Ofwat: Strategic Priorities

Debate between Philip Dunne and Ruth Cadbury

Thursday 9th June 2022 Commons Chamber

[Philip Dunne]

I would like to say to the hon. Lady that my remarks about people misinterpreting what is being done do not apply to her. She has been a doughty champion on this issue; she has led debates in this House and we have had good cross-party discussions. She makes an interesting point: there are already five-yearly reviews, but whether that should be done more frequently is an interesting question, and maybe the Minister might like to respond to it in her winding-up speech.

Moving on, the pressures on the drainage systems have been developing over six decades, as investment in water treatment infrastructure and drainage systems underground has not kept pace with development above ground, as my hon. Friend the Member for Central Suffolk and North Ipswich (Dr Poulter) has pointed out. It is also exacerbated by pollution caused by others—both farming practices, which my right hon. Friend the Member for Hereford and South Herefordshire described, and run-off from highways and other hard standing—so I accept that it is not exclusively the responsibility of water companies.

As the Secretary of State himself acknowledged before our Select Committee, the solution ultimately may require separation of surface and foul water drainage systems, and I believe the Department is currently trying to get a harder estimate of the cost of such a massive exercise. It will take enormous capital expenditure to correct the problem for good, and the work will take decades to complete, but a start needs to be made now. The SPS provides that opportunity.

I will focus my remarks now on what Ofwat should consider in its negotiations with water companies to encourage them to identify and quantify solutions. It inevitably takes time to progress solutions through the planning process before the required infrastructure construction can begin, whether through nature-based solutions or traditional mechanical and chemical systems. Much of that involves installing monitoring equipment to increase public awareness of the quality of receiving waters in real time. That was a key transparency recommendation of my private Member’s Bill and our Committee report, and it is now required to be introduced under the Environment Act. However, it merely establishes the baseline; the real spend will be incurred in the corrective measures required.

In my own constituency, Severn Trent Water has announced plans to invest £4.5 million to achieve bathing water quality status along some 15 miles of the River Teme between Knighton and Ludlow as part of their “Get River Positive” investment plan. That is obviously very welcome. The Thames Tideway tunnel will make a remarkable difference to water quality here in London. It illustrates well both the high cost and the length of time involved in delivering a transformational project to improve water quality, namely £4.9 billion and 11 years from securing planning to becoming operational respectively.

[Ruth Cadbury (Brentford and Isleworth) (Lab)]

I welcome the right hon. Gentleman’s mention of the Tideway tunnel. It is an enormously expensive project and collects a lot of the sewage from London, but not from any sewage treatment works above Hammersmith—by which I mean specifically Mogden sewage treatment works. Every time it rains more than a drizzle, Mogden and Thames Water discharge dilute sewage into the River Thames, and the Thames Tideway tunnel can do nothing about that.

[Philip Dunne]

I bow to the hon. Lady’s knowledge of her constituency and the area around it. I am informed that the tideway tunnel will take 37 million tonnes of the 39 million tonnes of sewage currently discharged annually into the Thames out of the river, so it may not affect every single treatment plant, and it is primarily coping with the north of the Thames rather than the south of the Thames, as I understand it. I will touch on how it is being paid for in a moment.

Given Ofwat’s unique opportunity to approve capital investment, it needs to focus not only on the economic impact of household bills but on the environmental impact that water companies have. With the rising cost of living, none of us wishes to see bills rising sharply, but equally, if water rates are set so low as to preclude necessary capital investment in water quality, we will simply kick the can down the road for another five years and the problem will be harder to solve and more expensive to fix.

Given that the current cost of capital is still at historically low interest rates, over a multi-decade investment cycle water companies remain well placed to fund significant capital investment. For example, the tideway tunnel, the biggest current project, is due to add only £19 per annum to household bills in London. I believe that a balance can be found as regards Ofwat’s new priority for water companies to improve treatment in addition to the necessity to secure adequate drinking supply and have low bills.