‘Rising water bills and the sewage crisis show firms should be nationalised now’

The water regulator Ofwat has recommended bill rises of 21% over the next five years. Consumers will rightfully be angry to learn that the regulator wants them to pay for the privatised water companies’ failure to invest.

Nothing exemplifies the mess in which the Conservative Party has left our country more than our failing privatised water system. 

Our rivers and seas are infected with sewage. The latest annual figures show water companies in England spilled sewage into our waterways 464,056 times in 2023. 

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This is environmental destruction on an unprecedented scale and a severe threat to public health. We’ve all seen the news of households in the South West of England and elsewhere being told not to drink water from the taps because of diseases in the water. This is the new normal in modern privatised Britain. 

Shareholders have taken priority over delivering a good service

How have we ended up here? Water was privatised in England in 1989. The companies at the time had very low levels of debt. Now, 35 years later, the companies have built up a debt mountain of over £60bn.

At the same time, bills have gone up by 40%, payouts to shareholders have topped £78bn and investment in infrastructure has decreased by 15%. 

It is widely recognised that a major cause of the industrialised destruction of our waterways by sewage dumping is down to companies’ failure to invest in infrastructure. As a result, our ageing sewage system has fallen into disrepair.

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It doesn’t take a rocket scientist to work out what has gone on here. By inserting the profit motive into our water system, shareholder dividends have taken priority over delivering a good public service. 

The water companies are taking us for fools

Let’s take Thames Water as an example. The company was demanding that Ofwat sign off on its plans to increase bills by 44% over the next five years. In return, Thames Water pledged to invest billions in infrastructure, which they have neglected for years.

In other words, they indicated they were willing to invest in making their infrastructure safe for the public, if the public foots the bill. 

However, we know that Thames Water has paid out £195.8m in dividends in the past year, albeit to other group companies.

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Let’s compare Thames Water to publicly-owned Scottish Water. Analysis by the campaign group We Own It suggests Scottish Water has spent £72 more per household per year (35% more) on infrastructure than the English water companies.

It suggests that if English water companies had invested at the same rate, an extra £28bn could have been spent on the infrastructure needed to tackle the sewage crisis. 

They are taking the public and the government for fools. It’s time we put a stop to it. 

We need structural reform to our water system

Now I return to Ofwat. Why is it that the water regulator, which is supposed to look out for the interests of consumers, is caving to pressure from the water companies and allowing them to hike bills? 

I have serious concerns about Ofwat as an institution. Some have argued the regulator is compromised by the private sector. The revolving door between its board and staff and the privatised water companies themselves is a serious concern.

It is clear to me that we need to go a lot further than just changing the regulator or delivering them new powers. We need structural reform to our water system.

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I represent a constituency in West Yorkshire that is served by Yorkshire Water. This company is half owned by Hong Kong investment firms, a third owned by the Singapore government and the remainder is owned by Australian-based pension funds. 

I have nothing against these countries or their citizens. But the owners of Yorkshire Water do not have skin in the game. In my area last year, there were 4,468 hours of sewage spillage in 2023. When this company poisons our water with sewage, it isn’t them and their kids drinking it. It would be naive to think this has no impact on how seriously companies treat sewage dumping.

Water should belong to the people, not private companies

My point is that water is our most precious resource. Without water, life itself cannot exist on Earth. It should belong to the people who use it, not private companies or foreign governments. That is why I support public ownership. 

Ofwat has decided to place Thames Water in special measures due to the “significant issues” it is facing. It has been reported that this could lead to “temporary nationalisation”. If the company is nationalised, I do not believe the government should take on all the losses before handing it back to shareholders to make more profits in the future. 

In my view, there should be permanent public ownership and the shareholders who are responsible for driving the company into the ground should suffer the losses – not the taxpayer. 

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A publicly-owned English water company could then be used to demonstrate the benefits of this model over privatisation, as has been shown by Scottish Water’s superior record of investment to the English companies.

It will be an early test for the Labour government to clear up the mess left by the Tories. Barely have ministers got their feet under the table than this issue has emerged.

We cannot afford sticking-plaster solutions. We should be bold enough to pursue genuine structural reforms that clean up our water system for good. First on any list ought to be the regulator itself which has cravenly failed the customers, and the countryside.

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