South East Water: Disruption of Supply

My Lords, climate experts are predicting that a super El Niño this autumn could lead to 2027 being the hottest year on record. We know this today, so what exactly are the Government doing now to prepare the country in advance and avoid the disruption to water supplies as seen last spring? There can be no excuses next year that the Government did not know it was coming.

The Government established the Water Delivery Taskforce last spring to ensure that we have sufficient water supplies and wastewater capacity to support the Government’s ambitions and the country as a whole. Having sufficient water supply is absolutely critical for the country, and is something that we are taking very seriously. I am sure the noble Earl will be interested in looking at how the proposals in the water Bill, which is coming later this year, will also help to support the long-term security of our water industry.

At what critical point of failure are the Government willing to act in the interests of customers in the South East Water area, who have been failed time and again? Will the Government now urgently consider a different model from the previous Government—one which rejects shareholder profit being placed above investment in more resilient systems—and change to something like a mutually owned public-benefit model, or will we continue to see care homes struggling and businesses closing because they are failed by a service that is so fundamental? When exactly will we get a water Bill to fix this?

I do not think there is anybody in this House who would disagree that the water industry needs a serious shake-up. That is one reason why we brought in, as a priority, the Water (Special Measures) Bill when we came into power in the previous Session, and it is why a priority for this Session is the water Bill that will come later this year. Clearly, proper support for customers is critical. We cannot have a situation where customers cannot rely on their water service. We will be bringing in reforms in that Bill that should lead to greater control in order that we do not continually end up in the situation that we have ended up in recently.

My Lords, working as the chairman of a small water company means that one does know a bit about it. I just want to ask the Minister: when are we going to stop pouring fresh water into the sea during the winter in the east of England and then being so short of water in the east of England that the Essex & Suffolk Water company has announced that it cannot provide water for any new business or extension of an old business until 2036? The Government’s water Statement does not cover this fundamental nonsense. We should be collecting the water and having it so that people can get on with their jobs.

The noble Lord makes good points. One problem that we clearly have is that there are parts of the country that have plenty of water and parts that have very little water. Unfortunately, the parts that have very little water tend to be the ones with the highest populations. We have to look at how we are going to manage that long term, because clearly what we are doing at the moment simply is not working and is not the right approach. Again, that is why we want to reform the water industry and shake it up properly. It is critical that the points the noble Lord makes are taken into consideration, because we have to get this right.

The Minister knows that she has my full support in shaking up the water industry, as we have discussed on quite a number of occasions. While it is all very well for us to tell her to hurry up and supply more water, can she tell the House how long it takes to build a reservoir?

That is a very good question. Obviously, we have not built a new reservoir for more than 30 years. That is one reason why we have reduced domestic capacity, as the noble Lord knows. We need to just get on with this as best we can. We are trying to get a co-ordinated system-wide approach to it. Havant Thicket is the first new reservoir, so we are using that as a live learning opportunity for the Government, regulators and the water companies, because we all need to work together if we are going to do this. A reservoir senior sponsorship group was established by the Water Delivery Taskforce, designed to both identify and resolve any barriers that we have in delivering a new reservoir. There has been talk of reservoirs for years, so we need to work out why it is not happening so that we can crack on and make it happen.

The South East Water company is something of a joke. If I lived in Tunbridge Wells, I would be “Angry of Tunbridge Wells”. The failures in supply in parts of Kent over the last two or three years have been quite profound. What measures can we take to make sure that the company improves its performance? Is there a case for it being taken into some form of control by the state?

I am sure the noble Lord is aware that the chair and CEO of South East Water have resigned following calls from Defra Ministers. My colleague Minister Hardy met the company twice at the end of last month and wanted to understand better what it was doing about compensation plans, but also a proper action plan for this summer. South East Water has also been held to account through the Water Delivery Taskforce to scrutinise its infrastructure delivery. Obviously, we are also aware that Ofwat has fined it, but there is no point fining water companies if it does not fundamentally change their behaviour, so we need to go further. Ofwat is looking at what to do about that. A licence investigation from Ofwat is going on because of South East Water’s repeated supply failures, and the Drinking Water Inspectorate is investigating the company. Ofwat has also opened enforcement action because South East Water is no longer complying with its investment-grade rating, as Moody’s obviously downgraded it. A lot is happening here but, fundamentally, we need to totally reform the water system so that this does not keep happening in the future.

My Lords, 84% of proposed UK data centres are in areas already in water stress or projected to be so by 2040, and water bills for households are expected to rise because of the construction of data centres. Does the Minister agree that we should not be building data centres where there is not enough water and that households should not be paying for this construction by tech companies?

It is quite a challenge, is it not? How do we get that balance right? It is really challenging: we know in this country that we need more infrastructure, but how do we balance the needs of infrastructure with the water requirements that go along with that? The noble Baroness talked about data companies, but you could say the same for housing and other industries that use a lot of water, because we all do. We are looking at data companies in particular because we need to ensure that we have sufficient water supply without impacting on other areas.

My Lords, will my noble friend resist the temptation to build more desalination plants in areas of this country that are pretty wet already? In Cornwall, South West Water is trying to build a desal plant when it could perfectly well look at more reservoirs, rather than wasting power—which is in short supply around there—on pumping water up the hill.

I do not know the detail of the proposals in Cornwall but, as I said, we need to get the balance right. It is really important. As I said in answer to the question from the noble Lord, Lord Deben, we have a problem with populations often being in the driest part of the country, so we need to get a proper overview of this.

My Lords, a lot of the regulation relating to water still comes from the European Union. Will the Government look at that in isolation or as part of the water Bill when it is before the House this autumn?

We need to look at it in the round. As the noble Baroness is aware, we are having a lot of discussions with the European Union at the moment, and it is important to learn from other countries and from what works in different places. Some countries are better at saving water than we are in this country, for example. I do not know the detail of where we will end up—negotiations are still ongoing—but we certainly need to take into account the way the European Union approaches water and the legislation that is likely to be with us.