South West Water: Environmental Performance
(7 months, 3 weeks ago)
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Mr Ian Liddell-Grainger (Bridgwater and West Somerset) (Con)
I beg to move,
That this House has considered the environmental performance of South West Water.
I am delighted to have secured this debate on South West Water, Mr Hollobone. South West Water looks after Devon and Cornwall, yet it has been dumping raw sewage in the lovely rivers of Devon and Cornwall for years. For 10 disgraceful years, South West Water has dished out huge dividends to its shareholders instead of investing to clean up its own filthy act. For 10 deplorable years, South West Water has been rated red by the Environment Agency—red for appalling, red for risky, red for downright dangerous. People can buy its shares if they fancy it and are brave enough, but they should look out, because this company has been borrowing its way out of trouble for many years.
Pre-privatisation South West Water was debt free, but two years ago it was in hock to the tune of £2 billion. It has reduced the debt a little bit, but with rising costs and the threat of a big stick from the regulators—rightly so—South West Water looks like, I am afraid to say, a very dodgy stock in which to place money. The company’s chief financial officer has left, and who can blame him? South West Water is now under severe and serious investigation for massaging statistics. It has lied about the scale of the ongoing pollution. It has already been fined over £2 million for dumping poo in the recent past. It does not even make the water; it sells it. God makes water! It sells water, and charges the highest price in Britain for every drop used.
South West Water also loses water at a frightening rate through burst pipes and its own broken promises to repair them. Almost 127 million litres a day goes down the drain. I will repeat that: 127 million litres. It would matter less if it had enough water to last, but it does not. There are two reservoirs in the area; one is in Roadford in Devon, and the other is Wimbleball, the big lake on Exmoor. Needless to say, South West Water did not build either of them. They were constructed in the days before privatisation.
The only addition that South West Water seems to have made is a highly unpopular timeshare village, believe it or not, on the banks of Roadwater lake, and guess what? It did it for money, of course. South West Water leaks like a sieve, it makes its customers pay through the nose and it is rapidly running out of storage space for what is left. None of us should be surprised that South West Water still has a hosepipe ban in place—the only one in Britain. It is a complete joke.
The Government have been passing laws to trample on obscene bonuses, often awarded in the name of protecting the environment. The Lord-Lieutenant of Devon is one such recipient. In principle, I am all in favour of hitting the culprits hard where it hurts—in their wallets. It is a good idea, but the Minister and her team probably did not reckon on the ingenious methods used by some of the water companies. South West Water is not the only one, but it is the one that I am concentrating on.
When it became clear that it could not get away with pumping poo into the rivers willy-nilly and then paying each other fat bungs for saving the planet, South West Water had a little rethink. Surprise, surprise—guess what? It decided to award handsome bonuses for meeting its financial targets instead. Funnily enough, it was an idea borrowed from Wessex Water. You do not really invent the wheel; it goes round. When that ruse fails, South West Water will probably move the goalposts again. Who knows? They might start awarding each other big bungs for helping old ladies to cross the road.
In the water industry, more or less anything is acceptable these days, which is bizarre. For example, last week the BBC—yes, the BBC—did something very unusual. It did some good old-fashioned journalism. That is amazing —not dance-offs, but journalism. It produced a story that I think would have chilled the Minister to her core, along with many others. Water companies are allowed to dump raw or partly treated sewage on a strictly limited basis, when the weather is really wet and the pipes would get overloaded, and they need a permit to do so. Some bright spark at the Beeb—and that is going some—wondered whether it could be discovered exactly when the discharges happened and what the weather was like at the time, and to look at all water companies. The results of these inquiries were shocking.
