Water Company Performance

Caroline Nokes Excerpts

Tuesday 21st February 2023 Commons Chamber

[Caroline Nokes (Romsey and Southampton North) (Con)]

(Urgent Question): To ask the Secretary of State for Environment, Food and Rural Affairs if she will make a statement on what measures can be deployed to ensure water companies are performing adequately.

[The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Rebecca Pow)]

First, I thank my right hon. Friend the Member for Romsey and Southampton North (Caroline Nokes) for bringing the matter of ensuring that water companies are performing adequately before this House. I think we all agree that this is an incredibly important and serious issue. I have been clear that water companies’ current performance is totally unacceptable and that they must act urgently to improve to meet Government and customer expectations. The British people expect better and so do this Government.

We have committed to deliver clean and plentiful water, as set out in the environmental improvement plan, and we have set out clearly how water companies must deliver that. First, our strategic policy statement to Ofwat, the water company regulator, sets out four clear priorities for water companies to protect and enhance the environment, deliver a resilient water sector, serve and protect consumers, and use markets to deliver for our customers.

Secondly, we have set new duties, through the Environment Act 2021, on water companies to monitor their overflows and set new legally binding targets to restore our precious water bodies to their natural state by cracking down on harmful pollution from sewers and abandoned mines, and improving water usage and households.

Thirdly, the storm overflow reduction plan, launched back in the summer, requires the largest investment programme in water company history and builds on the existing statutory duties. Water companies already have a statutory duty to provide a supply of wholesome water under the Water Industry Act 1991 and associated water quality regulations. They must ensure the continuation of their water distribution functions during an emergency.

I will begin by addressing my right hon. Friend’s concerns, because she has been in touch. I appreciate the lengths to which she has gone to hold her own water company to account, particularly over the supply interruptions experienced by Southern Water’s customers following multiple emergency incidents back in December 2022. A more recent incident last week led to approximately 15,000 Southern Water customers being off supply for an extended period, as she will know. Although some supply interruptions cannot be avoided, the repeated failure to properly ensure customers’ continued water supply is totally unacceptable. I will be meeting with Southern Water’s chief executive officer to understand how it plans to address its failings.

The Government and their regulators hold water companies to account in a number of ways, particularly through transparent reporting and performance. As the economic regulator for the water industry, Ofwat tracks performance against performance commitments, which are set at the start of the funding cycle.

The current performance commitments were set for the cycle from 2020 to 2024 and include pollution incidents, treatment works compliance and supply interruptions. Ofwat assesses performance against each of those metrics annually and ranks the companies in the water company performance report according to whether the metrics have been achieved. It reported that five water companies were extremely poor. The Secretary of State and I met them to hold them to account and to make it clear that we need further progress—

[Rebecca Pow]

Thank you, Mr Speaker. I want to be clear that where water and sewage companies are found to be breaking the law, there will be substantial penalties. We have increased all our measures on those penalties, and we are looking at whether we will go ahead with the £250-million cap that has been proposed. We will be consulting on that shortly.

[Caroline Nokes]

Water companies’ performance is not just about finances and Ofwat must not just be an economic regulator. It is about customer satisfaction, consistent supply, treating waste water, investment in networks, and making sure that our constituents have a clean drinking water supply all the time. In addition to compensation, customers need there to be better ways to hold water companies to account for significant outages, such as the three that we have seen in southern Hampshire in just five months, each of which lasted for days.

There is the ignominy of being in the Ofwat category of “lagging behind”, but that does not seem to have improved Southern Water or Thames Water, which have been in that category for two years running—shame does not appear to be effective. There are poor customer satisfaction ratings, but what do they change? There is a requirement to produce an action plan and targeted improvement plans, but by when, and what are the penalties for not delivering on them?

My constituents have gone without water to wash with, to drink, to cook with and to flush the loo with for days on end, with poor and in some instances misleading communications and without access to bottled water stations in my constituency. The only one was accessible on foot only, but water is really heavy to carry. They want significant fines for failure to supply, in the same way that there are significant fines for pollution. They want a requirement for emergency and back-up supplies to be available when parts of the network go down. Is it acceptable that if one part of the Otterbourne water supply works in the constituency of my hon. Friend the Member for Winchester (Steve Brine) is out of action, there is no provision to bypass the problem and continue supply?

Ofwat has said that it will push the “lagging behind” companies, but how hard, and what is the Department for Environment, Food and Rural Affairs doing to make sure that that happens? What is the penalty for not delivering on improvement plans? Last year, only 68% of the forecast improvement moneys were spent. At what point will DEFRA step in and recognise that the current situation is not working for the companies, the regulator or the poor customer?

We heard last week that there were plans to “water down” excessive fines, but a record £90 million was levied on Southern Water a few years ago, and that was not enough to convey the message. Rather than fines, can we therefore ensure that money is levied to force investment in the network, because current performance suggests that, so far, it simply has not worked?

[Rebecca Pow]

I thank my right hon. Friend for reiterating the situation that we have just witnessed with Southern Water, which was completely and utterly unacceptable, particularly following the incidents in December. I have communicated with the chief executive and I am asking again for an urgent meeting as a result of the situation last week.

My right hon. Friend raises some pertinent points about holding water companies to account. She knows that there is a system whereby water can be credited back to the billpayers, and I urge that that will be looked at and followed up. She also asked about the action plans for different companies. The Secretary of State and I had the five worst-performing water companies in before Christmas to talk about their failures, including leakages. We are taking swift action against them: they all have to produce an updated action plan to say what they are doing.

We have done a great deal to ensure that there is enforcement, which is critical, because everybody wants water companies to be held to account for what they do. The Environment Agency already has powers to issue unlimited fines through the criminal courts, but that can take a long time, as my right hon. Friend knows. It also needs data, but because of all the monitoring that the Government are doing, we are getting more of that, so we will be able to take more enforcement action. DEFRA is currently consulting on plans to raise the cap on fines and to make it quicker and easier to issue fines when we know things are not working correctly.