Water Companies

Lord Sikka Excerpts

Tuesday 9th June 2026 Lords Chamber

[Baroness Hayman of Ullock (Lab)]

The noble Lord makes a very good point—in fact, he made it to me yesterday. I do not blame him for repeating it, because it is critical for the east of the country. All I can say is that we are looking right across the water industry to see how we can improve it and make it operate effectively for consumers and the environment. I will absolutely reiterate to the department the points he has made.

[Lord Sikka (Lab)]

My Lords, water companies have knowingly violated their licence conditions and have more convictions than hardened criminal gangs, yet no executive has been fined and no company forced to relinquish its licence. What will it take for the Government to recognise that privatisation has failed and that water companies ought to be returned to public ownership?

[Baroness Hayman of Ullock (Lab)]

I know the noble Lord is very keen on nationalising the water industry. It is important that we use the clean water Bill coming up later this year to make the systemic changes to the water industry that will deliver us an industry that is fit for the future and that people can rely on. That is the big problem—people cannot rely on the water industry at the moment, and we are seeing issues such as those with South East Water and Thames Water more and more frequently.

When looking at nationalisation, we consider the regulated capital value of the water sector to be the closest proximity for the total value of the sector’s debt and equity; it is currently £107 billion. This is usually used as the starting point for estimations. You can then put on a discount—for poor performance, for example—or a premium. At the moment, £82.7 billion is the cost of the outstanding debt of the water companies. We are not looking to renationalise because of the cost and because of the amount of change we are bringing in. We want to crack on. In the case of nationalisation, government would become responsible for that huge amount of money.

Plastic Pollution Reduction

Lord Sikka Excerpts

Wednesday 22nd April 2026 Lords Chamber

[Baroness Hayman of Ullock (Lab)]

The noble Baroness makes a really good point. One thing that is often confusing about recycling and composting is definitions, what the material does and how it breaks down. She makes extremely good points, and I will take them back to the department.

[Lord Sikka (Lab)]

My Lords, an enduring legacy of the last Government is potholed roads in every city, town and street. This can be fixed by partially replacing bitumen with plastic waste, which makes roads cheaper, smoother and more durable. Can the Minister say what proportion of plastic waste is recycled for road building and what plans the Government have to encourage its greater use?

Water Companies: Fines

Lord Sikka Excerpts

Thursday 29th January 2026 Lords Chamber

Asked by

[Lord Sikka]

To ask His Majesty’s Government how many of the fines imposed by regulators on England’s water companies in 2024 and 2025 are yet to be paid in full.

[The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Baroness Hayman of Ullock) (Lab)]

My Lords, Ofwat has imposed fines to the value of £122.7 million on Thames Water. There is a payment plan in place, with the first 20%—that is, £24.5 million—paid last year. The remaining 80% is due by 31 March 2030 at the latest. Fines following EA enforcement action total £4.6 million, and we are not aware of any unpaid fines. Fines are only part of the enforcement toolkit, however, with over £164.6 million of enforcement undertakings announced over the same period.

[Lord Sikka (Lab)]

My Lords, it is shameful that water companies, with nearly 1,200 criminal convictions, are permitted to negotiate the amount and timing of fines. Some will not pay the headline-grabbing fines announced in 2024 until 2030, while others will not pay any of the announced fines. No statement to that effect has been made to Parliament. Can the Minister explain why the Government continue to indulge criminal organisations?

Large-scale Waste Crime

Lord Sikka Excerpts

Wednesday 14th January 2026 Lords Chamber

[Baroness Sheehan (LD)]

My Lords—

[Lord Sikka (Lab)]

My Lords—

[Captain of the Honourable Corps of Gentlemen-at-Arms and Chief Whip (Lord Kennedy of Southwark) (Lab Co-op)]

We will hear from the Lib Dems next, then from my noble friend.

[Baroness Hayman of Ullock (Lab)]

The Environment Agency’s exceptional decision to progress works to entirely clear the site at Kidlington of waste followed new information and advice from the fire and rescue services that indicated that there was an increased possibility of a fire at the site, which is why it moved in to do it. It was the scale of that fire risk that set it apart from other illegal waste dumps in England. That is why it became an overriding public imperative. Regarding the other site, investigations and work are going on there, so it is difficult for me to comment specifically, but I am happy to look at what I am able to share with the noble Baroness and put it out in writing.