The BBC found out that 388 dumps—if you will pardon my expression, Mr Hollobone—took place in bone-dry conditions, which is illegal, yet this is probably only the tip of a very smelly scandal, because so few water companies provided any information whatsoever. All nine water companies were sent requests about when their spills started and when they stopped, but only Thames, Southern and Wessex provided details. The BBC cross-referenced those with the Met Office’s rainfall data and found that most of the spills took place during the drought last year. As an example, take Wessex, which covers my and the Minister’s constituencies. It admitted 215 individual spills at 68 different sites that lasted more than 60 hot, rainless days. That is one hell of a lot of illegal poo. My hon. Friend the Member for Broadland (Jerome Mayhew) looks quizzical, but he can ask the BBC if he wishes.
The Beeb had to rely on water companies’ own monitoring equipment, but—surprise, surprise—South West Water claimed it could not help because it has very old equipment; more likely is that it just could not be bothered to reply. I am afraid it is a bit like Russell Brand: not to be trusted. South West Water has a broken moral compass and a cavalier attitude to its own filth. In my view, it is a working certainty that South West Water was and still is quietly pumping pollution into our rivers, but we do not know how much or when.
The people who ought to be finding out are equally powerless to do so. The Environment Agency does not have the manpower or the time to investigate every single infringement. It has to rely on information from the companies themselves. In 2010, its budget was halved, and austerity came at a price. The Environment Agency no longer audits water companies every year, which it is meant to do by law. Only a third of all audits, to check if companies are telling the truth about pollution and illegal sewage, take place. Audits for South West Water, with its dismal record of pollution, are missing for eight of the last 13 years. I repeat: missing for eight of the last 13 years.
This company of ruthless, money-grabbing cowboys makes Al Capone look like an angel. South West Water is by far and away the worst water company in this country. The chief executive was paid £456,000 last year, which is four times more than the Prime Minister of the United Kingdom, and you should see the size of the bonuses these people get, Mr Hollobone. The same chief executive could have cleaned up an extra £450,000 this year, but she reckoned it would be good PR to turn it down—it makes her look like a caring type of chief exec, doesn’t it—so I will be coming round with a begging bowl a bit later if you could give generously to help her.
Let us not forget the company’s chair, the squeaky clean figurehead of Pennon Group, who was appointed deliberately to add gravitas to the grubby business of getting rid of what goes down the toilet. Her name is Gill Rider—actually, Dr Gill Rider, but if she wants to give you the botty probe, say no. She did five years at the top of the Cabinet Office, so she should jolly well understand what it takes for leaks and dirty deeds. She is also president of the Marine Biological Association, which was set up to help protect the environment of our coasts. What a wonderful irony that is, given that South West Water sewage ends up in the sea.
Miss Rider is of course the non-executive chairperson of Pennon Group, which is why I am afraid the poor lady has to scrape by on £113,000 a year. Perhaps it was her who suggested hiring a firm of top City lawyers to scare off local news organisations, and the Minister is aware of this. The editors were bullied by a City law firm into censoring my press releases about this company for fear of writs for defamation. Those are the tactics of mobsters, but I am afraid that Dr Gill Rider is used to getting her own way. One foot out of line, and you risk ending up with a severed horse’s head on your pillow—or perhaps, unfortunately, dead fish in the river.
That reminds me that there is in Tiverton an almost dead building firm called 3 Rivers Developments. It was conceived by senior officers in Mid Devon District Council, next to the Exe. They thought it would solve their financial problems. They have never built a Lego house, never mind a real one. They do not have a clue. Six years and £21 million later, the company is stony broke. There is an irony in all that. The kindest thing would be to cut their losses and shut it down—full administration, which is the only way to get to the bottom of what has gone on. We understand that as MPs—we have seen it in our seats—but the Liberal loonies decided to let it limp on, haemorrhaging public money. By the way, this is a political party that promised big change in Mid Devon. They cannot even change themselves. I noticed with some alarm that one of the members elected to Tiverton Town Council in May has not turned up for a single meeting—my hon. Friend the Minister looks shocked—so it is no wonder that people are calling for a by-election to unseat him.
