South West Water: Performance

Rebecca Pow Excerpts

Tuesday 28th February 2023 Westminster Hall

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

It is a pleasure to serve under your leadership today, Sir George. Of course, I would like to begin by thanking my hon. Friend the Member for East Devon (Simon Jupp) for bringing the subject of the performance of South West Water to us today. I know that many colleagues have been waiting to express their views, and we have heard them very clearly from Members today. There are others, I know, who could not make it, but who would very much reiterate some of the things that we have heard. I also must thank my hon. Friend for approaching the issue in an incredibly measured way. It is very serious, so I thank him for that.

As hon. Friends and Members will know, I make absolutely no secret about my disappointment with the poor performance of South West Water and the impact that it has had on the environment. It is very serious, and I met with the CEOs of all of our lagging water companies—basically those with poor performance—back in December, and had a specific meeting with the chief executive officer of South West Water in January. I have made it very clear that we need to see rapid improvement in their performance. We have all the data, whether it is about pollution incidents, storm sewage overflows, leakage, and so forth, so, rest assured, I am in really regular contact over this issue, and I do think we are making some progress.

The data is stark. South West Water has been one of the worst-performing water companies due to its high levels of total pollution incidents, which were, as has been pointed out, significantly above the industry average for total pollution incidents in 2021. It is completely unacceptable in this day and age, and I have made it very clear that urgent steps must be taken to tackle that.

I did want to say, though, that, actually, there are some positive actions being taken by South West Water, and indeed all of our water companies. We need them to be effective, and doing the job they are there for, to provide clean and plentiful water. I must say that I welcome South West Water’s steps to deliver its WaterFit project. That is a £45 million shareholder investment launched in April 2022 to reduce storm overflow discharges, alongside its existing £330 million investment in waste water.

I recognise, also, its success in putting in 100% of its event-duration monitors to track storm sewage discharges in the south west. That is something that we have asked all water companies to put in, but it is ahead of the game, so we will know exactly what is happening. Data is all, in this situation.

I would also say that it is all very well for Members of the Labour party to stand up there, and be seen to be more righteous than others, but, in fact, their record on putting in any kind of monitoring was virtually non-existent. Some 5% of monitoring for storm sewage overflows went in place in 2016, started by this Government. It is 90% covered now, and it will be at 100% by the end of this year, so we will really be able to see what is going on, and then action can be taken.

[Ruth Jones]

I thank the Minister for giving way. While we all agree that data is crucial, there is the “So what?”—never mind the Ofwat—question. With all the data, what are the Government doing about it? It is action, not data, that we need.

[Rebecca Pow]

I thank the hon. Lady for that. I was going to mention it later, but what I was going to say was that it is a shame that the Labour party does not actually look at what is going on. It has been referred to by all of our colleagues. In the water industry we have the most significant project and spend that has ever taken place, directed by this Government, to tackle this whole issue once and for all. I am happy to share the very extensive list of things that are taking place and that will set us absolutely on the track we need to be on.

Also, however, I am a little concerned that we do not want to mislead the public. There are some wonderful bathing waters around the south-west and I, too, love swimming off the coast there. Last year, 93% of our bathing waters, which are mostly off the coast, were classed as good and excellent. That is an excellent record, and it has only improved under this Government. We should not forget that. Obviously, we have to make them all perfect, but this Government have a good record.

To go back to the Labour party, it is all very well for Labour Members to spout on about what they would do and what we are not doing, but the EU took the Labour Government to court over the state of water and they still failed to act. We need to look back at others’ records—we are the Government putting things right.

South West Water has now committed to reducing its average number of discharges through overflows to 20 per year by 2025. That is definitely a step in the right direction, but the public clearly want to ensure that that happens, and we will be on its case. I have also been assured that by continuing on its current trajectory, the company will deliver the absolute lowest number of pollution incidents in the sector by the end of this year. Innovative solutions are being brought forward to include drought resilience in the south-west, which has also been touched on. That is clearly very important.

To be clear, we need our water companies to improve in the way that we need them to, and to be successful, because we want them to stand as successful businesses that people want to invest in. We need that huge investment in the industry, so we want to see the companies operating correctly. That is why we have all the strict measures and Ofwat as the competent regulator, which I will get on to in a minute. Where performance does not improve, the Government and the regulators will not hesitate to hold water companies to account, including South West Water.

The Environment Agency is focusing on South West Water permit compliance. It is prioritising high-spilling storm overflows for investigation. South West Water has now installed the event-duration monitoring I mentioned on all its sites, bar six or seven complicated ones, which will be under way. Since 2015, the Environment Agency has brought 56 prosecutions against the water companies more broadly, securing fines of more than £142 million. As the House is aware, following South West Water’s guilty pleas, on 29 March it will be sentenced for 13 criminal offences that took place between 15 July 2016 and August 2020. It is certainly being held to account.

Ofwat, as the economic regulator of the water industry, will play its role in holding companies to account for not meeting their commitments. Rightly, since South West Water has been shown to be such a poor-performing company, Ofwat required it to present its improvement plan setting out steps to improve performance. As touched on today, South West Water will have to return £13.3 million to customers as a result of not meeting water performance commitments, including those on pollution incidents.

The hon. Member for Tiverton and Honiton (Richard Foord) made a blatant comment along the lines of, “Let’s get rid of Ofwat”, but that is too simplistic. As was said by my hon. Friend the Member for Newton Abbot (Anne Marie Morris), we need to ensure that the regulator, too, is functioning absolutely to its right capacity. Given that, in our strategic policy statement last summer, we put the environment at the top of the agenda, Ofwat has to ensure that clean and plentiful water is provided, and to demonstrate that that is not have an adverse impact on the environment. Customer service is obviously right up there as well.

