Environment secretary Michael Gove has issued a rebuke to the UK’s major water companies ahead of a meeting tomorrow with chief executives and the sector regulators.
It follows a speech in which Gove committed to strengthening Ofwat’s powers to update company licences “to make sure they can do their job”.
A statement released this afternoon by the Department for Environment, Food and Rural Affairs (DEFRA) indicated that at tomorrow’s meeting, Gove will stress that he is not seeing enough immediate improvements on environmental performance, leakage and supply, and consumer experience.
Utility Week understands that although the statement reads as if Gove has summoned industry bosses on the back of the EA report, the meeting is in fact a long-standing commitment.
A water industry source told Utility Week that the confrontational tone of the statement was at odds with previous meetings and that the agenda was far wider than the EA report.
Delivering a speech at Kew Gardens yesterday, Gove quoted statistics around the disappointing condition of the UK waterways and called on water companies to do more. He also attacked what he said was continued under-performance at Southern Water.
He said both government and the industry needed to take action and to that end, DEFRA would use the Environment Bill to support regulators and that Ofwat needed more powers.
Here are his comments in full:
“The water companies of this country have an essential role in all our lives. They manage our most precious natural resource – and, of course, they also enjoy the economic benefits of a natural monopoly. We are captive consumers and their return on capital is guaranteed.
Their performance, however, isn’t just a matter for their shareholders to judge. The regulators Ofwat, the Environment Agency and the Drinking Water Inspectorate also assess how well the companies are serving us as consumers and how well they are protecting the environment.
“At present, 16% of our rivers, lakes, estuaries and coastal waters are in a ‘high or good status’. Our target is to improve this to 75% as soon as is practicable. Of course this cannot be achieved by water companies alone, but the role water companies are playing is simply not good enough. The recent Environmental Performance Assessment by the EA described water companies’ record in 2018 as ‘simply unacceptable’.
“Around 3.1billion litres of water still leak out every day – more than a fifth of the total supply. On the demand side, we as a government will soon publish a consultation on how to reduce household water use – for example, how to move towards increased metering.
“But water companies must bear their share of responsibility. And in particular on pollution.
“Southern Water has recently been penalised £126 million by Ofwat for transgressions including the dumping of untreated effluent into beaches, rivers and streams –aggravated by Southern’s failure to confess to them. For these transgressions, Southern said it was ‘deeply sorry’. Yet they still went on to have even more serious pollution incidents in 2018.
“We need to take action and so do they.
“The government’s priorities for the water sector, in line with the 25 Year Plan, are clear: we should be securing long-term, resilient water and wastewater services, we should protect customers from potentially unaffordable bills and must make sure that we have a cleaner, greener country for the next generation.
“So in the Environment Bill, Defra will support the regulators in ensuring that customers and the environment are protected. We will legislate to strengthen Ofwat’s powers to update water companies’ licences, in order to make sure that they can do their job.”
Water UK has pointed out that while the EA report was disappointing, it still showed six out of nine companies are rated good or better and the most serious pollution incidents were down 18% on the previous year in 2018.