‘Are Labour’s water and sewage policies enough to stop the coming sh*t storm?’

Labour’s long march to power ended this week. Alongside party-gate and Liz Truss’ mini-budget, the ‘Tory sewage scandal’ has played a key supporting role on this journey.

But despite profiting politically from the sewage scandal, Labour’s solutions offer continuity over change. With water quality inspections ramping up and legal deadlines due in the next parliament – the issue is likely to get worse before it gets better.

Could Labour end up on the receiving end of the anger they’ve channelled in opposition? Will this force Keir Starmer and his Shadow Environment Secretary, Steve Reed to go further to reform the water industry?

The mass dumping of sewage into rivers and bathing waters has become Labour’s ideal metaphor for the state the Tories have left the country in after 14 years.

The issue has gone mainstream and helped attract star appeal. Rockstar turned sewage campaigner, Feargal Sharkey has joined phone-ins with Keir, knocked on doors with candidates and even been appointed as President of SERA, Labour’s environmental society.

Sharkey’s Twitter pledges full support to Labour to “end the Tory sh*t show.” But looking at Labour’s manifesto, it is unlikely that Sharkey – along with thousands of voters and campaigners – will be thanking Labour for fixing the problem by the time of the next election.

Labour’s sewage policy

Despite talking tough on sewage, Labour in many ways is attempting to pass off existing Tory policies as its own.

Labour promises to dole out “severe” fines. The Tories introduced unlimited financial penalties in 2023. Labour promises to block executive bonuses.  Ofwat have already said they will consult on this in February.

What does go beyond existing policy is Labour’s pledge to put in place ‘automatic’ fines and make law-breaking bosses face criminal charges. But to borrow a phrase, these seem more like “sticking plaster politics” that ignore the cause of the problem – a lack of investment.

Investing to upgrade the country’s creaking Victorian sewage infrastructure required to fix water quality and end the problem with Combined Sewage Overflows (CSOs) will cost significant amounts of money and time.

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Given Labour have ruled out nationalisation, the mechanism to increase investment is Ofwat’s five year price review. Interestingly, Ofwat’s draft decision for 2025-30 is scheduled for 11 July – one week into their term if they win power. Here we will see just how ambitious the sector’s investment plans are, as well the knock-on impact on customer bills.

The Chair of the Environment Agency is “optimistic” that the levels of investment we are likely to see from water companies in this next cycle are going to make a difference. But painfully for Labour, this will not happen overnight. To make matters worse, bills will increase and so will public pressure to see more for their money.

At the same time, water quality monitoring is going to ramp up.

Labour’s manifesto has said they want to end the era of water company ‘self-monitoring’. This means that they will support the Environment Agency’s plans to increase inspections at a minimum by 4,000 a year by the end of March 2025, and then to 10,000 by April 2026.

To give a sense of perspective, this is going up from around 930 completed in the last financial year.

The Environment Agency’s new Chief Executive has also said he wants to publish more data.

Increasing accountability

More monitoring may seem like a good thing. But politically, as the Tories found out when storm overflow monitoring began under their watch, it’s not helpful for whoever is in charge. More data means more scrutiny. And what could be described as a sh*tstorm of data is coming.

An increase to physical inspections and an end to the era that campaigners argue water companies were allowed to “mark their own homework” may lift the lid on the true scale of how dirty our waters really are. Again the public’s appetite for action will only increase.

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All the while, legal deadlines loom. Water bodies are way off track to meet the 2027 Water Framework Directive target of ‘good status’. This will be a key milestone for campaigners to call for change.

Finally, while an end date is unknown, there may also be a possibility that the Environment Agency and Ofwat’s criminal investigation into potential widespread water company non-compliance could conclude in Labour’s first term. Any evidence of mass non-compliance from water companies will rock the legitimacy of the current regulatory model.

The combination of all these moving parts means one thing for Labour: pressure.

Reforming the system

Unlike 1997, Labour are not being elected because they are loved, but because the public want the Tories out. Back after 14 years, Labour will be under huge pressure to show they are different to the Tories and to get some quick wins. Sewage is one policy area where people want change. A poll last year found 56% of Brits say the sewage crisis will affect how they vote.

How could Labour go further? We won’t have to wait long to find out – how Labour handle Ofwat’s price review will give a strong indication of their future approach. Labour’s manifesto says it will ‘put water companies under special measures’ – a veiled threat of reform.

Campaigners are already calling on Labour to pause Thursday’s price review and conduct a root and branch review of the current regulatory and ownership framework.

Setting an overarching ministerial direction to stop regulators pulling in different directions could help.

Nationalisation is not the answer

But there’s a risk that squeezing companies too much could deter investment. The renowned Oxford Professor Dieter Helm wrote last year that it was “time to pull the plug on the water privatisation model” but that nationalisation is not the answer. With so much pressure already on the government’s books, it simply does not make sense.

Unfortunately, with some companies Labour may not have a choice – there are growing doubts over Thames Water’s future this week. Any company collapsing would force the government to step in to run the critical infrastructure.

With sewage being one of many crises Labour faces in power, it’s likely that their honeymoon period in government will be short if they fail to rise to the challenge.

Reforming the current model is tricky and expensive. But Labour risks political capital if it keeps the status quo.

If they fail to act in the years ahead as the situation gets worse, how long will goodwill from campaigners – and others who have lent Labour their vote – last before we hear cries of betrayal? What damage will this do to their coalition as they campaign for a second term?

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