Water Supply Disruption

Debate between Lord Gardiner of Kimble and Baroness Pinnock

Tuesday 6th March 2018 Lords Chamber

[Lord Gardiner of Kimble]

My Lords, again, so many of the noble Lord’s comments are in line with what I said and what the Secretary of State was very clear about last week. Some water authorities are, in my candid view, better than others. I have a list of some of the many projects that certain water companies are undertaking, whether investment or dramatically improving water on beaches. There are some very good examples of where that investment of £140 billion since privatisation has undoubtedly borne fruit, whether it is in sewers, flooding, pollution or reduction in nitrates. But there is no doubt that the game needs to be upped, and that improvements in certain water companies need to be considered.

As I said, Ofwat has already given Thames Water a substantial fine for missing leakage targets. When one thinks of water shortages in the south-east and other places with large populations, it is imperative to bear down on continuing leaks very strongly. We need to ensure that water companies are investing properly. In fairness, I have to say that leakage levels are down by a third since privatisation and bills since 1994 are but 3% higher—but there is room for considerable improvement. That is what my right honourable friend the Secretary of State is looking for. We are clear that if Ofwat needs any further powers, we will actively look at them.

[Baroness Pinnock (LD)]

My Lords, I draw attention to my entry in the register of interests as a non-executive director on the board of Yorkshire Water until September last year.

My understanding is that water companies have to agree a five-year plan for investment in water infrastructure with Ofwat, which is a balance between investment, priorities for improvement such as those to which the Minister referred—sewage systems, clean bathing water, the freshwater river directive and all the rest of it—and cost to the consumer. That is the balance that has to be reached, and those plans are agreed with Ofwat. I am not saying that there ought not to be significant improvements, because there always ought to be, but we need to look at the reality, which is that it is a three-way balance between national government priorities, consumer cost and Ofwat agreeing to the cost of capital.

When I was on the board of Yorkshire Water, I was always going on about leakage, on which I think it is now one of the better companies at about 19%. Water is actually quite cheap—it costs about a penny a litre out of the tap—so the cost of repairing Victorian pipes in many of our towns and across the country is not economic for the water saved, certainly in the north of England where we have plenty of water. It is probably different in the south. Perhaps the Minister could comment on that.

[Lord Gardiner of Kimble]

I am tempted to say that Yorkshire Water is planting millions of trees to help reduce the risk of flooding and control surges in the flow of water. On leakage, the target was 297 million litres per day, which sounds a lot, but the actual was 295 million, so Yorkshire Water, under the previous custodianship of the noble Baroness, is obviously working extremely hard on some of the issues that she rightly outlined as a balance with other work, working with natural capital and so forth, that water companies are doing.

The first thing to say on the five-year business plans agreed with Ofwat is that they have tough performance commitments, and we agree that they should balance resilience and affordability in the priorities in the strategic policy statement .

On the point about leakage and the cost of the leakage, the noble Baroness may be right that water is cheap, but it is also very precious. I am thinking about the ways in which I would feel very uncomfortable about taking the foot off the pedal in bearing down on leakages and the targets, as we all ought to be doing—and, indeed, upgrading our infrastructure. In previous years, all the streets of London were up because Victorian main drains were being replaced, and so forth. The investment of £140 billion since privatisation has gone on upgrading the infrastructure, and we undoubtedly need to do more.