The Liberal MP for the area, the hon. Member for Tiverton and Honiton (Richard Foord), who is in his place, ought to be—dare I say it—kicking the backsides of South West Water on a painful and regular basis. I gather that he would like the company to be reformed. I am sure that South West Water will take his views with the seriousness they deserve—and take no notice at all. I will do the kicking, because that is the job of an MP. I have attacked South West Water once, twice, three times, four times. I will not rest until this is sorted, and I have sharp toecaps. I have already highlighted the shortcomings of the Environment Agency and Ofwat—the regulators are far from rapid in their response to water company excesses—but I must say to my hon. Friend the Minister that her Department, the Department for Environment, Food and Rural Affairs, is responsible. I gently say that the Department cannot plead complete innocence. I recognise that the Minister has worked hard—she is my neighbour in Taunton—to steer tough new water legislation through Westminster. It is good news to be able to offer limitless fines as a punishment for polluting our rivers—fantastic. But the whole exercise is pointless if the agencies cannot enforce the law. That is what is happening, and it should not be.
I am sure that the Minister will recall the Environment Act 2021. It created the brand-new Office for Environmental Protection, which is charged with holding everybody who is responsible to account. Ministers, Departments and agencies all come under the new OEP, and the new OEP has already spoken. The OEP opened an investigation into the Environment Agency, Ofwat and DEFRA last June, amid concerns that they had not properly been enforcing the law. At the heart of the case, the OEP said, was whether those bodies were correctly interpreting what count as “extraordinary circumstances”. Now, that is open to interpretation. Water companies have been granted permits to discharge sewage into rivers and seas hundreds of thousands of times a year when their network has been overwhelmed by rainwater—we have had serious flooding in Somerset, as the Minister knows, over the last 48 hours—on the basis that such rainfalls were considered “extraordinary circumstances”. The OEP, however, believes that DEFRA, the EA and Ofwat may be being too lenient in interpreting the law. I ask my hon. Friend the Minister and her Department to defend themselves against the public body that they created. This is a monumental mess.
Mr Liddell-Grainger
I give way to the Member for the women’s auxiliary ballerina corps.
Richard Foord
The hon. Member is giving a bombastic speech of which the late Lord Flashheart would have been very proud. What does he think of the actions of the Government in this space? Although he seeks to shift the blame on to water companies or regulators, the Government ultimately have the responsibility for the regulation of South West Water and for holding it to account.
Mr Liddell-Grainger
More to be pitied than scolded, Mr Hollobone. I would say to the hon. Member that he must listen to what Members in this House say. We are not complete morons. I have laid out why I was saying what I was doing. I have made the point.
I know that my hon. Friend the Minister, whom I have worked with for over a decade, understands that there is much to do, and the OEP has made it clear that DEFRA, the EA and Ofwat have a lot to answer for. The hon. Member for Tiverton and Honiton may not know this as a new MP—I understand the limitations—but DEFRA is a Government Department. It is the Department for Environment, Food And Rural Affairs, as my hon. Friend the Member for Broadland mouthed with me— I am grateful to him for that.
The hon. Member for Tiverton and Honiton needs to sit up and listen. He really does. Quite honestly, I wish he was a little more proactive on South West Water, because all we get from him is resounding silence. I know he was a major in the education corps, but that is not an excuse.
My hon. Friend the Minister’s constituency includes Taunton, which is on a flood plain—we are the levels—so she knows how important water is. Will she say in response what action the OEP needs to take? How are we going to get South West Water to actually do the job, because its staff and team are not doing it and it is going to go bankrupt at some point because it is haemorrhaging money? How we are going to stop this before we all end up back in Westminster Hall or the main Chamber saying, “What did we miss?” I am glad that the Minister is in her place, and I look forward, as always, to hearing her words of wisdom.
The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Rebecca Pow)
Mr Hollobone, it is a pleasure to have you in the Chair today to preside over this important debate about one of our water companies, South West Water.
Like my hon. Friend the Member for Bridgwater and West Somerset (Mr Liddell-Grainger), I am disappointed at the overall environmental performance of South West Water and the impacts that that is having on the local environment. I have been regularly meeting the chief executive officers of companies identified as lagging in their performance commitments, including the CEO of South West Water. I expect to hear of the progress it has made this year and its plans on how it will continue to improve.
