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Like many other noble Lords, I, too, had to suffer the indignity of being ribbed and teased by foreign friends who simply could not believe that London had a water problem. And to be frank, I still cannot believe it. My family has a house in Umbria in Italy. We have a large garden and a swimming pool that evaporates throughout the summer. The summers are hot; the rain is infrequent; yet our property is irrigated and the squirters go on every other night. Our water comes from the mains and a well, and there is not even a hint of a water usage ban.
The Select Committee spent a week in another hot country—Australia. We saw a nation versed in water conservation where from childhood everyone understands that water is a precious commodity. But even after six years of drought in the Sydney region, people are still permitted to water their gardens, albeit between 10 pm and 4 am. There they succeed, even in that arid climate, in making their beautiful gardens look like gardens in Surrey.
So when my friends tease me, I am shamefaced to admit that in my city—the greatest city in Europe—with its reputation for grey skies and constant rain, we face a major crisis in our water supply. I ask myself why? Is it because it does not rain enough? Well, that has to be partially true. Is it because of climate change? Well, that, too, has some relevance. Is it because of regulation and government interference? Well, it would be nice to say yes to that, but it cannot really be the answer. Or is it because of mismanagement? Of course, the sad reply is yes, it is.
The title of this report refers to water management, but my interest has been in water managers. We visited some brilliant water companies. Yorkshire
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We visited Yarra Valley Water in Melbourne, which is right at the cutting edge of using and reusing water, where office buildings have their own reprocessing units, and townships where grey water is recycled to provide a stunning environment. The Melbourne water authorities should be studied by all UK water utilities. Finally, we visited Sydney Water where drought has become a permanent way of life, yet where people have learnt to live successfully with it and to adapt to the problem.
The Australians showed us how they recycle water and how they have persuaded their population to install new and efficient shower-heads and dual flush toilets, and encouraged almost universal use of rain butts to collect roof and garden run-off. Australia makes every drop of water count.
There is a common thread that draws together each of these successful Australian and British water authorities. Unsurprisingly, it is good management—business managers who have clear vision, precise guidelines and a determined focus on meeting their targets. How lucky they are, and how unlucky are we who live in London and the south-east.
I am by nature an inveterate capitalist and a serial entrepreneur to boot. I understand how business works. I understand very clearly the relationship between risk and reward. In my days, I have enjoyed some reasonable successes, but I have also suffered some pretty painful failures. I know the rules of the game. But Thames Water, and some of the other water companies in the south of the country, leave me speechless. They seem to play by different rules. The worse the service gets, the more they are rewarded. They under-invest. They have the highest percentage of leakages in the UK. They are slow to fix burst water mains and a third of the water simply disappears. Yet I and millions like me have been banned from watering our gardens. They have achieved record profits and they pay their top management outrageous salaries; yet I and millions like me have to pay inflated bills to compensate for their mismanagement. They are now up for sale and private equity companies are circling them like vultures, offering their shareholders billions upon billions; yet I and millions like me have been made to feel like criminals if we use a hose to wash our cars.
Thames Water is a shambles. And do not let any of us fall for the bleating about its legacy of ancient pipes and sewers. Its inability to repair emergency leaks with any sense of urgency is ample testimony of a company that is badly managed and oblivious to its customers’ requirements. What is the solution? Perhaps competition. We should be able to buy our
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Having ranted about Thames Water, may I be permitted to raise one hobbyhorse not quite on the theme of water management, but not quite off it either? I am just about to come to the end of my stint on your Lordships’ Select Committee on Science and Technology. I have loved every minute of it and I thank your Lordships for appointing me. I have served on at least six Select Committees. I believe that this Select Committee has done some magnificent work. We have called on the very highest level of witnesses and have travelled far and wide in our investigations. We have produced excellent work, which we have submitted to your Lordships’ House.
