Question: The Periodic Review of Water Prices is obviously at a crucial point at the moment as we wait for guidance from the Secretary of State for Environment, Food and Rural Affairs to be published.  What does Thames Water want from this review? 

John Sexton: We would like to see the focus of this review differ from that of previous ones.  In recent years, careful investment of customers’ money has greatly improved the quality of wastewater treatment and drinking water quality.  We now meet European standards consistently and the River Thames is the cleanest metropolitan estuary in the world. 

So it is time to change the focus from those things that we can see above ground to the essential network of pipes under the ground.  We all depend on those pipes when we turn on our taps, but the network is getting very old.  It is in a poor condition in many places and we really do need to start investing in it.

Question: The Environmental Agency is lobbying for more investment in environmental measures.  Where do you think environmental investment should be focussed?

John Sexton: We are very happy to be party to improving the environment – that goes without saying - but we must make sure it isn’t at the expense of proper investment to improve the condition of the pipes underground.  Providing the environmental investment is alongside this we are quite happy.  But if a choice has to be made, no one is going to thank us if water supplies in London aren’t up to scratch in a few years time because we haven’t stood our ground and made sure the investment is in the right places.

Question: So why is it important to have these environmental measures?

John Sexton: Many of our environmental obligations come from European legislation, so that has to be complied with, but we also have some other very important environmental areas to tackle.  I class odours from sewage works and the relatively few cases of regular sewage flooding as ‘environmental’ issues and they really do need to be funded in order that we can deal with them.

Question: How can you justify price increases for customers?

John Sexton: If there is new legislation then obviously we have to comply with it.  We don’t set the legislation but we want to make sure we do fully comply with national and European law.  But, in the end, our combined average bill is the lowest in England and Wales and, even with the increases in bills that we have called for in our Draft Business Plan; our customers will still have the lowest bills in the country for at least the next six years.  With the relative affluence of London and the South East and the very specific nature of providing services here, I think that our customers will still be getting a very good deal for a long time to come.

We are seeing London growing rapidly.  It is forecast that another 700,000 people will arrive in the capital by 2016.  That’s equivalent to absorbing the population of Leeds.

We are seeing an increase in the use of water.  There is increasing use of water for leisure purposes and, as London continues to grow, people are not going thank us if when they turn on the tap water doesn’t come out.  Our job is to make sure it does and we do need this investment to make sure that happens.

Question: How does the standard of drinking water in London compare to other major European cities like Paris or Rome?

John Sexton: The quality of drinking water across the UK is excellent.  The UK standards for drinking water fully comply with European regulations.  Thames Water carries out over one million tests a year on our water. About half of them are used to check compliance with the standards in the regulations and  99.91 per cent  complied last year.  Quality is not the issue it’s just making sure we can carry on putting sufficient water through the pipes to meet customers demand in the future.

Question: How do you think the government has treated your sector since 1997?

John Sexton: At the last price review we felt that the government was very responsive to the case made by the Environment Agency – that there was a huge need for investment throughout the UK to improve the quality of rivers - and that did take precedence over some of the maintenance activities we felt necessary to ensure the system stayed up to date. 

We don’t feel last time the balance was right.  This time we are determined that what we would consider the ‘day job’ comes first.  If then it is politically and publicly acceptable for prices to go up further to improve the standards of service and to improve the environmental performance then that’s fine, but it must not displace the things that you and I rely on every day.

Question: What else would you like the government to be doing?

John Sexton: To look more closely at the key issues that our customers talk to us about.  Sewer flooding is one of those issues.  In London we have a system whereby the Victorians covered the rivers and turned them into sewers.  Effectively the sewers carry all the rainwater which in most other towns and cities would be in rivers.  So when we experience heavy rainfall we do get occasions when the sewers overflow and this does lead to homes and gardens being flooded with sewage.  That’s really totally unacceptable – we do need to make some improvements to the hydraulic capacity of our sewers that’s quite clearly the customers first issue.

The second issue that customers contact us about is odour.  It is very, very difficult to remove odour from sewage works.  Obviously we deal with a product that is going to be odorous and we have a lot of sewage treatment works in London and the Thames Valley so it is inevitable that it will impact on our customers.  We are building new modern works, in Reading for example, where the processes are fully covered and where odour is at an absolute minimum, but the old sites don’t do this and the customers quite rightly are up in arms if they live near them.  So we really must do more to tackle that as an issue as well. 

Question: Can you give us an idea of the scale on which you are working on?

John Sexton: Thames Water is responsible for 20,000 miles of water mains and something like 18 million joints - that’s a hell of a task.  I don’t think people appreciate just what an infrastructure there is under the ground that supports the supply of clean, fresh drinking water.  A third of it is over 150 years old, so it’s quite clear that we do need to address these issues.