I thank my hon. Friend the Member for East Devon (Simon Jupp) for this timely debate. It is clear from the contributions across parties that we all feel strongly that this issue must be gripped and grasped.
The water industry is fairly heavily regulated. It has Ofwat, the economic regulator; the Environment Agency, the environmental regulator; and the Drinking Water Inspectorate, the drinking water regulator. The key is to make those regulators work effectively together, and to understand the underlying problems. As has been explained, finding a problem and imposing a penalty is not enough. We have to ensure that the problem itself is rectified.
South West Water did not perform well under Ofwat. The December 2022 report, which my hon. Friend the Member for East Devon referred to, set out that South West Water had fallen below its commitment level in five separate areas: customer satisfaction; the number and duration of water supply interruptions; water quality; the second highest number of pollution incidents in the country; and treatment work compliance, resulting in the £13.3 million fine.
Given that Ofwat set other targets, one asks why those have not been met and acknowledged. There is an allowance for investing in improvements, and South West Water had the second lowest investment. Given that it has some of the biggest problems, why is it the second lowest spender? It spent only 46% of its allowance—why? It is incumbent on South West Water to explain that to us. I certainly hope Ofwat will dig a little deeper into the reasons and look at what we might do differently to ensure the right level of investment. As has been said, the Environment Agency, the second regulator, looked at six metrics, and South West Water got only one star—the lowest rating—on environmental performance.
My hon. Friends have already set out what the Government have rightly done to shine a light on the problems and inadequacies, and to put in place a remedy, but we need more than just fines. We need to unpick how we will drive forward the change that is needed and understand better the cause of the problem. We regularly blame the low settlement figure on privatisation, given the geography of the south-west, but other than the continuing Government contribution to our water charges, for which I am extremely grateful, I am not aware of any work that has been done to look at the underspend. Is that argument justified, and how can that investment be put back? South West Water may well say that it cannot be done, but until we know what the figure is, we cannot assess its responsibility since privatisation and identify where more help needs to come from the Government. Ultimately, although our water is in private hands, it is a public good. It may be that the Minister can help me by providing some figures on that.
The second thing we clearly have to look at post privatisation is the role of the shareholder. Do we feel that, in this case, the shareholders have been complacent? What happened to corporate governance? What happened to the obligation to be concerned about businesses’ impact on their environment? What happened to their social responsibility? It seems very strange that there is a tick in the box in South West Water’s accounts, yet there are these incredible shortfalls.