But what happens after our submissions? The reports go off to Government and we wait for a reply, which eventually comes. In my experience, in every case, the Government’s reply has been underwhelming and—dare I say?—grudging. Or at least that is how it feels. Take this particular report: we have been staggered by the poor quality of the Government’s unenthusiastic response. This highly talented sub-committee has prepared an excellent report on an important subject. We have made a series of well reasoned recommendations, and what is the response? Nothing—nothing that we did not know, and nothing that we had not considered.
Would it not be wonderful, just for once, if they were to say, “We think the committee has made a valid point and would like to pursue it further”? To me, it feels like the departments regard the Select Committee investigations as a total pain in the neck: an intrusion and an inconvenience, interfering with the very busy and, I am sure, important schedule of the officials concerned.
This report on water management was a clear case in point: an uninspired response to an excellent report. This House deserves better.
1.10 pm
Lord Dixon-Smith: My Lords, my first obligation this afternoon is to declare an interest. I am a farmer in north Essex. I have an abstraction licence which I use to fill a reservoir which holds 12 million gallons of water. I have no rivers on the farm. In a normal summer, no water leaves my farm. My average annual rainfall is a shade over 18 inches. When I built that reservoir more than 40 years ago, it took just over three weeks to fill it in an area where, anywhere else in the world, the rainfall would make it semi-desert. This somewhat colours my views on the problems.
I am immensely grateful to my noble friend for introducing this report, and to the committee for all its work. It has highlighted issues, raising the scale of topicality and significance over the past few years. One difficulty which we must all face and deal with today is that there is and always will be a conflict between good water management and the environment. I seriously suggest that we also need to bear in mind that the United Kingdom environment in its widest sense is certainly not natural, and has not been for many centuries. It has been created by man, and we must recognise that. I am afraid that we must
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Of course, population growth does not affect only the south-east. When I was a boy the populationof this country was about 45 million and now it is60 million: 30 per cent higher. You cannot service people without producing the resources they require. That puts greater pressure on the natural environment, a risk we must face. To mention an unmentionable subject, the population issue is not just one of a United Kingdom context, but a global context. It will have to climb rapidly up the ladder of topicality. To go back to global warming, there will be no solution to that problem unless we manage to get our global population numbers under control. That has all sorts of political and religious connotations, which are not appropriate here. It is, however, appropriate to remind ourselves of that background.
The corollary of having no population policy is that we have an obligation to make the resources available if it can be done. It can be done. The difficulty we have had for a number of years is whether there is sufficient intention to overcome the difficulties I have outlined in this conflict between the environmental interest and the resource implications of growing population numbers.
I highlight that from a slightly different perspective, because it is not exclusively our problem. We have heard about the European water directive, and we have European conservation directives. To bring the water and global warming issues together, part of the global warming issues, from a UK perspective, could be solved by getting hold of much more green electricity. We could get a large chunk of that from the Severn estuary, which has such environmental protection from Brussels that it would very difficult to get a barrage across it. At some point, we and other countries will find ourselves asking the Brussels Commission whether its priority is to bring global warming under control or to “preserve the environment”—particularly knowing that if we unleash rising sea levels on these coastal areas, they, in turn, will destroy the existing environment as we know it. That is another dilemma we must face.
I found an issue in the report slightly odd. The Consumer Council for Water made a comment tothe effect that water customers were paying for the demand created by society. I found myself saying, “Hang on, what is the difference between water customers and society?”. We are society. I do not know anybody who does not use water, so I did not understand that rather strange comment. One cannot help but feel that that sort of attitude pressures people. I am not sure whether there is any evidence that society, as is apparently predicted, is concerned about the costs of water and prefers the low prices of today to the possible high cost of ensuring supplies for the future. Yet it is clear that there is a concern in the committee’s report that the water regulators have been driven by a priority for the current low prices at the expense of future water security. I was not sure
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The next question is whether we manage our water well. Reading the Government’s response to the report, as far as I can make out, all is for the best in the best of all possible worlds; it was very complacent indeed. It makes clear the depth, complexity and length of the consultation process required to do anything in water management. This must be tackled with great urgency. I am aware that the Government are looking at the planning process in other fields, but they must also consider it in this context. One must seriously ask whether a 20-year process to take you from the conception to the construction of a major water facility is reasonable. I cannot help wondering, slightly cynically, whether we shall have a 20-year consultation on how we must improve the planning system, because that is also highly controversial.
