Question to the Department for Environment, Food and Rural Affairs:

To ask the Secretary of State for Environment, Food and Rural Affairs, with reference to the oral contribution of the Minister for Environmental Quality and Resilience of 28 June 2023, Official Report, column 282, and to the Consultation on change of ownership for Southern Water Services Limited, published by Ofwat in August 2022, what steps Ofwat is taking to work with Southern Water on its financial resilience; and if she will make a statement.

Ofwat monitors and assesses the financial resilience of each company on an individual and ongoing basis and challenges companies where they identify the need. Each year, in its Monitoring Financial Resilience Report, Ofwat sets out its key messages and observations on financial resilience across the sector.

Ofwat has used intervention and regulatory guidance to encourage Southern Water to improve financial resilience and outcomes for customers and the environment.

In 2021, Southern Water’s investors injected around £530 million to improve operational performance and support its financial position. Southern Water was also required to prepare a turnaround plan, which sets out how it will improve its overall performance. Progress against the delivery of its plan is being closely monitored by Ofwat.

The Environment Act 2021 gave Ofwat improved powers to modify water company licenses without consent from water companies. This has enabled Ofwat to strengthen its existing ring-fence framework and to intervene at an earlier stage where companies are experiencing financial resilience challenges. This allows greater engagement between Ofwat and water companies so that they can seek timely improvements and/or mitigating actions, to better protect water customers.