Independent Water Commission
Debate between Lord Katz and Lord Sikka
Lord Katz (Lab)
Absolutely. One of the key parts of Sir Jon Cunliffe’s report is around the importance of setting a strategic direction for the industry, and one of the things that are set out there is the importance of that ministerial and strategic direction. I imagine that the development of that will of course involve both Houses of Parliament. However, it is really important to understand that, in other areas of accountability, one of the important things that Sir Jon recommended was ending the years of water companies marking their own homework by introducing open monitoring. It is important that we see accountability and transparency across the piece.
Lord Sikka (Lab)
My Lords, the Minister has once again mentioned the £100 billion possible cost of bringing water into public ownership. That is a bogus number, and no Minister has publicly engaged in any debate about it. The Government had a chance to silence critics by asking the Water Commission to consider public ownership as an option and independently calculate its cost. Why did the Government not ask the Water Commission to do that?
Lord Katz (Lab)
At the risk of repeating myself, we were very clear as a Government that we had no intention of nationalising the water sector. The £100 billion figure is not bogus, because it is based on the regulated capital value of the water sector. My noble friend has to remember that it is not just the capitalised value of the companies as they currently exist but the equity and the debt that you would be bringing on to the books if you were to nationalise. Defra has provided a comprehensive note on its website that explains that calculation; I gently suggest to my noble friend that he has a look at that to understand the workings.
Water Companies: Private Ownership
Debate between Lord Katz and Lord Sikka(2 months, 2 weeks ago)
Lords ChamberRead Full debate Read Hansard Text
Lord Sikka
To ask His Majesty’s Government what assessment they have made of the social cost of leaving England’s water companies in private ownership.
Lord in Waiting/Government Whip (Lord Katz) (Lab)
My Lords, the Government are committed to protecting the most vulnerable households, and we expect water companies to put robust measures in place for households that are struggling to pay their bills. We are bringing forward secondary legislation to introduce new and increased compensation—double the previous amounts, or more—that it will be compulsory for water companies to pay customers for poor service.
Lord Sikka (Lab)
As the Minister is struggling to provide information about the social cost of leaving water in private hands, I shall help him a little bit. Analysis suggests that, between 2025 and 2050, customers of privatised water companies will pay over £1 trillion, expressed in 2025 prices. It will probably be higher as companies raise capital from customers while shareholders take returns. People will not own a blade of grass in return. If the Minister disagrees with this alternative analysis, I ask him to please commit to publishing the Government’s data.
Lord Katz (Lab)
The Government have indeed published our analysis of the cost of renationalising the water sector, which I believe is what my noble friend is getting at. Our analysis is that—on the basis of regulated capital value, which takes into account not just equity but debt—it would cost at least £100 billion to renationalise the water industry. We are not going to unpick the current ownership model, during which time underinvestment and sewage pollution would only get worse. We believe that the answer is better regulation. We have introduced the Water (Special Measures) Act, which has already hit bonuses for 10 water executives and toughened the rules so that bosses face up to two years in prison for covering up sewage spills. Following the Cunliffe review this year, we are taking forward a number of reforms to the sector, chiefly the creation of a powerful new water regulator.