Water Companies: Regulation and Financial Stability

Debate between Calum Miller and Tim Farron

Wednesday 23rd October 2024 Westminster Hall

[Tim Farron]

I thank hon. Members for both interventions. First, I agree with my hon. Friend the Member for West Dorset (Edward Morello). One problem is that Ofwat has fined three—or maybe four—water companies in the last year or so to the tune of about £170 million, and has collected precisely zero pounds and zero pence of those fines.

Secondly, to answer the point made by the hon. Member for Bognor Regis and Littlehampton (Alison Griffiths): absolutely—having regulators with conflicting responsibilities and rules is part of the problem. We have two inadequately resourced regulators with inadequate powers being played off against each other by a water industry that is far better resourced and able to run rings around very good people—but very harassed people—with the job of holding them to account.

The Liberal Democrats propose a unified and much more powerful regulator that we would call the clean water authority. That new authority would end the practice of monitoring being done by the water companies themselves—in other words, setting and marking their own homework. Let us put that right. Water companies should be charged the full cost of monitoring, but the monitoring itself should be carried out by an independent regulator so we can be sure that we are seeing the whole picture. Successive Conservative Ministers committed to changing that, but none actually did, so will the Minister commit the new Government to making that necessary change?

[Calum Miller (Bicester and Woodstock) (LD)]

It is a pleasure to serve under your chairship, Mr Pritchard. My constituents in Bicester and Woodstock are deeply concerned that Thames Water wants to hike its prices by more than 50% over the next five years. Just a month ago, I stood in the front rooms of constituents whose homes had been flooded with sewage because of the backing up of foul water drainage. Does my hon. Friend agree that the regulator he proposes, and which the Liberal Democrats support, should insist on and compel water companies to put performance before profit in their operations?

[Tim Farron]

Absolutely. That would be exactly the case at the heart of our community benefit model, which would be governed by a clean water authority. Profit would not be the overriding motive, and having the right people on board, including environmental campaigners in each area we are talking about, would keep the water companies honest and prevent the outrageous things mentioned by my hon. Friend.

The issue with the lack of reliability of data is key. It leaves us suspicious that the scandal could be even worse than we think. Just last week the BBC reporter that between 2021 and 2023, United Utilities illegally dumped sewage into Windermere for 165 hours, of which 118 hours were not reported to the Environment Agency. According to Environment Agency figures, United Utilities was the best-performing water authority in England in 2022 and, as a reward, it was allowed to raise £5.1 million extra by increasing bills, but—as we saw have now seen from last week’s revelations—United Utilities did not report hours and hours of illegal spill decisions made on the basis of inaccurate information.

When water companies mark their own homework, there are consequences; indeed, there are deep consequences for my communities in Westmorland. Some 7 million people visit Windermere every year, alongside the other 20 million who go to the lakes as a whole. I will state for the record that I happily swim in Windermere and have confidence in its safety in most places and at most times, but on behalf of our local community and especially our local hospitality and tourism businesses, I am deeply angry that the failure of the water company and its regulators to identify and solve these problems is not only beginning to damage our environment, but doing damage to the precious brand of the Lake district. That is why we need urgent, comprehensive, tangible and ambitious action, and why I am very grateful to my noble Friend Baroness Bakewell, who has tabled a Liberal Democrat amendment to the Water (Special Measures) Bill in the Lords to create a special status, with special protections, for Windermere.