Water (Special Measures) Bill [HL]

Baroness Jones of Moulsecoomb Excerpts

2nd reading
Wednesday 9th October 2024 Lords Chamber

[Baroness Jones of Moulsecoomb (GP)]

It is always a pleasure to follow the noble Baroness, Lady Parminter, but it is also daunting, because she can speak without notes for eight minutes. I cannot do that because I have so many complaints about the Bill, so excuse me for reading notes.

We have heard about the organisation River Action a couple of times; I am on its board and it will be playing a role in giving advice to the Government on how the Bill can be improved.

I know that the Minister knows how much I admire her and trust her as a Minister and in her role today. But, at the same time, the Bill is deeply disappointing. It is disappointing to the point of being almost a joke, because it does not do what the majority of people would like it to do. It is about the regulation of a capitalist monopoly and the good management of a privatised cash machine that water bill payers subsidise. The money just goes straight out and we do not get a benefit. The Bill tries to regulate by using the same people and organisations that have failed for the past 30 years. How can that change? I do not see that that is possible.

The Bill also tries to threaten the top people with jail time using the same tools that have been failing to work for 20 years. What it does not do is get back the billions of pounds that these company shareholders have pocketed for decades, or even stop those same shareholders from pocketing billions of pounds of our money in the future. Nor does it stop the water companies dumping sewage in the waterways. Instead, we hear about Ofwat making backroom deals that will keep the private companies in business by weakening the enforcement of regulations. I do not understand how that can be happening.

We should enforce the regulations—if the businesses fail, they fail—and let the companies know that this Government want the work done. Ofwat has made clear that the water companies have had the money they need, so they must either get the job done or give us a refund. What the Government should not do is allow these companies to run up more debts in order to pay out more dividends. Those debts and dividend payments have already cost us four months-worth of water bill payments. In what other area of life are consumers paying out four months-worth of bills each year but getting nothing back in return?

We are not even being offered a guarantee of clean water or that the leaks will be fixed. In fact, we have the insanity of a country soaked in record rainfall arranging a deal that would use tankers to import Norwegian water in the event of drought. That is so lunatic that I cannot even finish my sentence about it. As other noble Lords have said, water is a basic of life. We need water—all life needs water—so why is it in private hands and subject to profiteering?

Much of this Bill is about what happens when a water company fails and goes into a special administrative regime. Ministers have said on several occasions that they will not bring water companies into public ownership because of the cost. They have been quoting a six year-old Social Market Foundation report, but they ignore the very recent calculations by Moody’s and the S&P credit rating agency that these shares are junk. Their estimate of how much it would cost is very different.

Professor Ewan McGaughey of King’s College London said:

“Special administration would not cost the Treasury or taxpayers anything ... special administration enables the Minister to put a plan before”


the High Court to cancel a company’s debt

“if continued payments to banks would interfere with properly carrying out the water company’s sewage or clean water functions”.

So why does the Minister not just do that? Special administration sounds great and very cheap. As Professor McGaughey said:

“The best way to clean our water is with more investment. Forty percent more investment would be possible if we stop bailing out banks and shareholders with billpayer rises. It will cost us over £12.5 billion this Parliament to keep paying shareholders and banks. … The right way to close this black hole is to make failed companies lose their licences, cancel the debt and transition to public water … This is all possible under the existing law”.


As for the debt that was accumulated to pay shareholder dividends, I understand that the Thames Water debt is now being traded by hedge funds. They are buying this debt on the cheap because they think this Government are stupid enough, or corrupt enough, to compensate them at a higher level. As much as I hate the idea of rewarding the parasites in our water industry with compensation for worthless shares, I dislike even more the idea of hedge-fund managers making a profit from a Labour Government’s ideological rejection of public ownership, so will the Minister give me an assurance that minimal compensation will be paid to the creditors of failed water companies and that our water bills will not be used to line the pockets of the hedge funds?

The Minister mentioned in her opening statement that this Bill had public support. I knocked on a lot of doors during the general election—I spoke to a lot of people in their homes and on the streets—and I think that a huge number of people, if not the majority, would support the following criteria for a more radical water Bill: no compensation for shareholders, minimal compensation for creditors, and public ownership being one of the options for these failed companies.

I will bring forward amendments to ensure that this Bill does not simply allow these failed zombie companies to continue extracting bill payers’ cash while loading huge amounts of debt on to the balance sheet. The Government need a serious look at the opportunity to bring these companies into public ownership, and this Bill should give Ministers the option to nationalise these companies where it makes sense.