Water Industry

Alex Sobel Excerpts

Tuesday 22nd January 2019 Westminster Hall

[Alex Sobel (Leeds North West) (Lab/Co-op)]

It is a pleasure to serve under your chairship, Mr Gray. First, I thank my hon. Friend from my namesake constituency, the Member for Bristol North West (Darren Jones). He gave a great technical speech and we all learned a lot about how we can improve the data analytics and dynamics of the water industry.

I also thank my hon. Friend the Member for Keighley (John Grogan), who made a number of important points on which I will elaborate. Most informatively, he said that we should not rely on expert academics and opinions from north London. Perhaps in this debate we will hear some expert advice from west Yorkshire that the Labour Front-Bench spokesman and the Minister can act on. Lastly, I thank my hon. Friend the Member for Harrow West (Gareth Thomas) for securing this debate. He chairs the Co-operative Party with some panache. We have been waiting for this debate for some time, and I declare an interest as a Co-operative Member of Parliament.

I want to commend the publicly-owned Scottish Water, which, over the past 16 years, has managed to save consumers an average £42 a year when compared with English consumers, and is ranked as one of the UK’s most trusted companies. I also want to highlight the success of Welsh Water, as many others have. Glas Cymru, established under the then Labour Government, has managed to return £180 million to customers in the form of customer dividends, while providing £10 million to assist low-income families and individuals by offering them lower tariffs.

An increasing body of support shows that the Tories’ ideological obsession with privatisation, which the right hon. Member for Newbury (Richard Benyon) is a great exponent of, has done nothing to improve services and has only raised the cost to consumers. Water is water, whether you are English, Welsh, Scottish or Irish. But under the English privatised system it is more costly, even though both Scotland and Wales have very difficult topography and are sparsely populated in large areas.

When English people turn on their taps, they pour money down the drain—except that it is not down the drain, but into the pockets of the wealthy and into the wealth funds of foreign investors in countries such as Canada, Australia and Singapore. That makes up the £6.5 billion of dividends paid out to shareholders in the past five years: the same amount of money that goes into the pockets of the people of Wales. Do we really think that is good enough? Do we really agree that in our Union there should be a two-tier system for our most fundamental services? And do we think that an individual or family should pay more for water because they live in one part of the Union and not another?

The ideological mindset of those obsessed with the privatisation agenda is such that this Government cannot see the evidence in front of their eyes. Privatisation does not necessarily, as promised—

[Richard Benyon]

Will the hon. Gentleman give way?

[Alex Sobel]

I give way to the right hon. Gentleman, who I am sure will defend privatisation.

[Richard Benyon]

I am very fond of the hon. Gentleman. He and I agree on other things, but I cannot resist responding to being attacked for being ideological when I feel I am combating an ideology here. We have a system that works and it is being attacked by ideology.

On another point, of course 380 or 400 quid a year is a lot of money to people on low incomes and we have systems to support them, but for people on average incomes, compared with other costs in their lives, getting water that is 99% drinkable and of good quality and getting sewage away for about £1 a day is quite a good deal for most people, particularly if we protect the poor.

[Alex Sobel]

I was not completely embodying all the faults in the right hon. Gentleman’s arguments. To repeat his point, it is good value, but why is it better value in Scotland and Wales than it is in England? We should surely aim for best value.

At this crucial time, when living standards across the UK are being decimated and individuals and families are struggling to stay afloat, we need to reassert both sense and our fundamental obligation to the people we represent. We need to assert that the market has limits, that not everything in this world should be up for grabs, and that privatisation does not necessarily equal value for money. The market has its place as a means of exchange for goods and services, but a basic selling principle of marketisation is the offer of genuine choice, lower costs and better services. I am a customer of Yorkshire Water. The only way I can get Harrogate water is to buy it in a bottle. I cannot get it through the tap and cannot change provider as I can in other utility markets. None of those things apply to the case of England’s regional water companies, so I suggest it is time to look at the example of our Welsh and Scottish compatriots and to change our—literally—leaking system.

With no competition and no realistic prospect of withdrawing consumption, water bills can be best conceptualised as a tax, because everybody needs to have water through the tap. Indeed, other systems, such as that in Scotland, account for water within council tax. It is not a matter of theory, but of practice in Scotland. Under our system, however, there is no differentiation between households. Our flat, regressive tax hits those on low and medium incomes hardest, particularly those on medium incomes who have no redress. Shareholders skim a dividend from UK taxpayers who have no choice but to purchase water from monopolistic regional providers.

We have only to look to Welsh Water, which operates on a not-for-profit basis within the private system, to see how well a mutual approach can work. The company serves 3 million people every day and has the strongest credit rating in the industry, as we have heard from my hon. Friends, as well as sector-leading levels of customer satisfaction. Its success does not benefit a few wealthy shareholders. As I have said, £180 million has been returned to customers.

The idea that a select few own and profit from something that falls literally from the sky—something that makes up 70% of our bodies—is absurd. The arguments for privatisation of our most basic assets and infrastructure have been lost. It is not about competition, which implies choice. No, it is the same faith in the market that means people in this country pay through the nose for their gas, electricity and train travel, often receiving a worse service where it is privatised than where it is in the public sector.

Last summer, as my hon. Friend the Member for Keighley mentioned, Yorkshire Water allowed sewage to flow through the River Wharfe, which starts in his constituency and flows right through mine in Otley and Pool. As was said, swimmers in the River Wharfe had to swim through the sewage. Private companies do not face the level of accountability that the system demands.

For mutualisation to happen, the water companies must first be taken into state ownership and the shareholders compensated, and then the companies can be put into the hands of consumers. Our basic infrastructure can be truly owned by the public without the need for direct state ownership, which MPs of all parties should support. Then we come to the question of governance. Wales has a company limited by guarantee. It has no shareholders, so its corporate governance functions are the responsibility of its board, which has a majority of independent non- executive directors, and its members, around 70 individuals, are appointed following a process undertaken by an independent membership selection panel. Those 70 people are the customers: the people of Wales.

There are alternative forms of governance, with a water company in a defined geography, as we have in England, being a good fit for a consumers’ co-operative model. Consumers’ co-operatives utilise the co-operative principle of democratic member control—or, as we call it in the Labour party, one member, one vote. Most consumers’ co-operatives have a board of directors elected directly by and from the membership. Unfortunately, water in England drips with right-wing ideology, draining the public purse and rinsing out our most valuable resources, while drowning customers in debt. That money-making monopoly and the two-tier UK system must end. We must instead look west to Wales and replicate a model that brings water—the most basic of human needs—back into the hands of the public.