Nationalising water would cost up to £100bn and not resolve problems – Environment Secretary
Nationalising water firms would cost up to £100 billion and “not resolve the problems” faced by customers, according to the UK Government’s Environment Secretary.
Steve Reed ruled out bringing the companies back into public ownership as he outlined an independent review into the industry following a public outcry over bills, bonuses and sewage pollution.
Mr Reed said the money to pursue nationalisation “doesn’t exist” and rivers, lakes and seas would be “filled with even more sewage and pollution” during the time it would take to unpick current models of ownership.
Review
The UK and Welsh governments have announced what they said was the largest review of the sector since privatisation, with an independent commission chaired by the former deputy governor of the Bank of England, Sir Jon Cunliffe.
It will focus on the water sector and its regulation, and will have no limits in the scope of its potential recommendations, including wholesale reform of Ofwat and how it interacts with other watchdogs such as the Environment Agency.
Scandal
Speaking in the House of Commons, Green Party co-leader Adrian Ramsay raised the “scandal” of sewage in seas and rivers before telling Mr Reed: “Since privatisation, £72 billion has been paid to shareholders in dividends while his own department highlights that it would cost £56 billion to carry out the necessary investment.
“So privatisation has failed as a model for getting the investment in place.
“And will the Secretary of State, therefore, confirm the commission will look at the ownership model for water that’s going to be effective in addressing this scandal, including considering the option of bringing water back into public hands?”
Mr Reed replied: “The reason I’ve ruled out nationalisation is because that would not resolve the problems that we face.
“We see at the Olympics in France the River Seine unable to be used for swimming because of pollution – that is a state-owned water system. We see the problems in Scotland – that is a state-owned water system as well.
“The problems are those of governance and regulation. If we were to look at nationalisation that would cost up towards £100 billion of public money, money that doesn’t exist, and the time it would take to unpick current models of ownership – during which time investment would be choked off – would see our rivers, lakes and seas filled with even more sewage and pollution rather than less.
“I’m more interested in the purity of our water than the purity of our ideology. I will do what works best as quickly as possible, the commission will give us guidance on how to change the system to make sure it works for everybody.”
Legislation
Ministers say the Water Commission’s recommendations, which will be handed to them in the second quarter of next year, will form the basis of further legislation to attract long-term investment and clean up the country’s polluted waterways and coasts.
The move comes after years of underinvestment, a growing population and extreme weather caused by climate change have led to intense pressure on England’s ageing water system, causing widespread flooding, supply issues, sewage pollution and leakages.
Public fury has swelled over the degraded state of the country’s rivers, lakes and coastal waters and at a lack of investment in water infrastructure, rising bills, high dividends and debt and executive pay and bonuses at privatised water firms.
Campaigners who want to see the water sector renationalised criticised the review for continuing with privatisation.
Sewage crisis
Matthew Topham, lead campaigner at We Own It, said: “The review is deaf to the calls of the public, anti-sewage groups and the international community to wrestle with the root cause of the sewage crisis: privatisation.
“Without serious thought, this Labour Government will be remembered for its re-privatisation of England’s water system – repeating a failed experiment which has been studiously avoided the world over.”
But a spokesperson for industry body Water UK said the sector welcomed the commission.
“Our current system is not working and needs major reform. The regulatory system is overly complex and too slow to approve vital new infrastructure.
“New homes have been blocked and even a new cancer hospital has been held up due to a lack of water.
“We hope this Water Commission can take a fundamental look at the root causes and provide clear recommendations on the changes needed.”
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Nationalise without comensation, they’ve had their money worth over and over
Most of those water companies should have their authority to operate removed due to their repeated negligence. Then government could insert its own company structures, recruit talent from the disqualified entities and crack on with the challenge of cleaning up and refurbishing/reinvesting. No dividends, no fat cat executive bonuses, better service performance.
This of course in nonsense. The issuing of bonds worth £100b would cost the country £5b a year and for that we get the value of the resource. Having the resource means we could reduce costs elsewhere – benefits to people who rely on the state to pay their water bill. NHS water bill etc etc . Add in the possible reduction in bills for the taxpayer leaves them a bit more money to spend in the UK economy instead of, as it is now, that money going to foreign countries to help their economy. Like every Starmer policy this… Read more »
They do not want such a debt added to the “National Debt” and a way around this would be the companies to buy themselves and become “not for profit” or alternatively co-op companies. Does not solve all the problems but most of the monies stay in the business.
So we can’t go back to nationalisation because decades of privatisation has funnelled infrastructure resources into the pockets of shareholders? Put up and shut up essentially? As far as I’m concerned we never did get rid of the Tory government – they’re just wearing a red rosette this time.
Starmer and Co will most definitely back away from any option that treads the toes of the international corporate and bankster cliques.
This speech is an excellent example of how Labour is not living up to its promise. There is no privatisation more hated than
Water. The message is: All methods of water delivery have problems- which is no doubt true but does not state which has the least problems. And that’s restoring public ownership. The government should stop it’s timidity and return water to where it belongs – without compensation if necessary.