[Lord Sikka (Lab)]

My Lords, there is waste crime in plain sight. For decades, England’s water companies have illegally dumped sewage in rivers, lakes and seas. Companies have nearly 1,200 criminal convictions, but their directors receive mega bonuses and rewards. Despite promises, no director has been prosecuted or disqualified from acting as a director. Can the Minister explain why the Government continue to indulge criminal entities and elites?

[Baroness Hayman of Ullock (Lab)]

My noble friend knows that water companies are private companies. He also knows that we have a criminal justice system that the Home Office and the Ministry of Justice work in. The law is there to be used when appropriate, and I would hope that it will happen.

Energy Market Reforms

Lord Sikka Excerpts

Tuesday 4th November 2025 Lords Chamber

[Baroness Hayman of Ullock (Lab)]

As I have said, one of our key priorities is to reduce bills for consumers, particularly for vulnerable customers. We will look at all aspects of how best to do that.

[Lord Sikka (Lab)]

My Lords, energy companies made £30 billion profit last year, which is over £500 per household. This fuels inflation and poverty. Some 128,000 people die in fuel poverty each year. There is an urgent need to end profiteering by excluding gas-generated electricity from Ofgem’s marginal pricing formula. Can the Minister explain why, after 35 years, Ofgem’s pricing formula has not been reformed?

[Baroness Hayman of Ullock (Lab)]

My noble friend asks about marginal pricing and refers to gas, because gas and electricity prices have been coupled together for many years. The market currently operates on the principle of marginal pricing, and the cost of electricity often tracks the cost of gas because gas generation frequently sets the wholesale price. It is a complex area. There are good reasons why the electricity market operates on that basis. Comparable countries tend to operate in this way as well. Over time, we need to rely less on gas, which means that electricity prices will become increasingly detached from the price of gas and be more frequently set by other generation, such as renewables. We see that as the way to bring prices down to support vulnerable people and to enable them to pay their bills. That is why our focus is on increasing renewable energy.

Deforestation

Lord Sikka Excerpts

Wednesday 17th September 2025 Lords Chamber

[Baroness Hayman of Ullock (Lab)]

It is a very good question. We have to look at what waste from forest is used for. We are supporting the timber industry in this country; that is important, because at the moment we import an enormous amount of timber. It needs to be easier, quicker and more financially viable to grow trees in this country, so that is one aspect of reducing the waste that comes from importing. At the same time, we need to ensure that we manage the waste from our own imports and our own homegrown timber effectively. We relaunched this year the Timber in Construction Roadmap. We need to be able to meet demand, but at the same time manage the waste issues to which the noble Lord refers.

[Lord Sikka (Lab)]

My Lords, successive Governments have facilitated deforestation abroad. A good example is Drax, which has received billions in subsidies for burning wood pellets to produce electricity that is twice as expensive as electricity produced from gas. Drax has a record of lying about the use of primary forests for burning wood. The company reported a profit of over £1 billion last year, paid out £97 million in dividends and another £300 million in share buybacks to shareholders. Can the Minister explain why this company continues to be subsidised?

[Baroness Hayman of Ullock (Lab)]

Electricity generators—and that does include Drax—receive subsidies only for the electricity they generate from biomass which has demonstrated compliance with the Government’s sustainability criteria. We have strengthened the sustainability criteria for large-scale biomass generation by increasing the proportion of biomass that must be obtained from a sustainable source from 70% to 100%, excluding core material from primary forest and old growth areas, and by tightening greenhouse gas emission requirements in line with European best practice.

Plastic Pollution

Lord Sikka Excerpts

Monday 15th September 2025 Lords Chamber

[Baroness Hayman of Ullock (Lab)]

Our ambition at the moment is to try to get the global treaty that we have been pressing for. We believe that the more countries that we can bring into that treaty, including those that produce the plastics and the materials for them, the more likely we are to have a larger global impact. But we are considering all options, because we need to move forward in this space.

[Lord Sikka (Lab)]

My Lords, can the Minister explain what assessment the Government have made of the pros and cons of requiring road builders to replace some of the fossil fuel-based bitumen with plastic pellets?

[Baroness Hayman of Ullock (Lab)]

At the moment, I am not aware of Defra having had such conversations. It may be that the Department for Transport has, so I will go back to my department, ask for more information on this subject and write to the noble Lord.

