Independent Water Commission

Debate between Lord Katz and Lord Cromwell

Monday 12th January 2026 Lords Chamber

[Lord Katz (Lab)]

I say to my noble friend that Defra takes this matter with the utmost seriousness. It simply cannot be the case that people are left to go days on end without an adequate water supply. As I have said, we will take every step to make sure that the chief executive and the executives in the water company are held to account on delivery. As I said in response to the previous question, we have already taken action to legislate and toughen up the regulatory framework. As a consequence, we have already seen, in six out of nine water companies, bonuses banned. We are willing to take action. I am not going to set out the exact details of the White Paper now, but it is important that water company executives realise that they are there to serve their customers, not simply to feather their nest.

[Lord Cromwell (CB)]

My Lords, this is a useful and substantive report that I welcome—in particular, its suggestion to merge the regulators into one super-regulator, which we certainly need. The underlying problem, which it identifies, is the need for long-term investment. I was surprised, therefore, that there is very little reference to the regulator needing skills in the financial engineering which has bedevilled the way that water companies have been run in the past. There is one reference, on page 197, to needing financial skills, but that is about it, I think. Does that give the Minister cause for concern?

[Lord Katz (Lab)]

The noble Lord is certainly right to recognise the importance of the recommendation by Sir Jon, in the commission report, of establishing a single powerful regulator for the entire water sector that will stand on the side of customers. He is right that the new regulator needs a wide range of skills, not only in terms of knowledge and understanding of the environment, customer service and regulation but also in terms of financial incentives. In the price review of 2024, we have seen the commitment to more than £100 billion of future investment in water infrastructure. In fact, since Ofwat announced its final determination, water companies have already raised over £2 billion in new equity investment. There is work going on, but he is absolutely right that there is no point having a single powerful regulator that is not able to regulate across the land and across the entire water sector’s activity.

Water Companies: Private Ownership

Debate between Lord Katz and Lord Cromwell

Wednesday 29th October 2025 Lords Chamber

[Lord Katz (Lab)]

I thank the noble Baroness for that question. To build on the answer I gave to my noble friend Lord Sikka, we have already put in place new measures, including the emergency legislation last year, to ensure that we are bearing down on water executives. We have indeed taken action. As I said, we are putting in place robust support measures for customers who are struggling to pay their bills and, as a result, water companies have more than doubled the number of customers who receive help with bills through social tariffs, from 4% to 9% by 2030. We are working with industry to keep current support schemes under review to ensure that customers are sufficiently supported.

[Lord Cromwell (CB)]

Does the Minister agree that the real issue is not public or private ownership but that the regulator clearly lacked the financial engineering skills to understand, spot and curtail the excessive debt loading and value extraction by private equity in previous years?

[Lord Katz (Lab)]

I agree completely with the noble Lord. Efficient, precise and forensic regulation is needed in this sector. That came across very clearly in the report of the Independent Water Commission led by Sir Jon Cunliffe. In response to his report, we have already committed to establishing a single regulator for water and to introduce a regional element within it so that, working with local communities, local businesses and water companies, the needs of an area, whether agriculture or the built environment, are taken account of in determining water company action.