Baroness Hayman of Ullock (Lab)
My Lords, recent events in the Brixham area have once again highlighted the sorry state of the water sector, yet just this week water companies in England and Wales have asked the regulator for permission to increase bills by up to 91%. They say that this is necessary to improve the water network, something that Professor Chris Whitty says is a public health priority as well as an environmental one. This pressing need has not prevented United Utilities increasing its dividend payments by nearly 10% while at the same time polluting Lake Windermere. Other firms are increasing payouts to investors despite their poor performance. Is it not time for the Government to call time on the current system by putting water companies into special measures and ensuring that law-breaking bosses face criminal charges rather than receiving bumper pay packets?
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Douglas-Miller) (Con)
I thank the noble Baroness for her question. We have debated a number of times the issue of special measures, and I think I have been clear in the House every time I have stood at the Dispatch Box that the Government will use special measures when the criteria for them are met. I accept that that is quite a high bar, but there are a number of other options for all those water companies that they should fully explore before the Government will consider putting them into special measures.
Baroness Bakewell of Hardington Mandeville (LD)
My Lords, the first television news on the Brixham infection indicated that contamination was contained to those already infected. The next day’s bulletin retracted that statement, telling viewers that the area of contamination had widened. Bottled water was available to some, but not all, living in that area. As the source was known to be a reservoir contaminated by animal faeces, why was action not taken sooner to alert people to the dangers of drinking their tap water and to provide everyone with bottled water?
Lord Douglas-Miller (Con)
I am always nervous of taking as fact what I read in the papers or listen to on the news. I have spent the morning speaking to the chief inspector of the Drinking Water Inspectorate and he is not able to tell me what the noble Baroness has told me. I am just guessing that he might have slightly better access to that information. It is dangerous to say with that level of assertion that that is what has happened, because it is not what I am hearing. It is a live investigation and I cannot go into the details of what I have been told. I can say that South West Water has been handing out bottled water and in many cases over the last week it has been prioritising priority service customers and vulnerable sites. It has opened three bottled water stations, at Broadsands car park, Freshwater Quarry car park and Churston car boot field. It is supporting both vulnerable areas and local residents with bottled water.
Lord Deben (Con)
My Lords, I remind the House of my previous interests—no longer—as chairman of a small water company; therefore, I know a bit about it. I hope that my noble friend will insist that the water companies behave properly, of course, but will he please remind the Opposition that when it was run by the state and municipalities, we had no investment at all? That was why it was privatised, and not for any other reason. In the years after privatisation, a great deal of investment has taken place. The problem was that both Governments—Tory and Labour—told the control, which started off with Mr Byatt, that he was to keep prices down instead of allowing the kind of investment that we need. You do not get water free, and we have to have proper investment.
Lord Douglas-Miller (Con)
My noble friend must have the same pack as I have in front of me because he has virtually said word for word what is in mine. We have discussed the issue of privatisation many times both in this House and in other debates and that is not a route that this Government are going to go down. I completely concur with what my noble friend has said.
Lord Boateng (Lab)
My Lords, in Scotland, real bills are still the same as they were 17 years ago, while English bills have increased by over 16% in real terms over the same period. The publicly owned Scottish Water invests over one-third more per capita in its water industry and supplies than any private English company. That is £282 per household over the last 17 years compared to only £210 per household in England. Does not one conclude from that that publicly owned companies are doing better than privately owned ones? If that is not the Minister’s conclusion, how does he explain the differential?
Lord Douglas-Miller (Con)
The noble Lord has some very impressive statistics on Scottish Water. I happen to be the beneficiary of Scottish Water because I live up there. It is not quite as rosy as he tells us, because one area on which we have made great progress in England has been storm overflows and monitoring and understanding exactly what is going into our river systems. If the noble Lord was to look at that area in Scotland, he would find it very deficient.
Baroness McIntosh of Pickering (Con)
My Lords, does my noble friend agree that the water companies play an important role as owners of agricultural land? It is extremely important that we get to the bottom of what caused this incident to ensure that tenant farmers know exactly what their position is concerning South West Water and the Brixham contamination, as well as other landowners.
Lord Douglas-Miller (Con)
I completely concur with my noble friend that it is critical that we get to the bottom of what has happened to have generated this outbreak of cryptosporidium. It is currently far too early to know the exact cause of the outbreak. South West Water is continuing its investigations to confirm the source of the contamination. The Drinking Water Inspectorate has initiated its investigation into the cause, extent and actions of the company and begun collecting evidence on site. I should point out that it is the Drinking Water Inspectorate which is taking the lead on this investigation.
Lord Whitty (Lab)
My Lords, is not this instance a failure of the central role of the water companies to deliver clean and healthy water to every household? In the days before privatisation, we used to pride ourselves on our water and decry foreign water. Whether that was true or not, this is a central failure of regulation. There are three regulators of the water industry. We need to have a new start on regulation of water, with a single regulator for it, if we are not to have renationalisation. On the point of renationalisation, I know that my Front Bench, as well as the Government, are not in favour of it, but I note that the largest shareholder in Thames Water wrote down its shareholding to nil. If the rest of the shareholders, which are very guilty in this, did the same then the cost of nationalisation would be pretty small.
Lord Douglas-Miller (Con)
The noble Lord is quite right that the Canadian pension fund’s owners wrote down the value of its shareholding in Thames Water to zero, but that of course does not mean that it is zero. I am not sure that would help him in terms of its privatisation.
Lord Redesdale (LD)
My Lords, there is quite justifiable anger at the way that some companies, including Macquarie, have dealt with taking money away from water companies. The problem highlighted in the south-west is that there is an enormous amount of anger in the country towards water companies. However, this has led to an increase in the amount of abuse and actual physical assault that workers in the water companies are facing at the moment, as has been highlighted by some of the work of the GMB. Could the Minister make sure that, when MPs or others discuss this issue, they should commend the work of those people on the ground rather than the higher issues that are causing problems?
Lord Douglas-Miller (Con)
I completely concur with those statements, because it is absolutely unacceptable that those who are sent out to sort a problem end up being abused and given a tough time for something which cannot conceivably be their fault. I totally accept that and will ensure that we take that message back.