Water Company Performance

Lindsay Hoyle Excerpts

Tuesday 21st February 2023 Commons Chamber

[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—

[Mr Speaker]

Order. We are now a minute over—we are on four minutes. Can you do the conclusion to help us out? Just pick the last sentence.

[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.

[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.

[Mr Speaker]

I call the shadow Secretary of State.

[Jim McMahon (Oldham West and Royton) (Lab/Co-op)]

I congratulate the right hon. Member for Romsey and Southampton North (Caroline Nokes) on securing this urgent question. She, like many of us, is absolutely sick and tired of the impact that sewage discharges are having on our streams, rivers, seas and local economies. They are devastating whole regions and devastating our coastlines. Frankly, we are here again with the same old excuses and the same old promises for action getting drawn out, but there is no action behind it. The water companies know they can laugh all the way to the bank because the Government will not take action, and the regulators know that the Government will not take action because they have taken away the capacity to take action from the regulators.

All the while, it is local people who are suffering—whether that is people being able to enjoy their local beauty spots and to take a walk down the river, or that is coastal businesses that are reliant on seasonal tourism to provide jobs and livelihoods to people. They are affected, not the Government, and what do we see? This year alone, when the Bank of England and the Government are telling hard-working people to rein it in and stop asking for pay rises, the water bosses are asking for 20% increases in salary. There is not a single thing the Government have said—in the environmental improvement plan or in anything said at the Dispatch Box—that sends out the message that things will be any different, and the water companies know that. They have already banked £66 billion in dividend payments and more will follow.

Labour does not want to sit on the sidelines and witness our country being turned into an open sewer. We set out at the Labour party conference in September a position that would clean up the water industry in this country, deliver value for money for consumers and bill payers, and finally work in the national interest, so when on earth will the Government get on and deliver Labour’s plan?

--- Later in debate ---

[Rebecca Pow]

South West Water is a one-star company. It is one of the worst-performing water companies. I have had its representatives in a number of times to look at its performance, and it has a clear plan of action for its trajectory to improve. We must hold its feet to the fire in that regard. Let me also say, however, that our friends the Liberal Democrats have been spreading an awful lot of misinformation about this issue—particularly in the south-west, where I come from—and independent fact-checkers have often found many of their claims to be false.

[Mr Speaker]

And now, someone who needs no turning on—Jim Shannon.

[Jim Shannon (Strangford) (DUP)]

I thank the Minister for her responses to all the questions.

Given the increased pressure on the water system as a result of the increase in the number of power showers and spa-type waterfall showers—as well as the increase in the number of homes, which I consider to be another critical factor in what is happening—it is clear that our current infrastructure is not up to scratch. How will the Minister ensure that we do not sacrifice the balance between quality, as developers who are under financial pressure owing to the cost of living are looking for cheaper options, and the bare minimum where permissible?