage companies’ ability to keep pace with the needs arising from new property developments.

This is an active issue across many of our constituencies, and we have heard many personal stories. In my constituency of Exmouth and Exeter East, we have had a new town built called Cranbrook. A sewage treatment works was promised but has not been delivered.

That has put pressure on systems elsewhere, and we have seen big sewage outflows in other parts of the constituency. We know that in the Ministry of Housing, Communities and Local Government there are big reforms coming for the national planning policy framework.

Will the Minister please confirm whether her Department is having active conversations about what we are speaking about, and whether or not there will be changes in this space?

We wish to press the new clause to a Division. Question put, That the clause be read a Second time.

I beg to move, That the clause be read a Second time. We have conferred, and hon. Members will be delighted to hear that we have two proposed new clauses to go and we will not press either to a vote. My hon.

Friend the Member for Witney and I may disagree, but I think we have confirmed that that is our view. I have little to say on new clause 34. We had the substance of this debate on amendment 19, but the new clause is significant all the same.

The point is simply that among the things that deeply undermine the public’s confidence in the water companies, and in the industry in general, is the very obvious revolving door between the regulator and the water companies themselves.

I will reiterate some points and add to some things that were said the other day. In its analysis in 2023, The Observer found 27 former Ofwat directors, managers and consultants working in the water industry that they had previously regulated.

The hon. Member mentioned directors. I think we all agree that the strength of this Bill is its clarity, but in his new clause, he has chosen to write “any individual”.

Does he agree that it is the directors, not the catering team, the cleaning staff, the admin people, the accountants and so on, who have sought to swindle customers or flim-flam the taxpayer? That is where we should focus the attention, and that vagueness does not add to the Bill.

That is an excellent point, and if I was pushing the new clause to a vote, that might make me think twice.

I am not the only person who has done this, but I have spoken at length on this issue, not just during this Committee, to make the point that we understand that this is a heated debate, which at times has become quite fiery out there in communities and in this place.

But the people who work for the water companies, the regulators and so on are human beings doing a job, and we need to value them. That even includes the directors. Having said all that, it is clearly wrong that directors are switching from one to the other.

I add that our research found that the director for regulatory strategy at Thames Water had previously been a senior Ofwat employee. We had a senior principal at Ofwat moving directly from Thames, where they had worked on market development.

We also found links between Ofwat and Southern Water, Northumbrian Water and South West Water, including directors and those who work on regulation.

There is a serious point about regulatory capture, which we should talk about cross-industry, cross-sector. There is something that we could do constructively across the House on regulatory capture.

We talk a lot at the moment about artificial intelligence and the growth of the tech industry, and we need to implement stuff on regulatory capture now. Any lessons that we learn about regulatory capture in the water industry should be implemented across other industries.

I hope that the whole House can come together on that.

I am grateful for that well-informed and thoughtful intervention. The hon. Member is absolutely right: that is what we should do. To be reasonable, we want people who understand the industry working for the regulators.

We understand why there could be a benign reason for what is happening, but nevertheless, we trace it to some of the reluctance in the culture of Ofwat towards taking action. I talked about the £168 million-worth of fines still not collected by Ofwat from three transgressing water companies.

Some of the reluctance comes not from corruption but cosiness, and we need to make sure we address that, as the new clause seeks to do. We dealt with this issue on amendment 19 and it was pushed to a vote. I do not want to trouble the Committee again, so I will be happy to withdraw the new clause.

I thank hon. Members for their contributions. Again, we recognise the intent behind new clause 34, tabled by the hon. Member for Westmorland and Lonsdale. However, it would be disproportionate to prevent all water company employees from being able to accept employment in Ofwat.

Ofwat seriously considers the handling of actual and potential conflicts of interest. Staff in Ofwat are bound by the civil service business appointment rules, which do not apply to every agency, but they do in terms of Ofwat, and by the duty of confidentiality and the Official Secrets Act.

Any new employees in Ofwat, regardless of their previous employment, would be bound by those rules. Compliance is mandatory and any breach may result in disciplinary action being taken. Individuals with experience working in the water sector have a wealth of knowledge—the hon.

Gentleman mentioned this—that might be a valuable asset to Ofwat and could support better policymaking. I hope that this reassures him on his concern about the potential conflicts of interest in Ofwat, and that the new clause, as drafted, is therefore unnecessary.

These timelines are too slow. Setting the date at 2035 for monitor installation will mean that this is done at a much slower rate than the rate over the last seven years. That is disappointing. Targets set for 2045 and 2050 are too far away. We do not need to, and should not, move that slowly.

We must do better.

I am sorry, but with spill per overflow, I again think we are drinking the water industry’s Kool-Aid. We are doing its metrics, and that is not doing anybody any favours. We are talking about spill per overflow; what we should be talking about is how many hours. We have that information.

Why are we not saying how many hours? Let us think about it. We could have a spill for one hour or a spill for a month. That is just one, in that metric. It is missing a huge amount of what is going on. Please can we move away from these metrics towards spill hours, at a minimum?

Again, I recognise the intent behind the hon. Gentleman’s comments. Whichever way we want to address this, talk about it or set targets, ultimately what we want from a Government is less sewage going into our rivers, lakes and seas.

If we can find a way to all agree on the best way to move that forward, that is something we can unite behind. As I mentioned, the Government cannot accept the new clause, but I recognise the intent behind it.

It would cut across the existing targets that I have set out, creating confusion and uncertainty about which water targets the companies should meet.

That would risk undermining the extensive forward investment programme that is already under way and is essential to delivering the changes that we all want. For those reasons, and for the last time, I ask the hon. Member to withdraw his new clause.

We will not press this new clause to a vote. I beg to ask leave to withdraw the motion. Clause, by leave, withdrawn. Question proposed, That the Chair do report the Bill, as amended, to the House.

Anyone else? In that case, for the last tearful time, I call Minister Emma Hardy to respond.

Thank you very much, Dr Huq, for your wonderful chairwomanship. I thank everybody on the Committee. It has been a new experience for so many of us, with Members in new positions and some new Members appearing on a Bill Committee for the first time.

It has been really enjoyable, and there has been pleasant camaraderie. Where there have been disagreements, we have had them in a polite and courteous manner. I think we have set a wonderful example for many of the other debates, and long may it continue.

I thank the incredible Bill Committee team, who have done such an amazing job in supporting me in my work. I thank the Whip, my hon.

Friend the Member for Manchester Withington, for making sure that we all voted in the right way at the right time, which definitely prevented me from getting into trouble while leading on my first Bill.

And of course, we have had loads of written evidence, and for a small Bill, we have had lots of amendments, which shows the strength of feeling and interest in the Bill from the wider community. What else can I say other than we’ve only just begun, and you ain’t seen nothing yet?

Following this Bill, which is just part of our phased transition to transform the water sector as a whole, we also have the Cunliffe review, and in the words of Arnold Schwarzenegger, “I’ll be back”, with another Bill—similar time, same place.

I hope to see many of you there, as we go again to clear up our rivers, lakes and seas for good. Question put and agreed to. Bill, as amended, accordingly to be reported.