PARLIAMENTARY DEBATE
Water Company Performance - 21 February 2023 (Commons/Commons Chamber)
Debate Detail
We have committed to deliver clean and plentiful water, as set out in the environmental improvement plan, and we have set out clearly how water companies must deliver that. First, our strategic policy statement to Ofwat, the water company regulator, sets out four clear priorities for water companies to protect and enhance the environment, deliver a resilient water sector, serve and protect consumers, and use markets to deliver for our customers.
Secondly, we have set new duties, through the Environment Act 2021, on water companies to monitor their overflows and set new legally binding targets to restore our precious water bodies to their natural state by cracking down on harmful pollution from sewers and abandoned mines, and improving water usage and households.
Thirdly, the storm overflow reduction plan, launched back in the summer, requires the largest investment programme in water company history and builds on the existing statutory duties. Water companies already have a statutory duty to provide a supply of wholesome water under the Water Industry Act 1991 and associated water quality regulations. They must ensure the continuation of their water distribution functions during an emergency.
I will begin by addressing my right hon. Friend’s concerns, because she has been in touch. I appreciate the lengths to which she has gone to hold her own water company to account, particularly over the supply interruptions experienced by Southern Water’s customers following multiple emergency incidents back in December 2022. A more recent incident last week led to approximately 15,000 Southern Water customers being off supply for an extended period, as she will know. Although some supply interruptions cannot be avoided, the repeated failure to properly ensure customers’ continued water supply is totally unacceptable. I will be meeting with Southern Water’s chief executive officer to understand how it plans to address its failings.
The Government and their regulators hold water companies to account in a number of ways, particularly through transparent reporting and performance. As the economic regulator for the water industry, Ofwat tracks performance against performance commitments, which are set at the start of the funding cycle.
The current performance commitments were set for the cycle from 2020 to 2024 and include pollution incidents, treatment works compliance and supply interruptions. Ofwat assesses performance against each of those metrics annually and ranks the companies in the water company performance report according to whether the metrics have been achieved. It reported that five water companies were extremely poor. The Secretary of State and I met them to hold them to account and to make it clear that we need further progress—
There is the ignominy of being in the Ofwat category of “lagging behind”, but that does not seem to have improved Southern Water or Thames Water, which have been in that category for two years running—shame does not appear to be effective. There are poor customer satisfaction ratings, but what do they change? There is a requirement to produce an action plan and targeted improvement plans, but by when, and what are the penalties for not delivering on them?
My constituents have gone without water to wash with, to drink, to cook with and to flush the loo with for days on end, with poor and in some instances misleading communications and without access to bottled water stations in my constituency. The only one was accessible on foot only, but water is really heavy to carry. They want significant fines for failure to supply, in the same way that there are significant fines for pollution. They want a requirement for emergency and back-up supplies to be available when parts of the network go down. Is it acceptable that if one part of the Otterbourne water supply works in the constituency of my hon. Friend the Member for Winchester (Steve Brine) is out of action, there is no provision to bypass the problem and continue supply?
Ofwat has said that it will push the “lagging behind” companies, but how hard, and what is the Department for Environment, Food and Rural Affairs doing to make sure that that happens? What is the penalty for not delivering on improvement plans? Last year, only 68% of the forecast improvement moneys were spent. At what point will DEFRA step in and recognise that the current situation is not working for the companies, the regulator or the poor customer?
We heard last week that there were plans to “water down” excessive fines, but a record £90 million was levied on Southern Water a few years ago, and that was not enough to convey the message. Rather than fines, can we therefore ensure that money is levied to force investment in the network, because current performance suggests that, so far, it simply has not worked?
My right hon. Friend raises some pertinent points about holding water companies to account. She knows that there is a system whereby water can be credited back to the billpayers, and I urge that that will be looked at and followed up. She also asked about the action plans for different companies. The Secretary of State and I had the five worst-performing water companies in before Christmas to talk about their failures, including leakages. We are taking swift action against them: they all have to produce an updated action plan to say what they are doing.
We have done a great deal to ensure that there is enforcement, which is critical, because everybody wants water companies to be held to account for what they do. The Environment Agency already has powers to issue unlimited fines through the criminal courts, but that can take a long time, as my right hon. Friend knows. It also needs data, but because of all the monitoring that the Government are doing, we are getting more of that, so we will be able to take more enforcement action. DEFRA is currently consulting on plans to raise the cap on fines and to make it quicker and easier to issue fines when we know things are not working correctly.
All the while, it is local people who are suffering—whether that is people being able to enjoy their local beauty spots and to take a walk down the river, or that is coastal businesses that are reliant on seasonal tourism to provide jobs and livelihoods to people. They are affected, not the Government, and what do we see? This year alone, when the Bank of England and the Government are telling hard-working people to rein it in and stop asking for pay rises, the water bosses are asking for 20% increases in salary. There is not a single thing the Government have said—in the environmental improvement plan or in anything said at the Dispatch Box—that sends out the message that things will be any different, and the water companies know that. They have already banked £66 billion in dividend payments and more will follow.
Labour does not want to sit on the sidelines and witness our country being turned into an open sewer. We set out at the Labour party conference in September a position that would clean up the water industry in this country, deliver value for money for consumers and bill payers, and finally work in the national interest, so when on earth will the Government get on and deliver Labour’s plan?
Do not forget that, since privatisation, the water companies have made a huge investment—billions of pounds of investment—in improving our water company infrastructure. Because of our new storm overflows discharge reduction plan, they are now committed to £56 billion of investment up to 2050, and £7.1 billion of that is already under way, including the Thames Tideway super sewer. A great deal of enforcement action is already taking place. Just in 2021, £121 million of fines were meted out to water companies. Because of the very detailed investigation now under way by Ofwat, the regulator, and the EA, we have more and more data and information to pinpoint where permits are being contravened and where water companies are not taking the actions they should be, and enforcement will follow. We are now consulting on a potential figure of £250 million to make sure we have a realistic and sensible fine that will really do the job in holding our water companies to account.
“Yes…but many tweaks and improvements”
are needed
“to ensure that it is working properly.”—[Official Report, 12 January 2023; Vol. 725, c. 702.]
Let me give her another opportunity to answer the question. Does she really think that the current system of regulation for the water industry is fit for purpose?
“we wanted to provide you with the most recent information so that you are able to have an informed debate”.
Does the Minister agree that what should inform our debate is the experience of our constituents, who are seeing their bills rise and sewage flood our waterways, and does she agree that water companies should be focusing on delivering a quality service to bill payers rather than quality lobbying of politicians?
Given the increased pressure on the water system as a result of the increase in the number of power showers and spa-type waterfall showers—as well as the increase in the number of homes, which I consider to be another critical factor in what is happening—it is clear that our current infrastructure is not up to scratch. How will the Minister ensure that we do not sacrifice the balance between quality, as developers who are under financial pressure owing to the cost of living are looking for cheaper options, and the bare minimum where permissible?
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