Benyon reiterates £250m fine threat

A Defra minister has reiterated the threat of £250 million fines for water companies found to have polluted the environment, first posed by the Truss government.

There had been speculation over whether the policy remained a priority, following the resignation of Ranil Jayawardena, who announced it at the Conservative Party Conference during his short tenure as environment secretary. A consultation was promised but has yet to be set.

However, despite U-turns on many commitments made by the previous administration, minister of state Lord Benyon made clear in the House of Lords on Thursday (3 November) that this government supports the 1,000-fold increase in the maximum civil sanction the Environment Agency can levy.

The Department of Environment, Food and Rural Affairs minister raised the threat of penalties in response to a question about the appropriate level of fines for “asset-rich” companies.

Benyon retorted: “We have increased a thousandfold, from £250,000 to £250 million, the upper limit on which water companies can be fined.”

Questions from peers piled pressure on government to take firmer action against companies and regulators that fail to meet performance commitments.

Baroness Hayman asked Benyon whether current sanctions that see failing companies repaying customers a proportion on their bills in future years were enough to bring about improvements and whether the suggestion by the newly appointed Ofwat chair Iain Coucher to debar directors of egregious water companies was something he supported.

She said: “The problem is these performance commitments do not set the bar particularly high, which makes it worrying that so many companies are falling short”.

Benyon said Defra would work with Ofwat to find areas to improve the sanctions system and stressed that other enforcement options were also available but did not comment on debarring.

Baroness Bakewell echoed that many billpayers would prefer to see clean waterways than “receive a small monetary handout” from a water company that does not meet its targets.

To a question on action against industrial farming practices that damage waterways, Benyon replied: “We have to recognise there is a planning issues, alongside the way in which we support and incentivise farmers, and the way in which we enforce these issues”. However he offered no specific actions being taken other than alluding to “controls and sanctions” in the Environment Act.

“There is a plan, and that we are determined to end the shameful situation of illegal outflows into rivers, whether it is from sewage or from illegal pollution coming from farmland,” Benyon said.

The final question came from Green peer, Baroness Jones, who sits on the All Party Parliamentary Group (APPG) on water, who said: “Those of us who watch this situation closely do not actually think that Ofwat is doing a very good job. A case in point is that it fined Thames Water £50 million, which was great – bit Thames Water is now giving each of its customers £3.40 as a sort of recompense. Does that sound reasonable or fair?”

Benyon said the system of returning money to customers is “absolutely at the heart of the kind of incentives we want to see” but did not comment on the reasonableness or fairness.

The 11 oral questions follow an inquiry by the Industry and Regulators Committee into the work of Ofwat, which last week saw chief executive David Black and new chair Iain Coucher answering questions on the organisation’s work.