Independent Water Commission

Lord Sikka Excerpts

Wednesday 23rd July 2025 Lords Chamber

[Baroness Hayman of Ullock (Lab)]

The noble Baroness is correct: we have ruled out nationalisation. But if she would like to share the paperwork, I would be more than happy to look at it.

[Lord Sikka (Lab)]

My Lords, Ministers claim that public ownership of water would somehow cost £100 billion, which is a totally unsound claim. Let me explain. The £100 billion figure is generated by Ofwat, which calls it “recognised capital value”. It is calculated by taking the value of the company at the time of privatisation, adding the annual investment and multiplying it by the annual rate of inflation. It adds that 35 times—that is, over 35 years—and comes up with the figure of £100 billion, which does not represent anything. On the same basis, a £10,000 Reliant Robin bought by Del Boy in 1990 would now have a value of over £50,000. There is no way that Del Boy would be able to sell it for £50,000, because that figure has absolutely nothing to do with value. So, can the Minister explain why the Government consider £100 billion to be a credible figure for the cost of public ownership?

[Baroness Hayman of Ullock (Lab)]

I would just say to my noble friend that we have discussed this on a number of occasions, including with officials in the department. I am sure that we will continue to discuss it.

Thames Water

Lord Sikka Excerpts

Wednesday 4th June 2025 Lords Chamber

[Baroness Hayman of Ullock (Lab)]

Any future operating model will be part of Sir Jon Cunliffe’s review that is currently taking place—I am sure the noble Baroness will be aware that the interim report is out. That will be part of the work being carried out by Sir Jon and others.

The big issue is that fundamentally this a private company. It for the company to solve the issues of financial resilience. It is not for us to tell a private company how to manage its finances. That is really important. But, having said that, we have to be prepared for all eventualities across regulated industries and Thames Water has clearly had some pretty serious problems. If it comes to a SAR, creditors cannot ask the debt to be repaid during that special administration regime. If it did come to that, there is a moratorium on legal proceedings during a SAR and that would take away the creditors’ ability to enforce any debt repayments.

[Lord Sikka (Lab)]

My Lords, while the Government are dithering about the future of Thames Water, its debt has increased by £3 billion, it is spending £200 million a year on its business advisers and one-third of a customer’s bill basically covers the interest payments. Is it not time that the Government recognise that privatisation has failed and that the only way of giving the water industry firm footing is through public ownership?

[Baroness Hayman of Ullock (Lab)]

As I have said previously, the Government are not going to be renationalising the water companies. The Government are not dithering. This is a private company that has some serious debt problems. It is not for the Government to tell a private company how to manage its finances. If it comes to it, we are prepared to ensure that customers continue to receive high-quality water through their taps, because that is what is really important, and that the systems stay in place.

Thames Water: Bids

Lord Sikka Excerpts

Monday 28th April 2025 Lords Chamber

Asked by

[Lord Sikka]

To ask His Majesty’s Government what guarantees they expect to give to, or receive from, any bidder for Thames Water.

[The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Baroness Hayman of Ullock) (Lab)]

I had almost relaxed then.

My Lords, it would be inappropriate for the Government to comment in detail on a company’s commercial regulations. Ofwat notes that the company has now moved to the next stage in its equity raise process, and it continues to engage with the company to ensure the delivery of the financial and operational turnaround that both customers and the environment deserve. Any investors will be expected to show that Thames Water will meet its statutory and regulatory obligations.

[Lord Sikka (Lab)]

My Lords, I thank the Minister for her Answer. Let us look at the facts. Thames Water was put on the road to ruin by private equity. Now its shareholders have designated KKR, another private equity group, as their preferred bidder. KKR’s business model is profiteering, high leverage, low investment, asset stripping and high cash extraction. That will inevitably multiply Thames’s problems. The Water Industry Act 1991 gives the Secretary of State powers to vary the licensing conditions. We need to know precisely what the Government will demand from the new owners of a company that already has 187 criminal convictions.

[Baroness Hayman of Ullock (Lab)]

Regarding the company choosing KKR as its preferred bidder in the ongoing equity raise process, clearly Thames Water is a commercial entity engaged in a public equity raise, and it would therefore be completely inappropriate for the Government to comment on that. However, I note that the company had a number of potential bidders to choose from, which indicates that a market-led solution to the financial resilience of the company is a possibility.