PARLIAMENTARY DEBATE
Water Supply Disruption - 6 March 2018 (Commons/Commons Chamber)

We now turn to the statement—what might be described as “Coffey on water”—from the Parliamentary Under-Secretary of State for the Environment, Dr Thérèse Coffey.

Thank you, Mr Speaker. I promise my response will not be diluted.

I would like to take this opportunity to update the House on the water supply situation following the severe weather experienced last week. The exceptionally cold spell and the rapid thaw that followed has caused widespread water supply issues in the country. Over the weekend, and at the start of this week, tens of thousands of people across southern England have experienced loss of water supply in their homes, and even more have had to cope with low water pressure following leaks from burst pipes. I entirely recognise that it has been a stressful and difficult time for many residents and businesses.

The immediate priority is to get water back up and running for those who have been affected, particularly vulnerable people, businesses, hospitals and care homes. Water companies have been following standard practice, including isolating bursts and redirecting water to mitigate the problem. Bottled water has been provided in the areas most badly affected, and water has been provided by tanker to keep hospitals open.

This morning I chaired a meeting with water company chief executives, Ofwat and Water UK to make sure that water companies in England are working to restore supplies as quickly as possible and that water companies in other parts of the country are preparing for the thaw as it spreads across the country. That will include learning any lessons from places that have already experienced thawing through higher temperatures. The challenge the sector faces is the sheer number of bursts following the rapid change in weather across multiple companies’ networks.  Many of them have been relatively small and difficult to detect, and some of the loss of pressure is due to leaks in private homes and businesses.

As of 10.30 am today, based on the information provided by the chief executives on the phone call, we are aware of 5,000 properties still affected in Streatham. The principal source of the problem is airlocks in the water network, which Thames Water is acting to remove, and we expect that to be completed today. Southern Water reconnected supply to more than 10,000 properties overnight, and 867 properties in Hastings are still experiencing problems. We expect everyone there to be reconnected by this afternoon. South East Water has identified approximately 2,000 properties spread across Kent and Sussex that are still without supply, and we expect that they will be reconnected today. South West Water has approximately 1,500 properties affected, but that is changing on a rolling basis as the thaw progresses west. Yorkshire Water has identified 13 affected properties.

Some water companies have identified higher demand than usual on service reservoirs, which indicates that there are burst pipes that need to be dealt with. I want to encourage householders and businesses to report leaks and burst pipes, including those on their property, not just those on public highways.

Water companies have been working hard to address the issues for customers, though I recognise the frustration that many have had in contacting their water companies. I have been assured that companies have increased their staff on the ground who are out identifying where bursts have occurred and repairing them, as well as moving water across their networks to balance supply across the areas they serve. We should recognise the efforts of the hard-working engineers and all involved in working through the night to fix these problems.

Once the situation is restored to normal, we expect Ofwat to formally review the performance of the companies during this period. That will be a thorough review. As well as problems being identified, I want to see excellent examples of practice and preparation shared across the sector. The Government will consider any recommendations from the review and act decisively to address any short- comings exposed. As part of that review, Ofwat will decide whether statutory compensation should be paid. Of course, water companies will want to consider how they compensate customers on a discretionary basis, and I discussed that with the chief executives this morning.

This Government actively support a properly regulated water sector. We have high expectations of water companies increasing their investment in their water and sewerage networks. That was laid out clearly in the strategic policy statement issued to Ofwat last September and reinforced by my right hon. Friend the Environment Secretary when he addressed the water industry last week and said that he expects the industry to increase investment and improve services by maintaining a resilient network, fixing leaks promptly where they occur and preparing for severe weather.

As my right hon. Friend has said, we want a water industry that works for everyone, is fit for the future, improves performance and makes sure that bill payers are getting the best possible value for money. Ofwat will be given any powers it needs, and we will back it in action that it needs to take to ensure that water companies up their game.

I am grateful to the Minister for that statement.

While last week’s freezing temperatures presented serious challenges all over the country, the failure of water companies to supply water to customers as the weather has improved has now descended into chaos. The aftermath of the “beast from the east” and Storm Emma meant that yesterday, 5,000 homes were without water in Kent, with thousands of properties across Wales, parts of the midlands and Scotland also affected by intermittent water supply.