The answer to the question of whether we manage our water well in this country has to be, “No, we don’t”. We use only about 10 per cent of the precipitation that we receive. There are lands in other parts of the world that use a vastly higher percentage of their available water. Unlike everybody who wishes to knock Thames Water, I wish to pay it one important compliment. I acknowledge that it has all sorts of deficiencies, but it must have about the best water cleaning process in the world because the water we use in London is recycled five times between Teddington weir and Beckton. The reports on Essex and Australia mention the yuck factor, which means that when water is recycled, it is necessary to put it back in the river to make it acceptable to the people who consume it. I have not heard anybody in London complain about the yuck factor of drinking recycled water. I suspect that that may well be because the vast majority of people do not know it is being done, which is a serious compliment to the system that makes it possible. It also makes me wonder how many of the obstacles that we have to put in the way of progress through this immensely complex and sophisticated consultation process are, in effect, purely psychological barriers. I feel that the Government in particular and we politicians in general need to be much more robust about the need to promote essential infrastructure that will make life worth living for our successors.
I was delighted to get to the final pages of the report for one reason; it reported on a visit to my region. There is a ray of sunshine; some really serious work is being undertaken on river basin transfer. Essex is one of the driest counties in the country, if not the driest. We had no water shortage this year because 30 years ago a river basin transfer scheme was put in place. That facility can be made available everywhere, if need be. It is not a question of building a national water main or of transferring all the water for certain individuals to certain places, as the Minister once said, but of producing a system that can take care of the marginal deficiencies in particular areas. That is what we are talking about, and that can be done. The Government must look
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1.23 pm
Baroness Sharp of Guildford: My Lords, it was a privilege to serve on this committee under the noble Earl, Lord Selborne. I thank our Clerk and our special adviser for their excellent work. Those who served on this committee saw this report as a sequel to earlier reports that we produced on energy efficiency and renewable energy because the key issue in this report and the earlier reports was security of supply. As the noble Lord, Lord Mitchell, said, it seems madness that in a country renowned for its rainfall there should be any question about security of supply in relation to water. The report makes clear that, at the moment, there is no issue in relation to northern or western areas of the UK, but, as this summer has shown with its hosepipe pans and drought orders, there is a serious issue in the south and east of the country where water resources are already stretched to the limit.
We spell out the main co-ordinates of the problem in Chapter 4 of the report. Over the next 25 years, the population of England and Wales—not that of the United Kingdom as a whole—is expected to rise by7 million people, from 53 million to 60 million. Those people are expected to settle disproportionatelyin the south and east, where the jobs are. The average consumption of water in this country is already150 litres per day per person. Although the report states that there is some flexibility about the figure, it is nevertheless an average of 150 litres per day per person and rising. Today’s Guardian, which is celebrating the fact that the United States now has a population of over 300 million, notes that average water consumption in the United States is 350 litres per person per day, which is almost 2.5 times what we consume. As we get richer, we use more water: we take more baths; we wash more clothes more frequently; we spend more money on the plants in our gardens; and we want to water them more frequently. Also, as we get richer, we tend to break down into nuclear households. As Professor Adrian McDonald points out in his interesting appendix, although larger households proportionately do not increase their demand for water—obviously larger households demand more—the break-up of households into small units increases the demand for water.
If we look 25 years ahead, a population increaseof 7 million will mean that we will need an extra1,000 million litres of water per day. The tables on page 44 show that that is roughly the total consumption of the north-west of England: it means a whole new region. That population will disproportionately be settling in the south and east. The maps on pages 56 and 57 of the report make clear that in the south and east of England present levels of demand for surface water and ground water are unsustainable. We are abstracting more from the rivers and aquifers in the dry months than we are putting back in the rainy months. Climate change is not going to make this problem any easier because we
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If we think that we have got problems, other countries have problems too. On Tuesday, the Guardian published an article by George Monbiot, in which he states:
In India, for example, some 250 cubic kilometres (a cubic kilometre is a billion cubic metres or a trillion litres) are extracted for irrigation every year, of which about 150 are replaced by the rain. ‘Two hundred million people [are] facing a waterless future. The groundwater boom is turning to bust and, for some, the green revolution is over’.
