Water (Special Measures) Bill [ Lords ] (Fifth sitting)

Adrian Ramsay Excerpts

Committee stage
Thursday 16th January 2025 Public Bill Committees

[Charlie Maynard (Witney) (LD)]

I beg to move, That the clause be read a Second time.

Good morning, everyone. I will highlight two key points about new clause 28, which concerns what happens when companies that have gone into special administration come out of it. Subsection (1) refers to considering

“the merits of changing the law to provide that a water company exiting a special administration regime becomes a company mutually owned by its customers.”

Subsection (2) states that that would involving considering

“the general merits of mutual ownership of water companies in such circumstances, and…what model of mutual ownership would be most suitable.”

We are not saying that companies have to be this or that; we are just advocating considering this possibility. Private companies have made an absolute mess of our water sector, have added no value over the past 36 years and have ramped up nearly £70 billion of debt. When the companies come out of special administration, we have an opportunity to do something different and not to repeat the mistakes of the past. I want the Committee to take that on board. We are not asking for a commitment; we are just asking for consideration. Hon. Members all know how badly the private companies have treated us, our rivers and our communities.

These companies are monopolies, so they have absolute power. Unfortunately, our regulators have completely failed in their task. If they have failed in the task, and if we do not have absolute confidence in the regulators—I do not think that anybody who will be voting today does—we must not give water back to the private sector.

Globally, this is standard. It is what the rest of the world does with its water sector. Even in the US, the vast majority of the water sector is mutually or municipally held. Chile may be the one shining example of private capitalism that we can point to in this regard, but there are almost no other countries in the world that do as we do. We are asking the Committee to do what is standard, rather than what is unusual.

The Under-Secretary of State for Business and Trade, the hon. Member for Harrow West (Gareth Thomas), has written about the benefits of the mutual ownership model, which he states forces water companies

“to operate in the interests of consumers; where environmental considerations such as disposal of sewage would take precedence over profit.”

That is our request. I rest my case.

[Adrian Ramsay (Waveney Valley) (Green)]

For several decades, the water companies have been able to profit from failure. There is a strong groundswell of opinion among the public, across political persuasions, that real action must be taken and that if there has been real failure, water companies must not just be allowed to carry on operating in the private sector. I welcome the hon. Member’s amendment; mutual ownership is clearly one alternative model. Does he agree that full public ownership is another option that should be investigated in these circumstances?

[Charlie Maynard]

What I really like about our proposal is that the companies are coming out of special administration, so it does not cost anybody anything: the equity of the shareholders has been written off. We often hear that it would not be a good idea, because it would cost too much to buy the companies out. Under our proposal, we would not need to buy them out, because we are advocating this only where companies are going into special administration. We are advocating a mutual model and—I say respectfully to the hon. Member—only that. That is what is on the table today, and that is what we are after.

--- Later in debate ---

[Emma Hardy]

Yes. We have ruled out nationalisation, but all other forms of ownership are in the scope of the Cunliffe review. I stress, however, that in a scenario in which a company was exiting special administration, it could go into mutual ownership if the organisation in question had sufficient funds and could ensure that the company, or parts of it, could continue to properly carry out its activities related to water. Of course, no one would want, in any situation, to transfer to a company incapable of operating and providing water.

It is important to emphasise that it would not be appropriate for the Government to dictate the terms of exit from a SAR, as that would interfere with the conduct of the court-appointed administrator and their statutory objectives.

[Adrian Ramsay]

I thank the Minister for the helpful clarification that the Cunliffe review will consider ownership models, including those that the hon. Member for Westmorland and Lonsdale has advocated. Will the Minister clarify why the Government are not permitting the Cunliffe review to consider full public ownership as one of the options? Why would they not allow an open assessment of all the potential options, especially given that, as we have heard, public ownership is so common in countries around the world for what is a natural monopoly?

--- Later in debate ---

[Charlie Maynard]

The point about “relevant time” is fair and deserves to be clarified. I completely agree on the issue of statutory consultees and have no issue with that either—that would make much more sense, because there is a real failure in that regard.

I will go a step further—I have lived experience in this regard—and give a special shout-out to Thames Water employee Richard Aylard, who for two years dutifully showed up every six weeks with West Oxfordshire district council to hash through these issues. I learned a lot from him and am grateful to him, as well as to Jake Morley, Lidia Arciszewska, Phil Martin, Laurence King, Alaric Smith and Alistair Wray. They sat through all that, and we all learned together. It is important that everybody knows what came out of those meetings. When sewage treatment works’ capacity is calculated—they are very much under-capacity in my patch and, I am sure, in those of other hon. Members—there are four criteria. The first is the population or population equivalent, which is normally optimistically understated. The second is per capita consumption. Thames Water has a high per capita consumption when it suits the company and a low per capita consumption when it suits the company, so again that is understated.

The third is the Environment Agency multiplier, which is typically 3.0, and is discounted far too often. When there is a known record of spills, Thames Water is still allowed to discount the EA multiplier, often from 3.0 down to 2.4; that is a 20% cut, which means that the capacity can be 20% less. That is a real problem, and it is being done repeatedly on sewage treatment works that have dumped sewage left, right and centre for years.

The fourth criterion is infiltration. Some 47% of the capacity of west Oxfordshire’s big nine sewage treatment works comes from infiltration. That means that our pipes are leaking. There is not enough science on this matter. If we were to put in flow meters, we would have the information, but it seems that we Lib Dems are the only team in the room, alongside the hon. Member for Waveney Valley, that advocates flow meters. If we want to solve these problems, we have to get serious about the information.

[Adrian Ramsay]

I thank the hon. Member for the new clause. We all recognise the situation he describes. In East Anglia, planned housing growth over the coming decades outpaces available water resources. In my constituency, we already have a water resource zone in Hartismere where business operations and planned business growth are being restricted by the water available. He is addressing some of the important points about water companies’ being able to take responsibility, but do we not also need a joined-up approach? The planning system must be used to address the issues by means of stricter water efficiency requirements, sustainable drainage systems and housing plans that are realistic given the available natural resources. Is there not a problem with just putting the ball in the water companies’ court, rather than taking a more joined-up approach?