In London, Thames Water battled to re-establish supply to around 12,000 homes and several schools. Two of the country’s flagship businesses, Jaguar Land Rover and Cadbury, were among several forced to cease production at the request of Severn Trent Water, as it sought to prioritise household supplies. Even today, as we heard from the Minister, South East Water says that around 12,000 of its customers still have no supply, and companies continue to struggle to reconnect homes and businesses across London, Kent, Sussex and Wales, leaving some homes without water for up to three days.

While we all accept that last week’s weather conditions were incredibly challenging, the reality in London is that although freezing temperatures persisted over several days, temperatures did fluctuate and only fell as low as minus 6°C on one occasion overnight. Where is the resilience in the system, and why have we seen such systemic failure?

The Secretary of State for the Environment, Food and Rural Affairs made a speech just last week outlining that in many areas, water companies were failing to deliver. Six companies missed their leakage targets for 2016-17, with Thames Water’s performance data showing that 677 million litres are being lost to leakages every single day. To put that in context, the entire city of Cape Town uses 631 million litres a day.

Despite those failings on leakage, water bills have increased by more than 40% since privatisation, with many consumers set to see another rise in a few weeks’ time. Further to that, analysis by the House of Commons Library shows that executives at the top nine water and sewerage companies operating in England earned a combined total of nearly £23 million in 2017. The highest paid executive, the CEO of Severn Trent—the same water company that yesterday asked Cadbury and Jaguar Land Rover to cease production—took home a total of £2.45 million last year, or 16 times the Prime Minister’s salary. That is on top of the billions paid to shareholders—the owners of those same nine water companies paid out £18.1 billion in dividends in the 10 years to 2016. In addition, six water companies have offshore finance structures registered in the Cayman Islands.

We have had tough words from both the Secretary of State and Ofwat, but where is the governance, and where is the action? In his recent speech, the Secretary of State said:

“Some companies have been playing the system for the benefit of wealthy managers and owners”

and stressed that he would give Ofwat “whatever powers are necessary” to get all the water companies to “up their game”. Rachel Fletcher, Ofwat’s chief executive, has been tough on water companies in the past 72 hours, saying that

“we won’t hesitate to intervene if we find that companies have not had the right structures and mechanisms in place to be resilient enough.”

However, just last month, Fletcher confirmed to the BBC that a dividend cap was not in Ofwat’s current thinking, nor was direct action on executive pay or tax structures. Instead, she said, Ofwat would require water companies to provide more public information on each of the areas of concern. If the Secretary of State’s plan is to empower Ofwat to intervene, I am afraid that based on what we have seen, there is no appetite in Ofwat to do so.

That regulatory failure on this Government’s watch has contributed to a situation where executive pay is out of control, and the failure to invest in resilience has left households and businesses picking up the cost. With that in mind, I would be grateful if the Minister could answer this question: if Ofwat lacks either the appetite or the powers to tackle—pay and rebalance profits so that less is pocketed by executives and more is invested in improving the service and resilience, what action will the Government take to make that happen? Will the Government respond to calls for a public inquiry into the handling of the crisis, and can the Minister outline whether that will involve the role of Ofwat leading up to where we are today?

Finally, can the Minister outline what compensation packages will be made available to customers, some of whom have had to seek temporary alternative accommodation or pay for childcare because schools have been closed? How will businesses that have lost a day’s trade be both compensated and reassured that this will not happen again?

The hon. Lady asked a number of questions, mostly about company structures, but she will understand that we have been focused on customer experiences in the past 48 hours in particular. That said, my right hon. Friend the Environment Secretary read the riot act to the water industry last week.

We recognise that over £140 billion has been invested in infrastructure since privatisation, but we still believe that more needs to be done. The hon. Lady will also recognise that, on average, water bills have fallen in real terms in the past five years—over the price review period. It is important that we get an appropriate balance between investment, recognising that people expect to be able to turn on the tap and get water—I fully accept that many households in London are still not receiving water—and customer bills. It is important to have a regulated water industry to achieve such a balance.

I think Jonson Cox has been an active chairman of Ofwat in challenging the water companies. In particular, he has taken on Thames Water about its financing arrangements. Again, the Department and Ministers have made it clear to the water companies that we expect them to accelerate the changes to their financial structures. I recognise that those structures were put in place some time ago, but we have said that we expect them to change more rapidly than some of their current plans suggest.

