Water Supply Disruption

Lord Berkeley Excerpts

Tuesday 6th March 2018 Lords Chamber

[Lord Berkeley (Lab)]

My Lords, I am grateful to the Minister for repeating the Statement and for his explanation of all the work that the water companies and their engineers are doing to reinstate supplies. It must have been a very hard job, day and night in pretty horrible conditions, and the engineers deserve all our thanks. Whether the water companies deserve our thanks is a completely different issue. It is obvious that when the temperature gets cold, the freezing depth goes down and eventually will probably hit a pipe; whether it is a quick or a slow thaw probably does not matter very much. I was cycling through Trafalgar Square this morning and there were two enormous floods coming out of manhole covers that looked to be nothing like water company manholes, so God knows what is happening to the rest of the services in Trafalgar Square. Not that that matters—it is just that it is near here.

My worry is that while Ministers are quite rightly saying that they are going to get a grip on Ofwat and the water companies—I was pleased that the Minister talked about the strategic policy statement and ended up by saying that the water industry works for everyone—that is not what has happened in the last five years. Ofwat, and to some extent the Ministers, have been asleep on the job. I have been saying for the last five years that Thames Water needed looking at because Macquarie bank has managed to reduce its level of assets to about 25% of what they were when it started, and then promptly went after the money to somewhere more attractive and sold Thames Water to the extent that it could not fund the Thames Tideway tunnel on its own and had to seek a government guarantee. That investment could have gone into improving the quality of the pipes, reducing leakages and so on. As the noble Baroness, Lady Bakewell, said, it needs more capital, but there really needs to be a massive change of attitude on the part of Ofwat to do what the Minister said and hold the water companies to account so that we never have this again. The companies should have enough assets to invest so that they can produce a much better system where the leakages are less; the charges, hopefully, are less; and it is about what the customer wants rather than what suits the companies in making the most massive amount of money in salaries and so on in the City. I look forward to the Minister’s comments.

[Lord Gardiner of Kimble]

My Lords, again, so many of the noble Lord’s comments are in line with what I said and what the Secretary of State was very clear about last week. Some water authorities are, in my candid view, better than others. I have a list of some of the many projects that certain water companies are undertaking, whether investment or dramatically improving water on beaches. There are some very good examples of where that investment of £140 billion since privatisation has undoubtedly borne fruit, whether it is in sewers, flooding, pollution or reduction in nitrates. But there is no doubt that the game needs to be upped, and that improvements in certain water companies need to be considered.

As I said, Ofwat has already given Thames Water a substantial fine for missing leakage targets. When one thinks of water shortages in the south-east and other places with large populations, it is imperative to bear down on continuing leaks very strongly. We need to ensure that water companies are investing properly. In fairness, I have to say that leakage levels are down by a third since privatisation and bills since 1994 are but 3% higher—but there is room for considerable improvement. That is what my right honourable friend the Secretary of State is looking for. We are clear that if Ofwat needs any further powers, we will actively look at them.