Thames Water: Oxfordshire

(Limited Text - Ministerial Extracts only)

Wednesday 7th February 2024 Westminster Hall

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

It is a pleasure to serve under your chairmanship, Ms Bardell. I thank the hon. Member for Oxford West and Abingdon (Layla Moran) for bringing this incredibly important debate on the performance of Thames Water before the House.

Let me be clear: Thames Water’s performance is completely unacceptable, and it must take urgent steps to turn this around. Its customers deserve better, and I want to begin by assuring this House that improving the performance of all water companies, including Thames Water, and ensuring that they deliver for customers and the environment, are top priorities for this Government.

As has been raised in this debate, the performance data for Thames Water is stark. According to Ofwat, Thames Water is failing to meet its commitments to customers on eight of the 12 common performance metrics, particularly on ensuring a consistent supply of water and on its pollution instances, as the hon. Member for Oxford West and Abingdon laid out for all to see. The Environment Agency’s findings tell a similar story, with Thames Water’s environmental performance at the worst levels since 2013, with 17 serious pollution instances in 2022.

The Government and regulators do not take underperformance lightly. As a result of failing to meet its performance commitments, Ofwat has directed Thames Water to return over £73 million to customers during the financial year of 2024-25, which is in addition to £51 million returned to customers during 2022-23. There are also ongoing investigations into compliance at sewage treatment works under way by both Ofwat and the Environment Agency. While it would inappropriate for me to comment further on the specifics of those proceedings, as they are currently under way, they are a clear example of robust regulatory action to hold water companies to account by not only Ofwat but the Environment Agency.

Ofwat has directed Thames Water to produce a service commitment plan. That will require Thames Water to publicly commit to a plan for how it will start to turn its performance around. Please be assured that regulators and the Government will scrutinise those plans in detail to ensure that everything possible is being done to get the company back on track with its service delivery, environmental performance, and ensuring that customers rightly get the good supply they deserve.

[Layla Moran]

I have been meeting with Thames Water on this issue for years now, and every time we meet, it has a plan. Every time we meet, there is a new bit to the plan or the plan has progressed a little bit. I hear now that there is a new plan: what will be different about it? It is everyone’s interest in this House to get this to work. Can the Minister assure us that this plan will actually deliver what people want?

[Robbie Moore]

I want to reassure not only the hon. Lady but every Member who has customers of Thames Water that the Government will hold the water company to account through the use of the regulators—the Environment Agency and Ofwat. I will shortly meet again with the new chief executive of Thames Water, which follows a meeting that the Secretary of State and I had with the CEOs of Thames Water and other water companies very recently. It also follows on from a meeting that the previous water Minister, my hon. Friend the Member for Taunton Deane (Rebecca Pow), had back in November. We want to take all these concerns seriously and deal with surge discharges, supply interruptions and internal sewer flooding, which was also mentioned by the hon. Member for Oxford West and Abingdon.

I know that Thames Water is under no illusions as to the scale of the challenge. It has recently published its revised three-year turnaround plan to address some of the concerns raised today, and while we all understand that it will take time to turn performance around, I want to be clear that I expect to see clear and measurable progress being made by the company as swiftly as possible.

[Tim Farron]

I want to press the Minister on the point I raised with my hon. Friend the Member for Oxford West and Abingdon (Layla Moran) a moment ago. The Secretary of State, the right hon. Member for North East Cambridgeshire (Steve Barclay), said something encouraging the other week. He said it was not right that the water companies were marking their own homework in assessing the scale of the problem. Does the Minister agree with that? More importantly, will he give us some details on the testing? There are more than a dozen water company assets around Windermere, many of which are failing, but we only know that they are failing when the water companies actually do the testing. Should it not be the case that the water companies pay for the testing but leave the Environment Agency to actually do it, so that we can have confidence that the data is independent?

[Robbie Moore]

I will come on to that point as part of my speech. I also want to clarify that we only have to turn the clock back to 2010 to see that only 7% of storm overflows were monitored. For a Government and a regulator to hold water companies to account, they need 100% monitoring, which we achieved at the end of December last year. That is 100% monitoring of storm overflow discharges compared with only 7% in 2010.

I want to pick up on some of the specific points made by the hon. Member for Oxford West and Abingdon on bathing water status. I know how important this issue is, having campaigned in my constituency for a bathing water designation on the River Wharfe in Ilkley. The hon. Lady rightly raised the issue of the “poor” classification on her bathing water designation. I know the challenges of that, since my local bathing water designation is still classed as poor. As we both recognise, that is why it is incredibly important to have a specific plan to tackle improving the designations poor, sufficient, or even good, to bring them to an excellent rating.

At Wolvercote, the Environment Agency is currently undertaking a nationally funded joint bathing water investigation, both in Yorkshire and in the Thames region, including enhanced monitoring and DNA sampling. That will help the Environment Agency find the sources of bacterial pollution and develop plans specifically on a local catchment area approach to address them.

Thames Water also has a role to play in fixing the problem. That is why, as part of its business plan from 2025 onwards, it will identify and address additional actions needed to improve the quality of the bathing water site, which the hon. Member referred to. Although those business plans are subject to scrutiny by Ofwat, to ensure value for money for customers, I welcome those positive steps to protect people and the environment.

I want to pick up on some points made about data. We must remember that bathing water quality in England has improved significantly due to robust regulation and strong investment. In 2023, almost 90% of designated bathing waters in England met good or excellent standards. That was up from 76% in 2010, despite stricter standards being introduced in 2015.