Overall, we need to recognise that the review—I have asked Ofwat to report back to me by the end of the month—may be only an interim one, with the initial lessons about what has happened. In the short term, however, I am conscious that we must continue to put pressure on Thames Water in particular to make sure that it reconnects households as quickly as possible.

The Environment Secretary highlighted to the industry last week that, on a normal day, 3 billion litres of water is lost to leaks. What can be done to ensure better regulation, particularly in tackling such a huge yearly water loss?

My hon. Friend is right to talk about leaks; the hon. Member for Halifax (Holly Lynch) did so, too. We know that, as has been pointed out, companies are missing their leakage target. That is why we have tasked the companies to come up with plans for how they will put more investment into their infrastructure, including the sewerage network.

I thank the Minister for her statement. First, I pay tribute to all those who have worked on behalf of local authorities and other services over the past week—and even more so now —to deal with the unprecedented weather difficulties in Scotland and much of England. In Scotland, we had a red alert for snow for the first time since the current alert system was devised.

While there are still water supply difficulties in Scotland, there does not seem to have been the degree of systemic failure that we have seen in many authorities in England and Wales. Right here in London—one of the world’s greatest cities; many would argue that it is the world’s greatest city—in the 21st century, it is beyond the wit of the Government and the water authorities to provide one of the most basic essentials of human existence to tens of thousands of citizens.

I hope that the Minister will respond positively to demands for a public inquiry to find out what went wrong. It might also find out what lessons can be learned from the water service in Scotland, which has faced the same weather difficulties. There have been supply interruptions, but nothing on the scale or to the extent of what we have seen elsewhere.

When I checked the Scottish Water site immediately before the Minister stood up, the areas still affected were parts of EH10 in Edinburgh, as well as Dalwhinnie, South Ronaldsay, Burray and Lybster. If Members check those places on a map, they will see that all four of them have very substantial remoteness issues, so we would expect it to take longer to fix any problems there.

As the hon. Member for Halifax (Holly Lynch) pointed out from the Opposition Front Bench, there are problems in England with poor customer service in an industry that has paid out £18 billion to shareholders and pays out between £2.5 million and £3 million each to some chief executives. Customers in parts of England are paying £150 a year more for their water than those in Scotland, and the service is not being provided to them. The reason for that may be that the service in England is profit-driven and shareholder-driven, whereas in Scotland—thanks to the foresight of successive Governments of all parties in the Scottish Parliament—we have retained a Scottish water supply under public ownership and public control.

Will the Minister undertake, in the public inquiry that she must surely now accept, that nothing will be off the table, and that part of the remit will be to examine whether the ownership model that applies in Scotland would be beneficial to customers in the rest of the United Kingdom?

We have a well-established pattern of water provision in England. The hon. Gentleman will be aware that I am not responsible for Scotland. I do not know how much has been invested in the Scottish water industry in a comparable timeframe, but I would point to the fact that the £140 billion figure is considerably higher than the amount invested prior to privatisation. There is no doubt that there have been a lot of benefits not only in service to customers, but—dare I say it?—to the environment. We will not allow that progress to stall. On other matters, I stress that I do not pretend to be a water engineer; it is the job of Ofwat, working with my officials, to come back to me on them.

I understand that Mr Jonson Cox, the chairman of Ofwat, is a constituent of yours, Mr Speaker. You will know, I am sure, that he is a fine fellow, and he will not be taking any rubbish. I am sure he has taken some lessons from you.

That is very gracious of the Minister. Jonson Cox is in fact an estimable fellow. I have met him on many occasions, including at the Great Brickhill cricket club. I hope he recalls that, because I certainly do.

We have too much water in the lower Avon. When is the Minister coming to have a look?

As I said to my right hon. Friend at the last Environment, Food and Rural Affairs questions, I am sure I will find time to visit his wonderful constituency in due course, but he will recognise that my priorities at the moment are the people who do not have enough water.

Speaking of which, I call Helen Hayes.

In my constituency, we have had a Thames Water leak or burst every single week of the winter. The pipe network is crumbling and causes constant problems, but it is not a surprise. The unforgivable thing about this week’s water supply problems has been the total lack of a robust emergency plan for a situation that anyone could have predicted would occur sooner or later.

