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Water and Sewage Utilities (Regulation)

10.59 am

Dr. Vincent Cable (Twickenham) (LD): I am pleased to introduce the debate. It is a short debate rather than a one-and-a-half hour one, so I shall focus on a narrow aspect of the problem with the regulation of water and sewage utilities which is of particular interest to my constituency. It relates to sewage works. There is one very important and controversial establishment in the neighbourhood at Mogden. As it happens, Mogden is just across the border from my constituency, in that of the hon. Member for Brentford and Isleworth (Ann Keen), who has also been active on the issue. It is in the borough of Hounslow. However, the problems that it generates are shared by my borough, Richmond.

The issue is a long-standing one, but its seriousness—or, at least, the public perception of its seriousness—has grown. The plant was built 70 years ago. No doubt it was, in its day, state of the art and effective. Several things have changed. Technical standards have moved on to a much higher level. When new sewage works are established, as one was in Reading recently, they are fully covered. The environment is completely different. When Mogden was established in the 1930s, the population of south-west London was much smaller, and the pressure on Mogden's equipment and facilities much lower. It was built in a largely greenfield area. I have photographs from the 1930s of the rugby union stadium, which is just across the road from Mogden sewage works; it is surrounded by fields and orchards. My house, which is about half a mile from the sewage works and rugby stadium, is a 1930s semi that was built in a largely rural area, which is now heavily built-up. In the last few decades in particular, thousands of homes have been built within a few yards of the establishment.

Consequently, public exposure, particularly to problems of odour, has become much more acute. In the last three to four years, there has been considerable growth in public anxiety, frustration and, in some cases, anger about the environmental problems presented by the Mogden establishment. What seems to happen is that, particularly at times of heavy rainfall, the plant does not have the capacity to handle the volumes of sewage that it receives. There are potent and unpleasant smells hanging over large areas, depending on the prevailing wind. That has become a significant source of concern for thousands of people across south-west London.

Perhaps I can break the concerns down into several specific points. The first relates simply to the smell. It may seem self-evident that the smell of sewage is unpleasant, but it was not until I read a helpful document from the Department for Environment, Food and Rural Affairs, a consultation on a draft code of practice, that I realised that there is much more science involved than I had appreciated. Smell consists of several different elements. First, there is the concentration of gases. With sewage works, that means hydrogen sulphide, ammonia, methane and various other complex gases. Secondly, there is the intensity of the smell. I had not distinguished those points, but intensity is not the same as concentration. As the atmosphere becomes more heavily concentrated, the intensity of its impact on people rises exponentially. There is a logarithmic relationship.
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Thirdly, there is an interesting concept called a hedonic scale. Scientists who deal with odour have constructed the scale, which ranges from plus four for a very pleasant smell, such as a bakery, the example that is given, to minus four, which is for the very unpleasant smell that one would associate with rotting flesh. Scientists have constructed a scale that enables smell to be measured qualitatively as well as quantitatively. Odour pollution from sewage is clearly at the bottom end of that scale. The point that emerges from that is that smell is not simply subjective. It has an objective base, though measurement is difficult and complex. That is one of the problems involved in regulation.

However, stench is not the only problem. Another problem that we have become aware of in the last few years is that of mosquito infestation. Until recently, Thames Water, the owner of Mogden, denied categorically that there was a problem associated with mosquitoes. It used to blame the residents for scaremongering and told them that the mosquito problem arose because of standing water in people's gardens. On the basis of consultancy studies, Thames Water has now acknowledged that the sewage works generate a problem and, moreover, that there is potentially a serious health hazard. There are growing worries among environmental health officers and people concerned with public health that British mosquitoes can now serve as a vector for quite dangerous tropical diseases. I know that the Department of Health and local primary care trusts have carried out some serious scientific investigation into the extent to which the mosquito infestation could be a serious hazard in relation to diseases such as West Nile disease.

The third problem at Mogden, after the problems of odour and mosquitoes, is that of sewage overflow. Increasingly, at periods of high rainfall, raw sewage is being washed into the River Thames. That does not directly affect my constituency, but is a matter of great concern to people living along the Thames. Raw sewage in the river causes great damage and loss of life to fish and other river-borne life forms, as well as creating an unpleasantly polluted environment for people, such as canoeists and sailors, who use the river for pleasure purposes. That is becoming a substantial issue.

The question therefore arises of how those various problems are being tackled, and the extent to which the regulatory framework is adequate to deal with them. I shall introduce that point by running through the sequence of events that have occurred over the past few years, which partly reflects the growing frustration.