There are some promising signs of improvement since the previous debate on this topic in this Chamber, back in February, although I do not believe that my hon. Friend attended that. South West Water has been upgraded from one star in 2021 to two stars in 2022, according to the Environment Agency’s environmental performance assessment. Of course, this is a very long way to go to get the outcomes that customers, regulators and the Government expect.
South West Water has consistently been one of the worst-performing companies for high levels of total pollution incidents and, despite recent improvement, it was still significantly above the industry average for total pollution incidents in 2022. It must take urgent steps to further reduce these pollution incidents, and I expect to see sustained and continued improvement. I have spoken to it about this many times.
I am also aware of the concerns raised about South West Water’s use of combined sewer overflows and the impact that has on coastal communities. South West Water has made good progress on monitoring storm overflows, has met its deadline for 100% coverage by the end of the year, and has achieved a 30% decrease in the number of spills from storm overflows. I am pleased to say that I received an update just this week, from right across the water industry, to say that 96% of overflows are now monitored, with the remainder on track to hit our target of 100% by our deadline at the end of this year.
I welcome the shadow Minister, the hon. Member for Chesterfield (Mr Perkins), to his place. I do not think that this is our first meeting together. I have to point out, though, that under Labour, only 7% of overflows were monitored. It was this Government who introduced the monitoring, and that is why we have a picture of what is happening. It was actually the Labour party that allowed water companies to self-monitor. That was alluded to, I think, by my hon. Friend the Member for Bridgwater and West Somerset, and we must not forget that.
On 29 August, I called the CEO of South West Water regarding Harlyn bay, the most beautiful bay in Cornwall, following reports of discharges from storm sewage overflows and reports of increases in sickness among bathers and surfers. The Environment Agency is investigating that. Clearly, action can be taken only if we have the evidence and if there is an issue. There is a permit system and there are exemptions for extreme weather—we know why that is in place—but I have asked the CEO to ensure that, should pollution be identified, signage is put on the beach so that it is made very clear to bathers and surfers alike. They have taken up my point.
Rebecca Pow
I will carry on for a moment.
On storm overflows and discharges in the south-west, Ofwat announced, as part of a £2.2 billion accelerated infrastructure package that this Government triggered, that South West Water will accelerate £70 million of investment to deliver 15 storm overflow improvement schemes in the Falmouth and Sidmouth catchments. That will ensure that they meet the new bathing water and shellfish requirements and will significantly improve standards to protect public health at some of the south-west’s most important sites. Further investment to meet our strict targets will be required as part of the draft water company business plans for the next price control period. Those are being looked at right now. They will be published shortly and scrutinised by the regulator to ensure that we get the infrastructure and efficiency we need, balancing the need for improvement with managing people’s bills.
No Government have ever done as much as this Government are doing to tackle storm overflows. In 2013, the Government set out expectations that water companies must monitor the vast majority of those combined sewer overflows, as I referenced earlier. It is that monitoring that has meant that regulators understand the scale of combined sewer overflow discharges and can take stronger action within the existing legal framework.
In 2022, the Government launched the storm overflows discharge reduction plan. Our strict targets will see the toughest ever crackdown on sewage spills and will require water companies to deliver the largest infrastructure project in water company history—that is, £56 billion by 2050. As my hon. Friend the Member for Bridgwater and West Somerset may be aware, there has been a court case and I am pleased to say that last week the High Court found that our plan went beyond legal requirements. We have been consulting on expanding our sewage overflows plan further to cover coasts, estuaries and marine protected sites—something I have particularly pushed for. We have announced our intention to make the plan’s target a legal requirement under that all-important Environment Act 2021, which I was so proud to take through Parliament. It is a game-changing piece of legislation; there is no doubt about that.
We also required water companies to produce action plans explaining how they will improve every storm overflow in England. South West Water will not be able to escape this; they have to do that, too. Those are on officials’ desks being worked through, and they will be published shortly. I hope that my hon. Friend realises that a great amount is under way by this Government.