Thames Water customers, faced with no water supply, have been unable to contact the company by phone or via the website, and have not had access to up-to-date detailed information, while the distribution of emergency supplies has been delayed, patchy and chaotic. There has been no plan for getting water to customers not already registered as vulnerable, but who are nevertheless unable to carry bottles of water long distances.

Thames Water made pre-tax profits of £638 million last year. There is simply no excuse for not having robust emergency plans in place. The failings this week have been appalling, and they have exposed an organisation that is not fit for purpose. Will the Minister now commit to ensuring automatic compensation for all Thames Water customers who have been without water this week, and to reforming our water industry to ensure its resilience for future emergencies?

I fully understand why the hon. Lady is so angry on behalf of her constituents. It is right that Thames Water is very much under the spotlight, and I am angry with it, too. This is a recurring pattern, but we should recognise that there has been a change of ownership and a change of leadership. I am absolutely determined that Thames Water customers should receive a far better service than they are now receiving.

It is not in my power to compel the water companies to give compensation. However, I can tell the hon. Lady that Thames Water is proactively going around to her constituents door to door in the 5,000 properties affected. It has been working through the problems with the airlocks. [Interruption.] I am just flagging up to the hon. Lady the information that I have received. I know that there was a particular problem with one of its service reservoirs, which it has now fixed, but that has caused further problems along the way.

I will of course make sure that we keep pressing Thames Water because, frankly, it has not delivered what it should be doing. I expect a full review from Ofwat that will particularly focus on its performance.

Will the Minister confirm that record amounts are being invested in our water supply system? It is far more than was ever invested when the industry was state-owned, and our water supply is actually among the best and cleanest in the world. Having said that, in this case—given that the weather was well predicted—the water supply companies have been caught on the hop, and automatic compensation ought to be paid. Does she agree that Ofwat, the water industry regulator, really needs to set a new leakage target? If, on a normal day, we are losing a fifth of the water in the system, most of my constituents in Kettering would say that that is far too much.

It is important that we also recognise those companies and parts of the country that have had no interruption of supply to customers. I thank companies such as Anglian Water, Essex and Suffolk, Wessex—I could go on. Yorkshire Water, for example, has seen an increase in demand and is proactively trying to identify where the leaks are before they become a problem for its customers. I want to zone in on the companies that are failing to help their customers and, meanwhile, I want to learn from the companies that are doing their best to protect customers.

Water engineers and others providing emergency support to customers around the country deserve our thanks and praise today, but there is no excuse for water companies that make huge profits being unable to provide the resilience that would have protected businesses and residents. While I am grateful for the Minister’s announcement of an Ofwat review, we do not need that to tell us that the water companies are held to half the standard on resilience and capacity that the Environment Agency is. Will she act and ensure that the water companies have to meet the once-in-100-years event criterion that the Environment Agency is held to?

The hon. Gentleman is confusing two levels of protection standards. I am more than happy to write to him with the full details but, in essence, when we did the national resilience review of critical national infrastructure, water companies were expected to be held to a higher standard. I think that he is referring to other parts of the water infrastructure network that do not have the same comparison to the Environment Agency.

I have come here straight from Henry Cavendish Primary School in St Leonard’s ward in Streatham, which you used to represent, Mr Speaker. It is closed today because of the water issues. Not only has that caused huge practical inconvenience to the school, but parents have not been able to find childcare in such a short timeframe, and are losing at least a day’s wages—the school was also shut yesterday.

Under the water industry guaranteed standards scheme, most of my constituents will get compensation of only £20 if they have been without water for 48 hours. They will get a further £10 per 24 hours after that point. Frankly, that is an insult. Does the Minister agree that proper compensation should be given to my constituents, and that £20 is derisory?

The hon. Gentleman will recognise that those are the minimum requirements, and I made that clear in my phone call to the chief executive today. The areas where people have been particularly affected include the hon. Gentleman’s constituents, and I believe that the issue is now isolated to SW16 and SW17. I expect Thames Water to go far beyond that figure to make sure that it redresses the balance.