A few years ago, a residents action group was established, and that has brought to a head the political activity in the area, enlisting support from local MPs and councils to bring pressure to bear on Thames Water to take action. About 18 months ago, there was a visit to Lord Whitty and one of the Minister's colleagues in DEFRA, who, I believe, were sensitive to local concerns. That was followed up with a visit to the site. Partly as a result of those representations, and partly as a result of questions in the House, DEFRA initiated its consultation process on a code of practice, and a number of streams of activity were then set in train.
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The other important recent development is in relation to the law. In principle, it has been possible for local authorities tackling issues such as this to use abatement notices under the Environmental Protection Act 1990, in much the same way as such notices can be used against excessive noise. However, until recently, attempts to use the law in that way were frustrated by objections from Thames Water. There have also been comparable issues in Liverpool and Plymouth, and the law has proved a very weak instrument in defence of local concerns. A few months ago, however, that changed, when a precedent was established. In the case of Hounslow council v. Thames Water, an appeal by Thames Water was dismissed. I understand that it is now possible for action to be brought in the courts, and that, in this case, it shortly will be. However, there are questions about whether the law will be strong enough, given the rather modest level of fines available under that legislation. In my conclusion, I want to question the Minister about that matter.

The final step in the sequence of events relates to finance and the current determination by Ofwat and the Department of the permitted levels of price increase by the water companies. That is critical to the resolution of the problems. When Lord Whitty came to Mogden with MPs and local residents, Thames Water unveiled a very impressive engineering project covering the whole plant, with the introduction of new equipment. It argued, and I am sure that it was right, that the project would have provided a final solution to the earlier problems that I mentioned. Thames Water also proposed other solutions to the problem of sewage overflow.

However, the investment required for those projects was substantial and, for that investment to be made, it was important that the Ofwat judgments about the passing through of investment into prices should be sympathetic. In practice, as is inevitable with the regulatory process, a compromise has been reached. Thames Water has been allowed a price increase of 24   per cent. over the next five years. It asked for 39 per cent. It is not clear whether that will permit it to undertake the Mogden work. I had a letter a few days ago from Mr. Sexton, the managing director of Thames Water, who says that he is still reflecting on whether it will be possible to carry out the work. There is now considerable doubt about it.

What is clear is that some of the other important environmental work will no longer be possible. The much bigger problem—at least in a wider London sense—of sewage overflow into the river probably cannot be solved as a result of Thames Water's investment plans. Indeed, the Environment Agency has expressed some frustration that the Thames tideway project will now have to be abandoned. Its recent press release stated that

The Minister for the Environment and Agri-environment (Mr. Elliot Morley) : I want to make it clear that no decision has been taken on the Thames tideway, so it is quite wrong to say that it has been abandoned.
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Dr. Cable : I hope that the Minister is right. I was only reading from a House of Commons Library note, which states that

If that is not the case, I am delighted to hear it, and I am sure that the residents will be, too.

I will conclude by posing a series of questions to the Minister that arise out of the background that I have described. First, the Department has laid a good deal of store by the ability of local councils—mainly Hounslow, but to some extent Richmond—to issue abatement notices against the water company when odour pollution is a nuisance, and now the way has been cleared for action to be taken. Is the Minister satisfied that the sanctions available through that route are on a scale that is appropriate to the problem? We are dealing with billion-pound companies and rather nominal fines under environmental legislation. I simply ask him whether he is satisfied that the legislation is robust enough to deal with a problem of this kind.

The second point is that DEFRA has now undertaken a helpful exercise: a code of practice. There is a lot of technical detail that I do not understand, but clearly a great deal of work has gone into it with the industry and the regulators. That is all welcome. How does the Minister see the code of practice acquiring greater statutory force? I know that he has been giving consideration to how it can be included in the Clean Neighbourhoods and Environment Bill, which is passing through the House. Certain aspects of the code of practice, particularly relating to mosquito nuisance, could be included in the Bill, and that is planned.

Why, though, is it not possible to include odour nuisance in that framework legislation? My colleagues and I strongly support it, and it would seem to be an appropriate vehicle. I know that there are difficulties with objective measures in relation to smell—that is somewhat more difficult than in relation to noise—but given that a great deal of effort has gone into producing quantitative measures, it does not seem totally impossible that the code of practice could acquire statutory force. I invite the Minister to give me some hope that that might be taken on board in the Standing Committee.

