Water Companies: Executive Bonuses

Kerry McCarthy Excerpts

Tuesday 5th December 2023 Commons Chamber

[Rebecca Pow]

The hon. Gentleman is right to be concerned. As I go through my speech, he will hear all the measures that we have put in place for all the water companies, not just United Utilities.

As I said at the beginning, I want to be clear that the current volume of sewage discharged by water companies is utterly unacceptable. They must act urgently to improve their performance so that they can meet both Government and public expectations, but it is because of the monitoring that this Government required the water companies to put in place that we now know what is happening and the scale of the challenge that we face.

We have upped the pressure on the water companies so that, by the end of this year, 100% of all storm sewage overflows will be monitored. We are taking the most ambitious action in water company history to tackle sewage pollution, including using new powers and new responsibilities in the landmark Environment Act 2021, which I was proud to take through Parliament—many of the shadow Ministers obviously engaged with the Act’s passage—and there is also the additional £60 billion storm sewage overflow discharge reduction plan.

Despite saying that they care about our precious water, many Opposition Members did not vote for all these measures so that the people of this country—including you and me, Mr Deputy Speaker—can have the wonderful water and the beautiful environment that we deserve. It is through our measures that we are now holding water companies to account, in a way that has never been seen before, with more investment, stronger regulation and tougher enforcement. We will continue to go further in holding the industry accountable for its actions.

[Kerry McCarthy (Bristol East) (Lab)]

The Minister knows perfectly well that we opposed some of these measures during the passage of the Environment Bill because we did not think it was strong enough. The Bill was very weak in places, hence our opposition. Given that the Minister’s constituents are covered by Wessex Water, does she think it is right that the company is asking its customers to pay an extra £150 a year towards funding work on infrastructure, when the chief executive took home pay of £982,000 in 2021-22? I do not think my constituents, who are also customers of Wessex Water, should have to pay that extra money. Does she?

[Rebecca Pow]

That is an important point, and it is why we have made so many changes to the regulator—I will go into detail in a minute. It is quite clear that customers will not be paying for water company bonuses. Ofwat and its board now have very strong powers to oversee all of this.

I am going to go through the points one by one. I will start with more investment. We are ensuring that our regulators have the investment and the powers they need, and we are ensuring that the water companies deliver the infrastructure improvements that we urgently require. Since privatisation we have unlocked over £215 billion of investment in England, with £7.1 billion in environmental improvements by water companies over the period 2020 to 2025. It includes £3.1 billion in storm overflow improvements; and £1.9 billion of that is for the incredible Thames tideway tunnel, which is on track to transform tackling sewage pollution for the people of London. I am sure that our Liberal Democrats present will welcome that, because it is a game-changing project.

In addition, over 800 storm overflow improvements countrywide have been set in motion. They are under way and will be completed by 2025. It is because of all our monitoring that we were able to pinpoint where all this work needs to take place.

--- Later in debate ---

[Kerry McCarthy (Bristol East) (Lab)]

As toxic sewage spills into our lakes, rivers and seas, it is clear that the Government are up to their neck in it—and this is not a stand-alone scandal. It perfectly encapsulates 13 years of Tory misrule by a Government who do not believe in governing, who see regulation only as a burden and who think that businesses always know best, allowing privatised utilities to make huge profits at their captive customers’ expense and the bosses to line their own pockets, and ignoring the need for investment in our public realm and the infrastructure that we need.

In 2022, as we have heard, not a single river in England was free of chemical contamination, just 14% had “good” ecological status, and 75% of UK rivers pose a serious risk to human health, the single biggest cause of pollution being untreated sewage. However, we need to look at other causes of pollution as well. The Environmental Audit Committee warned in January 2022 of a “chemical cocktail” from plastics, slurry and farm run-off that threatens water quality, and criticised the outdated, underfunded and inadequate monitoring regimes that make it difficult to determine the health of England’s rivers. CHEM Trust welcomed that report as

“a vital call to arms to improve the quality of water in our rivers”,

and called for action to tackle chemical pollution at source.

As we heard from the right hon. Member for Hereford and South Herefordshire (Jesse Norman), whose frustration was clear, industrial-scale agriculture is also an increasing problem. The River Wye has a massive problem with phosphate pollution linked to intensive poultry production. There are about 20 million chickens in the Wye catchment at any one time, and much of the manure is spread on surrounding fields, with nutrients leaching into the water supply. It is estimated that even if the source of the pollution were removed now, it would take between 10 and 20 years for the soil pollution to be reduced.

For now, however, I will stick to the subject of sewage, in which regard Wessex Water is a particularly bad offender. We have seen numerous cases of sickness among swimmers at popular local wild-swimming spots in areas around my constituency, such as Conham River Park and Warleigh weir. In 2021, Bristol Cable reported that between the beginning of January and the end of August, Wessex Water had dumped raw sewage into our local rivers 14,000 times, and sadly things have not improved: just yesterday, it dumped revolting raw sewage into the River Avon for more than seven hours.

Water companies are supposed to dump untreated sewage only during “exceptional” weather, but as “exceptional” is not even defined, they feel that they can dump untreated sewage whenever it rains—and, of course, in the UK rainy weather is far from exceptional. The BBC found that in 2022 Wessex Water dumped raw sewage into our rivers for 1,527 hours on dry days. That is meant to be illegal, yet Wessex Water, like fellow dry spillers Southern Water and Thames Water, was allowed to keep operating.

I have already mentioned the massive £982,000 take-home pay of the Wessex Water CEO in 2021-22. He has been with the company a very long time—since the 1990s—and if his pay then was adjusted for inflation, he would be on about £120,000, so he has had about a 700% pay rise. As I said, Wessex Water is now looking to its customers and wants to put up bills by £150 a year to pay for planned investment. I would argue that that money should already have been spent on maintaining infrastructure.

Last night’s BBC “Panorama” programme exposed the failures of self-regulation, where water companies get to mark their own homework and cheat the system with ease. It is telling that we had to rely on whistleblowers from the Environment Agency telling “Panorama” what was going on at United Utilities, rather than the Environment Agency taking enforcement action itself. In the last three years—2020, 2021 and 2022—931 serious pollution incidents were reported in north-west England but the Environment Agency went to inspect only six of them. We are not blaming the Environment Agency for that. We know that it is under-resourced, and we know how little respect this Government have for our regulators and the protections they provide. Its environmental protection budget was halved by DEFRA between 2010 and 2020.

We see this time and again, with the Tories railing against red tape and bureaucracy and slashing costs, then wondering why everything has gone to pieces, when in effect they have created a wild west where companies can pollute at will. Companies do sometimes get caught. In 2020, for example, Severn Trent was fined £800,000 for letting 3.8 million litres of raw sewage enter a Shropshire stream, but these fines seem to be little or no deterrent because the companies try to pass the cost on to their captive customer base instead.

As foul waste poisons our waterways, killing fish, destroying habitats, seeping into our soil and making people sick, it is clear that self-regulation is not sustainable. We need water companies to face the consequences of their failures, and that is what Labour is calling for: criminal responsibility. Water bosses should face personal criminal liability for law breaking related to pollution, with severe and automatic fines for illegal discharges. It is time to clean up the filth.