The town of Blaenau Ffestiniog lost its water supply on Friday, and many people had to cope for three days or more without mains water, with some of them boiling snow. Will the Minister join me in commending the community of Ffestiniog, which has helped out neighbours and family, and the water company workforce who have worked day and night in horrendous conditions to restore supplies? Will she also join me in commending Dŵr Cymru’s not-for-profit business model, which directs all profits to supporting the vulnerable and a rolling investment in infrastructure?

The hon. Lady will recognise that I do not regulate the water companies in Wales, but I pay tribute to the community coming together to look after each other. That is something that we have seen across the country—people helping their neighbours. It is worth pointing out that each company has a vulnerable user register. At the moment, people are required to register for that, but there are other ways in which people can be proactively highlighted as potentially needing support. Thanks to the Digital Economy Act 2017, we have data sharing provisions and, when the secondary legislation comes forward in the near future, water companies will have the capacity to proactively identify vulnerable people so that they do not need to ask for help, but get that automatically.

The dreadful and unacceptable situation faced by thousands of water consumers needs urgent action and certainly would not be addressed by blunt tools such as nationalisation. Rather it begs questions about whether Ofwat has the powers and duties required to regulate the industry effectively and in the public interest. Will the Minister therefore commit the Government to the reform of Ofwat to ensure that it is fit for purpose?

The hon. Lady will recognise the proactivity of her water company as it affects her constituents. By and large, Ofwat is doing a good job. My right hon. Friend the Secretary of State has asked Jonson Cox and Rachel Fletcher, who is the new chief executive, what powers they need to further improve the performance of water companies and to help consumers and businesses. We are prepared to give them those powers and back the actions they take to make sure that the water industry is fit for purpose.

The reality for many thousands of people, including hundreds in my constituency in Arnold, Nottingham, was 24 hours without water and, in some circumstances, no access to bottled water. In particular, people had concerns about vulnerable customers. Can the Minister assure us that companies such as Severn Trent will now review their emergency plans so that such things cannot happen again? It is simply unacceptable that we cannot even get bottled water to everyone who needs it.

I would be happy to hear a bit more detail from the hon. Gentleman on his local situation. I know that Severn Trent has been working throughout the night over the past few days to fix the issues. Part of the review will look into that, and I have already outlined how we want to do more to help our vulnerable customers.

Social media can be a useful way to communicate, but I recognise that it is not the only way. Part of Ofwat’s review will look at communications, and that might be a role for Ofwat or other media sources, such as broadcast. We recently introduced the 105 number for electricity disruptions, and I have asked officials and Water UK whether we could perhaps do the same for water disruptions so that reporting leaks or getting help are less complicated. We need to make sure that help comes more quickly than perhaps the hon. Lady’s residents have experienced in the last few days.

The N8 and N4 areas have also been badly affected. Not a week goes by without a large flood and now we do not have enough water. Will the Minister please make representations to Thames Water? The regulator is toothless: £20 compensation will not cut it for most of my constituents, many of whom have had to miss work, incur extra childcare costs and so on.

The hon. Lady describes difficult issues that are affecting her constituents as well as other parts of the country. That is why I have made the point to the water companies that they have the opportunity to offer discretionary compensation. I would welcome their doing that, especially in areas where the issue has been prolonged, in recognition of the frustrations in daily life that are caused by the lack of this basic service.

Lest anyone think these major bursts and leaks are solely the product of the recent snow and ice, let me say that in the last week of January, two major mains burst in Hammersmith, flooding residential and business premises, cutting off thousands of people in west London and closing two major east-west routes—King Street and Goldhawk Road. The latter is still closed almost six weeks later. The problem is that private monopoly utilities such as Thames have neither the carrot nor the stick so that they undertake the necessary repair and replacement of their pipework. My constituents want the Government to force them to do that, but I have heard nothing about it. Is not the Minister just washing her hands?

I recognise the description of the issue on Goldhawk Road. It is perhaps worth explaining that the problems being experienced at the moment are quite different from a mains burst. This is what is happening when pipes are dotted all around, whether in people’s properties or on the highway, so it is a different experience from the picture that the hon. Gentleman paints on behalf of his constituents in Goldhawk Road. Investment has been increasing, but the Government are not satisfied. That is why Ofwat has set a stringent price review, and we look forward to making sure that the plans on which water companies will shortly consult will lead to a significant increase in investment to tackle some of the challenges that have been outlined today.