In China, 100 million people live on crops grown with underground water that is not being refilled: water tables are falling fast all over the north China plain”.
Therefore, it is not just a problem that we face.
It is a problem that the Government have not made any easier for us, as the noble Earl, Lord Selborne, mentioned. It became very clear in our discussions that the Government embarked on their sustainable communities plan in 2003 and then took up Kate Barker’s suggestions for further housing increases in new housing development in the south east of some 200,000 units a year without due consultation with either the Environment Agency or the water companies. Although, as the noble Earl mentioned, things have improved and much more consultation is now going on, there is still a long way to go before we have the openness and the consultation that is really necessary. It seems from the Government's response mentioned by the noble Lord, Lord Dixon-Smith, that there is still far too much complacency.
Our report endorses the broad strategy that has emerged in both government and the Environment Agency and Ofwat, which is termed the twin-tack approach, although, as we point out, people have slightly different interpretations of what twin-track means. Essentially it means that we have to work on both supply and demand at the same time—at least we feel very strongly that it must be at the same time. On the supply side that means building new reservoirs or extending old ones, transferring waters from one river basin to another—the point raised by the noble Lord, Lord Dixon-Smith; and we were very impressed indeed by the work undertaken by Anglian Water in this respect—and tackling leakage. It possibly involves investment in the future desalination plants, although we were doubtful about whether that was really justified at the moment. Incidentally, we should bear in mind that the leakage from Thames Water—1,050 million litres per day—is just about what we need for that7 million rise in population.
All these issues, including leakage, require capital expenditure. One of the key issues that came out of our investigations was that in order to finance capital expenditure the water companies have to borrow, and if they are going to borrow they must have enough resources to pay for that borrowing. There was clear tension with Ofwat about whether it was being given enough leeway to raise the money it needed to raise the investment they needed. To some degree the
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I slightly share the view taken by the noble Lord, Lord Mitchell, that—as Mandy Rice-Davies put it—“They would say that, wouldn’t they?”. The Evening Standard noted when our report was published that the four water companies with the largest percentage of leakage—and that is over 25 per cent of their water supply—leaking from the system were also those with the largest profits. If you are a regulator there is a very nice question on how far you go in terms of allowing extra profits when you have a monopoly supplier; and domestic water supply is a monopoly at the moment. I think we were sometimes a little too kind to the water companies in our report.
Ofwat has a very real issue in balancing the two questions. We clearly need to make more investment. The companies must have enough money to make that investment. But how do you squeeze those companies to ensure that they are not putting that money into the pockets of their shareholders or into the pockets of their management? That is a nice question. It is not easy to answer, but I have some sympathy with Ofwat in terms of squeezing the companies.
It is encouraging that in their responses both Ofwat and the Government have accepted the points we made about the need to look to the future. I am extremely pleased about that. More generally, and this comes through our report, the whole governance and planning framework of the industry lacks coherence, is much too complicated and from the consumer’s point of view it needs to be simplified. I know that we are perhaps suggesting another layer of bureaucracy, but at least in a sense it links to the consumer more directly in terms of linking the area they live with the supply of water.
I will talk a little about the issues on the supply side. The key issue is metering. As the noble Earl mentioned, metering is not a panacea for everything. At the moment only 28 per cent of households in the country are metered. That is lower than elsewhere. Those who do not have meters are charged a lump sum every year. That lump sum is somewhat arbitrary because it is based on the old pre-1989—is it?—rateable values of those houses, which get increasingly out of line with the use of water that necessarily comes out of that. The more we can extend metering the better because people pay the price. If you pay a lump sum you say “I might as well use everything”, but if you pay a price then you look at what you are paying. It is important for us to try to push forward metering as far as we can.
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