The third point relates to funding. The Minister has already intervened, so he may be able to give me some reassurance. I am concerned that even if it was generally agreed that major investment was required, it seems that there could be some difficulties in funding the investment stream required to make things happen. I invite him to tell me whether he believes, after the Ofwat determination, that those needs can be met.

The fourth point relates to independent monitoring. It is clearly crucial to the maintenance of high environmental standards that there should be a genuinely independent assessment of the ability of Thames Water, and other utilities in other parts of the country, to meet their capacity requirements. At the moment, as I understand it, the Environment Agency is totally dependent on the company to produce estimates of flows in and out of the works, so there is no basis for independent monitoring of its performance. Perhaps the Minister can tell me whether any thought has been given to strengthening the element of independence.
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My final point is perhaps offbeat. On Saturday, I attended the annual conference of the National Association of Plumbing Teachers at my local tertiary college, the high-level Richmond upon Thames technical college, which does excellent work on trades and is a centre of excellence for plumbing teachers. I was questioned by some of the country's leading authorities on plumbing who said that a major crisis is emerging—I have no basis on which to judge whether this is a technically sensible point—as a result of large-scale installation of condensing boilers. The point was made that condensing boilers issue about 2 litres of acid into the sewerage system every hour. A typical sewage works with 10,000 condensing boilers in its vicinity could probably generate 140 million litres of acid every year. Even if diluted substantially, that could, and is beginning to have, a damaging effect on the bacteriological processes necessary for the treatment of sewage. The Minister may be unfamiliar with that problem, as I was when it was put to me. Could his technical advisers consider whether the problem is real and whether any action has been taken?

It is clear that there is greater awareness now of the problems, particularly that of odour, generated by Mogden and other sewerage works. A substantial momentum has built up for action. I would like some reassurance from the Minister on my specific points about enforcement, providing a statutory basis for the code of conduct and ensuring that there is adequate investment to ensure that improvements take place.

11.17 am

The Minister for the Environment and Agri-environment (Mr. Elliot Morley) : I congratulate the hon. Member for Twickenham (Dr. Cable) on securing this debate and on the detailed and measured way in which he made important points that are of concern to local residents. As he rightly said, my hon. Friend the Member for Brentford and Isleworth (Ann Keen) has also been active on the issue and arranged for my noble Friend Lord Whitty to visit the sewage works to see for himself and to talk to Thames Water about some of the issues.

Some of the points raised by the hon. Gentleman are right, including that about insects. We are dealing with that matter in the Clean Neighbourhoods and Environment Bill, which will provide the power to deal with issues such as mosquito nuisance, although such issues may not currently exist.

The hon. Gentleman asked about making the code statutory. As he rightly said—I shall touch on this in more detail in a moment—it has been established in court that local authorities can apply abatement notices in relation to odours, so regulation is in place. The problem with a statutory code for smell nuisance touches on issues that he recognised; how can a subjective test be devised?

The hon. Gentleman also mentioned independent monitoring. It is true that the Environment Agency relies on the figures provided by companies on matters such as flows. However, those figures comprise part of their investment programmes in relation to the size capacity of treatment plants, and their business plans are subject to careful scrutiny by Ofwat, as he knows. There is an element of independent assessment.
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The hon. Gentleman also referred to storm overflows and I should like to deal with that straight away because I do not want any misunderstanding about the Thames tideway. Mogden is one of four major treatment works that are currently unable to deal with storm flows, and that leads to a discharge from the treatment plants into the River Thames. I am pleased to assure the hon. Gentleman that, with the business plans that Thames Water put to Ofwat, there has been approval for a considerable investment in the upgrade of those treatment works, including Mogden, to enable them to cope better with storm flows. That in itself should considerably improve the River Thames.

The working group examining the Thames tideway has been considering whether there are quicker and potentially cheaper ways of dealing with combined sewage overflows in the long term. In the end, there may not be and, in the final analysis, the tideway scheme may be the best option. I do not rule that out. I am waiting for the group's report at the end of this month or the beginning of next month, and we will make an evaluation based on it. I want to see rapid progress, and that is why I am very pleased about the investment in the four sewage works.

The Thames tideway project will be five years in development; it will be five years just working it up. It will be at least another decade in construction. It is a long-term scheme that will cost billions of pounds. We must consider that option. I do not want the hon. Gentleman to think that the scheme has been abandoned, because it has not. We are just waiting for that report.

