Water Company Performance

(Urgent Question): To ask the Secretary of State for Environment, Food and Rural Affairs if she will make a statement on what measures can be deployed to ensure water companies are performing adequately.

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.

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.

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.

Water companies’ performance is not just about finances and Ofwat must not just be an economic regulator. It is about customer satisfaction, consistent supply, treating waste water, investment in networks, and making sure that our constituents have a clean drinking water supply all the time. In addition to compensation, customers need there to be better ways to hold water companies to account for significant outages, such as the three that we have seen in southern Hampshire in just five months, each of which lasted for days.

There is the ignominy of being in the Ofwat category of “lagging behind”, but that does not seem to have improved Southern Water or Thames Water, which have been in that category for two years running—shame does not appear to be effective. There are poor customer satisfaction ratings, but what do they change? There is a requirement to produce an action plan and targeted improvement plans, but by when, and what are the penalties for not delivering on them?

My constituents have gone without water to wash with, to drink, to cook with and to flush the loo with for days on end, with poor and in some instances misleading communications and without access to bottled water stations in my constituency. The only one was accessible on foot only, but water is really heavy to carry. They want significant fines for failure to supply, in the same way that there are significant fines for pollution. They want a requirement for emergency and back-up supplies to be available when parts of the network go down. Is it acceptable that if one part of the Otterbourne water supply works in the constituency of my hon. Friend the Member for Winchester (Steve Brine) is out of action, there is no provision to bypass the problem and continue supply?

Ofwat has said that it will push the “lagging behind” companies, but how hard, and what is the Department for Environment, Food and Rural Affairs doing to make sure that that happens? What is the penalty for not delivering on improvement plans? Last year, only 68% of the forecast improvement moneys were spent. At what point will DEFRA step in and recognise that the current situation is not working for the companies, the regulator or the poor customer?

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.

I call the shadow Secretary of State.

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?

It is so easy to just stand there with no facts and no detailed information, and level an attack. I agree, as does the Secretary of State, that sewage in water, unacceptable leakage and so forth are not to be tolerated, and that is why we have set so many actions in train—more than ever before. We are taking more action than any Government have ever before on the water companies.

Do not forget that, since privatisation, the water companies have made a huge investment—billions of pounds of investment—in improving our water company infrastructure. Because of our new storm overflows discharge reduction plan, they are now committed to £56 billion of investment up to 2050, and £7.1 billion of that is already under way, including the Thames Tideway super sewer. A great deal of enforcement action is already taking place. Just in 2021, £121 million of fines were meted out to water companies. Because of the very detailed investigation now under way by Ofwat, the regulator, and the EA, we have more and more data and information to pinpoint where permits are being contravened and where water companies are not taking the actions they should be, and enforcement will follow. We are now consulting on a potential figure of £250 million to make sure we have a realistic and sensible fine that will really do the job in holding our water companies to account.

The Minister knows that the River Mersey flows through the middle of Warrington—she has been to see it for herself—and I was struck recently by the comments of a local resident who reminded me of the pink film that used to exist on top of the river. Much has been done to clear up our rivers. Does my hon. Friend agree with me that it is absolutely right that water company dividends are directly linked to their performance in providing services to their customers and in cleaning up our rivers?

I thank my hon. Friend for that point. In 2019, transparency became much more critical in Ofwat’s holding the water companies to account, because it had to agree, in the price review, how much they should be spending on infrastructure to provide clean water and to ensure the supply. Ofwat has now been directed to ensure that water companies can demonstrate that payments to bosses and so forth are linked to environmental performance.

Does the Minister agree with the almost 209,000 voters who have signed a petition started by my constituents, SOS Whitstable, calling on the Government to at least consider renationalisation of the water companies? Profit-driven, largely foreign investors do not prioritise the cleanliness and economy of British beach communities or the way of life in constituencies such as mine? If the companies were answerable directly to the taxpayer, they might start to act at last.

The hon. Member forgets that since privatisation £120 billion has been invested by the water companies in the critical infrastructure that we need not only to provide clean and plentiful water but to ensure the supply, so I do not agree with her that we should be renationalising them. What we do need to do is hold them to account where they are doing wrong, but also enable them to continue to invest the £56 billion they are now required to spend to deliver our future water system, with our growing population and the demands of climate change.

The use of storm overflows is completely unacceptable, but does the Minister agree that the best way to tackle that is through enhanced monitoring, requiring a record £56 billion investment by the water companies, and the use of significant fines and criminal prosecutions? Does she also agree that the water companies should be in no doubt that they are in the last-chance saloon and that they and regulators must be held to account to deliver major improvements for our constituents?

I thank my hon. Friend for those sensible points. To be honest, it is because of the monitoring this Government have put in place that we now know what is going on. Under the Labour Government there was virtually no monitoring at all: in 2016, some 5% of storm sewerage overflows were being monitored; that figure is 90% now, and by the end of the year it will be 100%. We will also have to monitor upstream and downstream of every sewerage overflow outlet, so we will know exactly what is going on, and unacceptable behaviour will be acted upon.

Water bosses are actively allowing more pollution, because they know it is cheaper to pay the fines than to put in the investment, mend the leaks and stop the sewage. When will the Minister introduce the higher fines of £250 million that the Environment Secretary has pooh-poohed, and take the Environment Agency’s advice to put directors in jail if they fail? Will she give an undertaking that the Retained EU Law (Revocation and Reform) Bill will not get rid of all the protections from Europe, so that we do not have even more stools in our rivers and on our beaches?

If the hon. Gentleman had been listening earlier, he would have heard me say that we are consulting on plans to raise the cap on fines to £250 million, to make it quicker and easier to tackle enforcement. That will be a significant step, along with all the other measures we are taking, which I have clearly outlined, to hold the water companies to account.

The Minister knows the importance of water quality for my beautiful constituency of Southend-on-Sea and that the use of storm overflows has been completely unacceptable. I welcome the Government’s actions to ensure executive pay and dividends are linked to environmental performance, but she will know that the chief executive of Anglian Water earned £1.3 million last year, including a bonus of £337,651. I have asked him repeatedly for meetings but have still not got a date; will the Minister meet the CEO of Anglian Water with me so that we can understand his plan to stop storm overflows being used in Southend West?