Water Supply Disruption — House of Lords, 2018-03-06
Topic: Mixed Topics
Margaret Beryl Jones (Labour, Centre-left): My Lords, I thank the Minister for repeating the Statement and I pay tribute to the emergency services, who once again made us proud of their dedication and humanity when struggling in the worst of weather to provide healthcare and reach out to people cut off by the snow. I also thank many of the staff in the utilities—the engineers and the linesmen who worked in atrocious conditions to try to repair services, so that supplies of heating and water were retained. But the individual commitment of the staff cannot disguise the huge failings in the response of the water companies themselves in the recent bad weather I appreciate the update that the Minister has given today but as of yesterday, 5,000 homes were still without water in Kent and thousands of properties across Wales, parts of the Midlands and Scotland were waiting to have their supplies reconnected. In London, 12,000 households were still without water last night and relying on bottled water, but even supplies of bottled water were running out at some of the distribution points. This really is a very poor response. It is not as if the bad weather was a freak occurrence. The Met Office was warning of the predicted freeze weeks in advance. Yes, of course pipes are liable to freeze when the temperature drops but, equally, we should measure water companies’ success by the speed of their response and the interim help and support they provide to their customers I absolutely agree with Rachel Fletcher, Ofwat’s chief executive, who is quoted in the Financial Times today as saying: "While the recent severe weather conditions have undoubtedly had an impact on pipes and infrastructure, water companies have been warned time and again that they need to be better at planning ahead to deal with these sorts of situations, including proactively communicating with customers when they anticipate issues" I really struggle to understand why the water companies are so poor at this. Anyone with any business involvement knows that risk assessments and the mitigating actions that follow are fundamental to the planning process, as is having in place a proper disaster recovery system. This should be ingrained in the systems of utilities because, for example, water companies are inevitably at risk of extremes of weather, whether flood, drought or snow. I hope when the Minister met Ofwat and Water UK today they were able to reassure her that supplies will have been reconnected to all affected homes by the end of the day and that, despite the review the Minister referred to, compensation will be provided to individuals and businesses affected by the loss of supply on this occasion There is a wider challenge here. It is not just about the aftermath of one week of bad weather. The performance of the water companies has been under criticism for some time. Six companies missed their leakage targets for 2016-17, with Thames Water’s performance data showing that 670 million litres are being lost to leakages every single day. This total works out at an average of 180 litres per day being lost for each property the company supplies. Despite these failings on leakages, water bills have increased by more than 40% since privatisation, with many consumers set to have another rise in a few weeks’ time. Meanwhile, rather than fix the problems the private water companies are paying out huge dividends to investors. For example, the owners of the top nine water companies paid out more than £18 billion in dividends in the 10 years to 2016, and their CEOs are being paid huge salaries and bonuses. Clearly, these companies have got their priorities wrong I therefore have to say that the Secretary of State was quite right to criticise the water companies in his speech last week, including their tendency to avoid paying tax and to hide their earnings offshore, but like many of his speeches it lacked a follow-up action plan. These problems have been known about for some time. I hope the Minister can also confirm that as part of the review, Ofwat will be given new powers to tackle excessive pay in this sector and to require a greater proportion of profits to be reinvested in service delivery and resilience. I hope he can also confirm that Ofwat will be instructed to use its existing powers more actively to ensure that water companies plan effectively for adverse weather events in future, as we all expect of them. Finally, can the Minister confirm that Ofwat will take a more active role in overseeing companies’ delivery of leakage repairs, intervening where necessary and increasing fines for missed deadlines so that real incentives are put in place to deliver the change that we should all expect? I look forward to his response.