Water Industry: Financial Resilience

Debate between Rebecca Pow and Karen Buck

Wednesday 28th June 2023 Commons Chamber

[Rebecca Pow]

I thank my hon. Friend for pointing that out. He is absolutely right: whatever the Opposition say today, one of the measures they did not vote for in the Environment Act 2021 was to enable Ofwat to hold water companies to account where they do not demonstrate a link between dividends and performance. They must have sound performance and be performing for their customers, otherwise they cannot pay out their dividends.

[Ms Karen Buck (Westminster North) (Lab)]

The staggering complacency we are hearing from the Minister will come as no comfort to my constituents who were flooded out three years ago in the west London floods, which were the second 100-year event in less than a decade. If Ofwat has been doing such a good job in holding the water companies to account, as she is now apparently telling us, why are we in this situation? What exactly has Ofwat been doing?

[Rebecca Pow]

It has to be remembered that privatisation occurred in 1989. We have had a succession of different Governments during that time, and it has been this Government who have accelerated clamping down on water companies and opening up transparency. The hon. Lady asks what Ofwat has done, and I will name just a few things. Since 2020, Ofwat has updated the licences so that if a water company loses its investment credit rating, it is barred from making payouts to shareholders. In July 2022, it set out additional proposals to increase financial resilience, including companies having a stronger credit rating. In March, it announced that it would take enforcement actions against water companies that do not link dividend payments to performance. We have done more than any Government before to ensure that we have a fully functioning, strong regulator.

Impact of Floods in North Westminster

Debate between Rebecca Pow and Karen Buck

Tuesday 7th September 2021 Westminster Hall

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

As ever, it is a delight to see you in the Chair, Sir David.

I thank the hon. Member for Westminster North (Ms Buck) for securing this important debate. The issue has clearly affected so many people’s lives, as we saw in the news during the summer. I pay tribute to all those who helped: the emergency services, and in particular the Environment Agency and the fire services, who really led on this emergency.

My heart goes out to all those people who suffered; I come from Somerset, so I know about flooding. I have also visited a great many people around the country, so we know how devastating flooding can be for people. I do not underestimate what it is like, and nor do the Government: we have doubled flood funding to £5.2 billion in the next spending period, which will put in place more than 2,000 new defences around the country.

The hon. Member for Westminster North has focused very much on surface water flooding, and in the new Budget we have escalated the importance placed on that issue. Approximately a third of that spending will be on surface water flooding schemes, so although it did not help the hon. Lady this July—although there are some schemes within her constituency—that issue is going to receive much greater emphasis going forward, and rightly so. Surface water flooding is the most widespread form of flooding in England, with around 3.2 million properties at risk. As the hon. Lady pointed out, the effects of climate change combined with population growth mean that we are expecting more of these related issues.

However, everybody—not just the Government—has a responsibility for managing water effectively. In England, the statutory responsibility for managing flood risk falls to the risk management authorities, including the Environment Agency and the lead local flood authorities. The Environment Agency has a strategic overview role for all sources of flooding, and although it does not lead on surface water flooding, it does provide support and advice on risks and facilitates effective partnerships.

I have just been on a visit to Merseyside and West Yorkshire, and have seen some very good examples of those partnerships working to get over some of the problems that people are facing. The lead local flood authorities—county and unitary councils—have the lead operational role in managing all local flood risks, including surface water, and are responsible for identifying the risks and managing them as part of the local risk management strategy. Alongside this, the highways authorities have responsibility for the road network, which includes highway and road drainage maintenance, and water and sewerage companies are responsible for maintaining the public sewer network to ensure that the area is well drained.

As the hon. Member for Westminster North said, we saw devastating flooding this summer, not just in Westminster but around the world. Here, we had those incidents in July and August: the Met Office recorded over a month’s worth of rainfall in just a few hours, and the localised nature of the downpours meant that certain areas were incredibly badly affected while neighbours were not affected at all. It was quite extraordinary, as I think the hon. Lady will agree. The flooding witnessed in north Westminster was primarily due to surface water. This kind of event occurs with extreme rainfall, where the water simply cannot drain away as quickly as it is arriving.

[Ms Buck]

I want to stress one of the central points of the argument: Thames Water built a £17 million flood alleviation scheme, completed just six years ago, to deal with exactly this problem in exactly this area, yet it failed catastrophically. We have been unable to get Thames Water to properly respond to us about why that happened—whether it was a planning issue or an operational one. That is one of the key things that I would like the Minister to help me get Thames Water to respond to.

[Rebecca Pow]

I thank the hon. Lady for that intervention, and I hear what she says. Measures were put in place when the Met Office gave its warnings, but of course it was all so quick: the fire brigade swung into action, but those things that the Environment Agency could whizz into place, such as trash screens, just could not cope with that flooding or the sewage overflows and so forth. That is what the Thames tideway tunnel project is going to address, and I have a meeting with those involved later this afternoon. However, the hon. Lady is right that questions need to be asked about that new development. As she referred to, a big public meeting was held with Westminster City Council after the flooding.