South West Water: Performance

Anne Marie Morris Excerpts

Tuesday 28th February 2023 Westminster Hall

[Anne Marie Morris (Newton Abbot) (Con)]

I thank my hon. Friend the Member for East Devon (Simon Jupp) for this timely debate. It is clear from the contributions across parties that we all feel strongly that this issue must be gripped and grasped.

The water industry is fairly heavily regulated. It has Ofwat, the economic regulator; the Environment Agency, the environmental regulator; and the Drinking Water Inspectorate, the drinking water regulator. The key is to make those regulators work effectively together, and to understand the underlying problems. As has been explained, finding a problem and imposing a penalty is not enough. We have to ensure that the problem itself is rectified.

South West Water did not perform well under Ofwat. The December 2022 report, which my hon. Friend the Member for East Devon referred to, set out that South West Water had fallen below its commitment level in five separate areas: customer satisfaction; the number and duration of water supply interruptions; water quality; the second highest number of pollution incidents in the country; and treatment work compliance, resulting in the £13.3 million fine.

Given that Ofwat set other targets, one asks why those have not been met and acknowledged. There is an allowance for investing in improvements, and South West Water had the second lowest investment. Given that it has some of the biggest problems, why is it the second lowest spender? It spent only 46% of its allowance—why? It is incumbent on South West Water to explain that to us. I certainly hope Ofwat will dig a little deeper into the reasons and look at what we might do differently to ensure the right level of investment. As has been said, the Environment Agency, the second regulator, looked at six metrics, and South West Water got only one star—the lowest rating—on environmental performance.

My hon. Friends have already set out what the Government have rightly done to shine a light on the problems and inadequacies, and to put in place a remedy, but we need more than just fines. We need to unpick how we will drive forward the change that is needed and understand better the cause of the problem. We regularly blame the low settlement figure on privatisation, given the geography of the south-west, but other than the continuing Government contribution to our water charges, for which I am extremely grateful, I am not aware of any work that has been done to look at the underspend. Is that argument justified, and how can that investment be put back? South West Water may well say that it cannot be done, but until we know what the figure is, we cannot assess its responsibility since privatisation and identify where more help needs to come from the Government. Ultimately, although our water is in private hands, it is a public good. It may be that the Minister can help me by providing some figures on that.

The second thing we clearly have to look at post privatisation is the role of the shareholder. Do we feel that, in this case, the shareholders have been complacent? What happened to corporate governance? What happened to the obligation to be concerned about businesses’ impact on their environment? What happened to their social responsibility? It seems very strange that there is a tick in the box in South West Water’s accounts, yet there are these incredible shortfalls.

[Richard Foord]

Will the hon. Lady give way?

[Anne Marie Morris]

I will not.

We then have to ask whether the three regulators were asleep on the job. Why is it only now that the Conservative Government have shone a light on the problem that they have suddenly woken up and begun to take steps? Further work needs to be done.

Are there some peculiarities about the geography of the south-west—its size, our farming communities, which inevitably lead to a degree of run-off, and the housing developments? As has already been explained, the challenge is that our water company has no ability to say, “No, the system we currently have cannot accommodate this new housing.” We know that there is pressure for housing and that we need that housing, so where should the responsibility lie for making the right investment so that the water and sewage system is fit for purpose? It seems that there needs to be a much greater investment obligation on the developer; it should be obligated to work with the water company to ensure that that investment can be made in the context of the existing infrastructure.

South West Water has clearly recognised that much more needs to be done. Like my hon. Friends the Members for Totnes (Anthony Mangnall) and for East Devon, I have had regular meetings with South West Water. We are at the point where South West Water is listening and, as my hon. Friend the Member for East Devon made clear, the level of investment has gone up significantly. The question is: is it enough? We ought to look closely at the numbers—the investment that has been put in, how that falls short of what could have been put in as agreed with the regulator, the rewards for shareholders and the bonuses for executives. Does it feel right? Does it pass the smell test? Right now, the jury is out.

[Richard Foord]

On that point about investment, will the hon. Lady give way?

[Anne Marie Morris]

I am afraid not. Remember that one of the key shortfalls was the lack of communication. South West Water’s communication has definitely improved. The WaterFit app, which my hon. Friend the Member for Totnes referred to, will be one of the first in the country, and it would be a good start. I understand that there is also now a programme for interaction with schools, and young people are asked for their views about the right way to improve water quality. All that is very good, but communication has to be converted into action. We need to look at where we go from here. South West Water is a private company, but it is for public good.

[Richard Foord]

Will the hon. Lady give way?

[Anne Marie Morris]

I am afraid not. When we looked at some of the shortfalls in the railways, the Government stepped in, because they recognised that the sector was not working. I give credit to the Conservative Government for going above and beyond anything that had been done before. Is there yet another step that needs to be taken to ensure that the public get the quality of water they need and deserve, given its significant impact? It is what we, as human beings, are mostly made of, and it is a key driver of our health and wellbeing. It matters fundamentally. This issue has been of great interest to the Minister, and she is to be credited for the work she has done. Does she think the Government could look at going further, alongside what they could do by working further with the three regulators, to improve water quality in the south-west?