Flood and Water Management

I am delighted to speak in the debate, and congratulate the hon. Member for Thirsk and Malton (Miss McIntosh) on initiating it. She chairs the Select Committee with great aplomb, and I know that the matter is exceptionally dear to her heart. I was surprised only that she curtailed her remarks as she did. I expected at least an hour from her. I look forward most of all in the debate to hearing from the Minister about the progress that has been made since the Government responded to the Committee earlier in the year. The Committee's report was published last year following a series of welcome and ambitious commitments from the Government: safeguarding clean, reliable and affordable water supplies; protecting households and property from the risk of flooding; and reforming the water industry and making it more resilient, efficient, sustainable, innovative and affordable. The report provided the Government with a comprehensive and holistic approach to delivering on those commitments. Of course we should, in this debate, be assessing the progress that has been made. Instead, I am afraid we must reflect on a number of broken promises and missed opportunities. A water White Paper was promised for June. In April the Minister revised that commitment and promised that it would be published in the autumn. Unfortunately, the latest business plan of the Department for Environment, Food and Rural Affairs now promises publication in December, nine months after the Committee's report, and we are still no clearer on how the Government plans will encourage the retrofitting of sustainable drainage systems, how they will ensure that customers' views will be taken into account during the price review process, and how investment in the water industry will be better managed to avoid the boom and bust cycle that so badly harms the supply chain. There is also uncertainty about the future of metering and water efficiency in households, social tariffs to reduce the impact of rising bills on low-income customers and the future of competition in the water industry. Publication in December would leave only four months for the Government to meet their commitment to introduce any new legislation required as a result of the White Paper by next April. I hope that the Government's ambition will not be scaled back in the fight against a tight time scale. Since our report, the Government have also severely cut capital funding for flood defences. When we consider that we need to increase investment simply to maintain the current level of protection, that is cause for considerable concern. As the Committee pointed out:"““To cut back significantly on flood defence infrastructure spending could be a classic example of short-term savings leading to much greater long-term costs.””" The Government have also failed to provide any assurance on the provision of flood insurance beyond 2013. The natural environment White Paper, which was excellent in many ways—we adverted to some of it earlier in the debate—also missed a valuable opportunity to set out how, for example, agriculture and land management could play a stronger role in reducing flood risk and improving water quality. I hope that the Minister will take the opportunity to update us on each of those issues, so that we may leave this afternoon's debate with a much clearer idea of Government policy on the future of flood and water management. I shall try to deal with each of those issues. I also want to discuss some of the priorities for the forthcoming White Paper. Ever since privatisation, capital expenditure in the water industry has been concentrated towards the middle of the five-year funding cycle. That has led to financial and managerial inefficiencies in addition to instability in the supply chain, ultimately resulting in higher costs for consumers. It also leads to the migration of skilled resources out of the sector to more stable industries. That has created a severe and worsening skills shortage in the water industry. The White Paper must help to bring to an end the effect of that five-year asset management planning cycle. It should also explore the link between the price review and innovation. In the current investment period, companies are looking for tried and tested technologies with payback within three years. Some water companies have disbanded their research and development departments as they are not currently funded by the price review. R and D is now conducted on an ad hoc basis rather than in a co-ordinated way. The water sector faces a period of huge challenge in coping with the implications of climate change, and in reducing its own carbon emissions. It can ill afford to be locked into a short-term investment cycle that stifles and inhibits innovation. The White Paper must set out how the Government will restructure the water industry properly to incentivise and encourage companies to invest in innovation, particularly in treatment processing, energy efficiency, leakage prevention, and water efficiency. Competition can help to stimulate that innovation. Competition in the water industry is not an end in itself, but it is a means of improving services for customers, particularly the most vulnerable, and improving environmental outcomes. In the White Paper, the Government gave a commitment to respond to the Cave review, and I would welcome an update from the Minister on how the White Paper will ensure that greater competition will meet those challenges. It would be helpful if the Minister clarified whether the Government's one-in, one-out rule, which prevents a regulation from being introduced unless another is scrapped, will apply to any legislation proposed in the White Paper. If so, perhaps he will share the Department's thinking on which regulations might be scrapped in the event of any legislation coming forward in April 2012. We talked much about sustainable drainage systems in another area on which the Government gave a commitment in the White Paper. When sustainable drainage systems are successfully implemented, they can make a significant contribution to reducing the risk of flooding by increasing the capacity of land to absorb water. They can also reduce the risk of water contamination, and increase the sustainability of water use. The provision of SUDS for new developments and, where possible, for existing developments is widely supported throughout the House. However, evidence to the inquiry revealed widespread concern among local authorities about their ability to fund the adoption and maintenance of SUDS. The Government's response to the Committee stated that DEFRA would fund local authorities for the costs of maintaining adopted SUDS and SUDS maintenance in the ““short term.”” Will the Minister say how long he expects that ““short term”” to be? That is important for local authorities. In November, the Prime Minister said that flood defence spending would be protected, and would be ““roughly the same”” as under Labour. In fact, capital funding for flood defences to protect homes has fallen from a baseline figure last year of £354 million to £259 million. We now know the meaning of the phrase, ““roughly the same””. It means give or take 30% according to my mathematics. In fact, it is a 27% cash cut to the budget, and a 32% real-terms cut when inflation is taken into account.