The hon. Gentleman will understand that the prime responsibility for tackling odour problems rests with the water company; in this case, Thames Water. I do not know the history of the site, but I wonder what was there first: the treatment plant or housing. If housing was built there, I wonder what consideration the planning authority gave to those issues. The hon. Gentleman knows the history better than me. Again, I can provide him with some assurance, because the original determination by Ofwat allowed Thames Water £10.8   million for odour works, mainly at Mogden where, it is recognised, there is a major problem. That would have covered the inlet works in the first determination. The final determination has almost quadrupled that allocation to £42.8 million. In addition to the inlet works, that will allow Thames Water to cover storm tanks and some of the sewage tanks. A considerable amount of money is available. The work programme is for Thames Water to decide, but, based on the business plan that the company put forward, Ofwat has made a considerable amount of money available for the approved programme.

The hon. Gentleman is right to say that we need an effective regulatory scheme. There must be a stick and a carrot. The stick is regulation and enforcement, including fines on occasions, and reasonable standards and real action to deal with complaints, which is the job of local authorities. The carrot is ensuring that the company is in a position to fund its operations. That is a matter for Ofwat.
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The legal position has been clarified by court judgments on odour. The High Court judgment confirmed that odours from sewage treatment works can be considered a statutory nuisance within the terms of the Environmental Protection Act 1990. As a consequence, local authorities have a duty to investigate such problems, and they have the corresponding enforcement powers. I understand that in this case the local authority has used its powers to issue abatement notices.

The Government published on 23 December 2002 the outcome of our first public consultation on odour, and that is where we developed the policy of supporting the use of a statutory nuisance regime to resolve odour problems at sewage works. We also recognise that local authorities and water companies need a clear idea of what procedures and standards ought to be met under that regime, and we have been working with them to try to clarify the situation. As a result, we launched a new consultation on the draft code of practice and local authority guidance on odour nuisance from sewage treatment works. Responses are invited up to 4 April 2005, and our aim is to implement the code by the summer. At the same time, DEFRA and UK Water Industry Research are collaborating on best practical means guidance that will be aimed primarily at the water industry.

We recognise that there are obvious local problems with odours from sewage treatment works. Water companies do not have to wait around for the outcome of the consultation and guidance, but should act now. As I said, funds have been made available in respect of the business plans.

If water companies need to do more at particular sewage works to manage odour problems, it may mean that better management or maintenance is required. We recognise that capital investment is a consideration, but I emphasise to the hon. Gentleman my understanding that the way in which sewage treatment plants are operated also has a bearing on odour. Issues of good practice, good management, good operation and good maintenance are separate from the capital programme. Ofwat rightly has an obligation to scrutinise the business plans in order to ensure good value for money.

Nationally, companies propose in their final business plans to spend more than £292 million between 2005 and 2010 to fund works on odour control. Ofwat allowed £96 million for that in the draft version. In the final version, the amount was increased to £134 million, which is a recognition of the representations that Ofwat received, including those of the hon. Gentleman and my hon. Friend the Member for Brentford and Isleworth. Considerable progress is being made on the matter, and we expect work to be carried out during the next five years. I very much hope that progress is made on the issues raised by the hon. Gentleman.

The hon. Gentleman asked whether enforcement was adequate, given the steps that can be taken. Ofwat will lend weight to the proposed code of practice by not allowing the cost of any fines that might be incurred by water companies as a result of prosecution under odour nuisance regulations to be passed on to customers. The company will have to pay for any fines directly out of its profits and not pass them on in consumer bills. I make that point to the hon. Gentleman, as that is an important assurance.
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Fines of up to £20,000 may be levied for such nuisances, but we should not forget that all water companies—Thames is no exception—take very seriously their image, environmental commitments and customer relations. They do not want to be seen as being in breach of any of the regulations, whether on odour, pollution or discharges, and they spend a great deal of time on ensuring that they have the mechanisms and management in place to deal with such matters.

As I said, there is also the issue of capital investment. I hope that I have assured the hon. Gentleman that significant capital investment has been allowed for in the current price review. On enforcement, there are court judgments, and DEFRA is finishing its consultation on the code of practice, which will help people who suffer from the problem. It will also help companies, which clearly need some guidance and some certainty as to how they should approach the matter. Those are important issues, and I am optimistic that the hon. Gentleman will see considerable progress, which will be of benefit to his constituents.

11.30 am

Sitting suspended until 3.30 pm

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