To address the point on storm overflows: the frequency and duration of storm overflow discharges in the Thames region is completely unacceptable, though it would be unrealistic to suggest that the issue can be simply turned around overnight. Independent estimates show that eliminating all discharges nationally would cost between £120 billion and £600 billion, increasing water bills between £271 and £817 per annum by 2049.

Our storm overflows discharge reduction plan is the most ambitious plan to address storm overflow discharges in water company history, delivering £60 billion of capital investment by 2050. The Government have also driven water companies to ensure that 100% of storm overflows, of which there are about 15,000, have been monitored. Furthermore, our plan for water, which is delivering more investment, stronger regulation and tougher enforcement to clean up our water, makes a step change in how we will manage our waters, delivering for customer bill payers and for our environment.

I also want to pick up on supply interruptions, which the hon. Member for Oxford West and Abingdon referred to. I know that customers in Oxfordshire and the wider Thames region have experienced multiple supply interruptions, largely as a result of adverse weather, in the past 18 months. I understand how frustrating that can be for customers. Water companies must by law ensure a continuation of water supply throughout an emergency. Plans must cover a range of risks and include the provision of alternative water supplies. Those requirements are set out in the security and emergency measures direction 2022.

I wish to assure hon. Members and the House that, during any incident, the Department for Environment, Food and Rural Affairs engages closely with water companies to obtain accurate and timely updates on the scale, impact and response, to ensure incidents are being resolved as swiftly as possible, and that impacted customers—particularly vulnerable customers—have access to alternative sources of water, such as bottled water, when a supply interruption takes place.

I understand how pressing a problem this is for affected customers, particularly in the Thames region. For that reason, this is another issue I will raise directly with the chief executive when I meet him shortly, as we have done in relation to recent supply interruptions in the Reading area.

The hon. Member for Oxford West and Abingdon mentioned storm Henk. Extreme weather can also lead to sewer flooding, such as that experienced during storm Henk in January. I understand how difficult and distressing it can be for the public when sewage gets into their gardens and properties. Indeed, recently I spoke to the Under-Secretary of State for the Home Department, my hon. Friend the Member for Newbury (Laura Farris); although her constituency is not in Oxfordshire, she has constituents who are part of the Thames Water region. We specifically talked about Lambourn in her constituency, where again Thames Water’s response to an incident has not been sufficiently robust. I expect the chief executive of Thames Water to update me on what it is doing in Lambourn when it is dealing with surface water flooding.

I want to be very clear that any sewer flooding is unacceptable and that Thames Water has reassured me that it plans to invest £1.12 billion in 250 sewage treatment works between 2025 and 2030, including those in Oxfordshire, to increase capacity to prevent sewer flooding from happening again. Ofwat will also assess internal sewage flooding inside people’s homes as a core performance commitment and where companies fall short of that metric they will be required to return money to customers under Ofwat’s outcome delivery incentives.

The hon. Member mentioned Abingdon reservoir. There is obviously a clear need for the water industry to improve the resilience of water supplies through new water resources infrastructure. Abingdon reservoir is subject to ongoing assessments, which will continue in the future, to develop the design and to understand the impacts of the scheme. Thames Water will need to ensure that any scheme that it builds will not only possess the resilience that we expect within its supply systems but has proper environmental benefits that can be demonstrated to its customers. Of course, any new development of this nature must also provide at least 10% biodiversity net gain, which again must be capable of being demonstrated.

Although the hon. Member did not mention it, I am also aware, from speaking to Members with constituencies that neighbour hers, about Witney sewage treatment works, so I will just use this opportunity, given that time permits, to provide an update on that. I am aware of the discharges from Witney sewage treatment works and the impact they have had on local communities. I share Members’ concerns about that and I want to reassure them that the Government and the regulator will take robust action on pollution incidents.

A criminal investigation into sewage discharges at Witney is currently being conducted by the Environment Agency, regarding significant sewage pollution incidents impacting the Colwell Brook and Emma’s Dyke downstream of Witney sewage treatment works. This was brought to my attention by the Solicitor General, my hon. and learned Friend the Member for Witney (Robert Courts). Although it would be inappropriate for me to comment in any detail, because this is an active investigation, there are significant consequences when water companies pollute the environment. For example, in July 2023, following an Environment Agency prosecution Thames Water was fined £3.3 million for discharging sewage that caused significant environmental impacts.

I also wish to assure the House that the Environment Agency is ensuring that treatment capacity at Witney sewage treatment works is increasing, meaning that the site will be able to treat more sewage before using its storm tanks, which will reduce the risk of pollution in the future. That work is due to be completed by 31 March 2025.

Furthermore, the Government are strengthening regulation. The Environment Agency can now use new powers to impose unlimited penalties, raising the previous cap from £250,000. This change came into effect at the end of last year and it will apply to water companies for a wider range of offences, following the Government’s changes to broaden the scope of the existing civil sanctions regime to remove the previous cap on penalties.

We are also increasing funding for the Environment Agency. Its funding was raised by both Members who have spoken today. We are providing £2.2 million per year specifically for water company enforcement activity, so that robust action is taken against illegal breaches of storm overflow permits. Both hon. Members said that the Environment Agency was not being given enough money, but I can reassure both of them and the House that, as I say, an additional £2.2 million per year is being given specifically to the Environment Agency to carry out enforcement action.

I have tried to go through all the points that have been raised, but I want to be as robust as I can. For the reasons that I have set out, it is therefore critical that all water companies, including Thames Water, clean up their act, behave transparently and take urgent action to improve their performance when they fall short. If they do not do these things, the Government will not hesitate to hold them to account.

Question put and agreed to.