In 2019, Ofwat asked companies to link executive pay to delivery for customers—yes, we might have thought that that was there already, but it is now. Similarly, Ofwat is exploring ideas and other options relating to dividends and pay. That includes changes to companies’ licences or ensuring that fines for misdemeanours come out of dividends and do not impact customers. I think that is what my hon. Friend was getting at. This is all on the radar, and she is absolutely right that it has to be fully functioning.

[Anthony Mangnall]

I apologise for interrupting the Minister because she is making an excellent speech, but it is worth making this clear for anyone watching from across the south-west. Last year Ofwat and the EA launched what is, I think, the largest criminal inquiry into water companies. Will the Minister reassure me and all our constituents that when fines are issued, they will be clearly presented to the public, people will know exactly where the fines are going, and there will be an uplift in the quantity of those fines?

[Rebecca Pow]

I thank my hon. Friend for his intervention. That was coming later in my speech, but I will touch on it now because customers are rightly asking those questions. We are determined to improve the water environment, and that is why we announced at the end of November that we would channel future revenues from fines and penalties handed out to water companies that pollute rivers and the sea into projects that will improve the water environment. That seems to be extremely popular, and it is the right thing to do. We will announce further details later in the year. We are also consulting on raising the whole bar to a fine of £250 million and, for the EA, civil sanctions. As has been said, Ofwat already has the power to charge a water company 10% of its turnover, and the EA has unlimited fine powers through the criminal courts for taking action, so strong powers are already there; they just need to be used.

Contrary to what the shadow Minister and the hon. Member for Tiverton and Honiton say, this Government are taking crucial steps to improve the whole water landscape, particularly the transparency of storm overflow operations, and to require water companies to make major investments in this area. Last week the Secretary of State asked water companies to get back to her with clear plans for every storm sewage overflow and the upgrades, starting with the ones in bathing water areas and those near our highly protected nature sites, because it is of critical importance that we do not pollute those waters.

I have mentioned that monitors are going in, which will mean we have 100% cover by the end of the year. As my hon. Friend the Member for East Devon said, we want those monitors to go in, and water companies will have to show clear plans of where they are going and when they are in. The monitors are for what we call event duration. The first ones will show how long the overflows are used, so we will have that data, and there is a requirement to publish near-real-time information about how often they operate, so we will have all that clear information. Water companies will also be required to put in monitors to monitor the water quality both above and below storm sewage overflows. That will determine what is in the water, which is information we need. We will consult on that shortly. You will see, Sir George, the picture I am building of a comprehensive list of work.

I want to be absolutely clear, particularly to the hon. Member for Tiverton and Honiton, that, as several colleagues have said, nobody in this Government voted to legalise sewage discharges into water courses. In fact, the Government put forward a raft of new laws to reduce the use of storm sewage overflows through our landmark Environment Act 2021. I hope we will get over the misinformation that has been spread, which has genuinely not helped anyone at all.

Independent fact-checkers have shown that a lot of the Liberal Democrat information that has been put out there has been incorrect and has not been credible. In fact, the plans that the Liberal Democrats suggest would not have stopped or banned sewage discharges; would cost up to £20,000 per household, which is absolutely unrealistic; and would take 1,000 years to raise the billions of pounds that they say is needed. I hope I have been clear that that is not credible.

The Government have put in place sensible, costed plans to tackle the issue, including in respect of storm sewage overflows, and we have introduced powers that allow us to direct underperforming water companies. We have in place a really comprehensive package. The improvement of water quality remains an absolute Government priority, and that is backed up by the comprehensive package we have announced.

[Richard Foord]

If the Government are so very keen on holding water companies’ feet to the fire, why did it require a Liberal Democrat amendment to the UK Infrastructure Bank Bill for the development of costed, time-limited plans to be a condition for the lending of Government funding to water companies for investment in infrastructure?

[Rebecca Pow]

That is a bit of a red herring, because all the things I have just outlined involve costed plans and the monitoring of plans. Water companies will now have to produce drainage and sewage management plans. Previously, they had to produce only drainage plans, but now they have to produce sewage plans, so we will know what comprehensive infrastructure is required.

My hon. Friend the Member for Totnes (Anthony Mangnall) touched on the important issue of housing. We must ensure that the development that we all need and the housing that people want are linked up correctly to our water system. A lot of work has been going on in that respect, and I am sure that my hon. Friend welcomes the fact that what we call sustainable urban drainage systems, or SUDS, will now be mandatory. The right to connect surface water to public sewers will be conditional on companies putting in sustainable urban drainage systems. That will help to separate the storm water so that it does not go down our sewage pipes. That has been talked about for a long time—it was one of my pet subjects when I was a Back Bencher—so I am delighted that the Government are making it a reality.

The hon. Member for Tiverton and Honiton read out lots of gruelling letters from his constituents, but it is quite interesting that South West Water has just introduced a scheme called WaterShare+. One in 14 households in the south-west have become shareholders in South West Water, so they will be able to play an active part in holding their water company to account and making sure it is a socially responsible business. I believe South West Water is taking note of what comes its way from its customers. It needs to put it right, and I genuinely hope it will.

All water companies must clean up their act, and the Government have demonstrated that we have the most comprehensive plan in the history of the water industry to make that happen. We will work with the water companies and Ofwat to make sure that happens, but will not hesitate to take action using all the powers now available if we do not see the improvement that we need.