Rebecca Pow
I will do my final paragraph on this subject and then I will give way. In April 2023, the Government published their “Plan for Water”, which is a comprehensive strategy to transform our water environment, dealing with supply, demand and pollution, and pulling everything together to deal with the needs of society for water in future.
Richard Foord
I heard the Minister say a moment ago that enforcement action can only take place where there is evidence. Is it the case that the Minister does not have sufficient evidence for enforcement action to take place against South West Water?
Rebecca Pow
I thank the hon. Gentleman for that question. One cannot take a court case without sufficient evidence; that is absolutely critical to any court case. I will come on to that, the actions that the Environment Agency is taking and its enforcement powers in a minute, but first I must refer to what some of the other parties think would be the right thing to do.
The Labour party has been calling for mandatory monitoring when we have already delivered it, as well as automatic fines that would make sanctions weaker and a plan to tackle sewage that simply is not credible. When it comes to talking about water, the Liberal Democrats do not have a plan. They seem to think that we can flip a switch and fix it overnight. Even if we could flip a switch, it would mean sewage backing up into people’s homes and businesses and widespread mains waterpipe bursts across the country. We are the only party that has a credible plan to tackle this problem, backed by more investment, stronger regulation and tougher enforcement. That will all be applied to South West Water as appropriate.
I will touch on water security, because that has been a significant issue in the south-west. I am well aware that South West Water customers in Cornwall and Devon have been under hosepipe bans for extended periods of time—since last year, in some cases. I am pleased that South West Water will lift the hosepipe bans next week. I have personally visited South West Water to look at the issues: I have been to the reservoirs referenced, looked at how their size is being increased and how the issue is being tackled to address the whole water-resilient supply. We are working with South West Water, and it is working on emergency plans for situations of drought.
Where performance does not improve, the Government and regulators will not hesitate to hold water companies, including South West Water, to account. Back in 2015, the Environment Agency brought 59 prosecutions against water companies, securing fines of £150 million. As the House will be aware, South West Water has recently been fined £2.1 million in criminal charges relating to offences between 15 July 2016 and 20 August 2020. In response to the point made by the hon. Member for Tiverton and Honiton (Richard Foord), of course the EA had the evidence and data. That is how it could take that strong action.
The subject of enforcement was raised. The EA had its budget for enforcement expanded by £2.2 million a year to tackle enforcement, and Ofwat received a further £11.3 million uplift for enforcement. This is an absolute priority. Furthermore, following its categorisation as a lagging company in 2022, South West Water was required by Ofwat to publish an action plan setting out how it will improve its performance. It was published in 2023 and updated earlier this month, and I will be tracking its progress. Enforcement is being taken really seriously, and I am sure the House is aware that this is actually the largest criminal and civil investigation, investigating 2,200 sewage treatment works. It is being undertaken right now by the Environment Agency and Ofwat into water company permit compliance.
I must quickly allude to that BBC report. I was a news reporter, and I prided myself on my data and sources. They obviously did their report, but it would need to stand up in court if the EA chose to prosecute any of the cases raised by the BBC. If it stands up in court and the information is there, of course the EA will take action if it finds non-compliance. Huge amounts of data were analysed, and it must be thoroughly analysed by the EA in order to go to court, but more openness and transparency are very much needed in the water industry. That is being worked on.
We continue to take action to strengthen the regulator’s powers to better hold water companies to account, and we are in the process of removing the cap on civil penalties for environmental regulators to drive compliance. I share concerns about dividends and executive pay—they must reflect performance. Ofwat has recently strengthened its ability to take enforcement action against water companies that do not link dividend payments with their performance, using its powers under the Environment Act 2021. In June, Ofwat made it clear that customers will no longer fund executive bonus payments that have not been sufficiently justified. I know that my hon. Friend the Member for Bridgwater and West Somerset will be interested in that.
Motion lapsed (Standing Order No. 10(6)).