Water (Special Measures) Bill [Lords]

Bobby Dean Excerpts

Report stage
Tuesday 28th January 2025 Commons Chamber

[Tim Farron]

I strongly agree with my hon. Friend. The water companies simply do not fear Ofwat, or indeed any other part of our fragmented regulatory system. They dwarf Ofwat in terms of resources, they flout the limited regulations that they face, and they run rings around the regulators and obviously get away with it. There was the outrage of the water companies being permitted, just before Christmas, to increase water bills by 36% by 2030, and what makes it even worse is that a third of customers’ bills are being spent just on servicing the debt—a debt that was in part run up to fund excessive dividends.

Water companies are already passing on the consequences of their complete financial mismanagement to our constituents—their customers—but this Bill could enable that to go further and to be even worse. According to the Government’s explanatory notes,

“following the provision of financial assistance by the Secretary of State to a company in special administration”,

clause 12 of the Bill, as drafted, would

“require a water company to raise amounts of money determined by the Secretary of State from its consumers, and to pay those amounts to the Secretary of State to make good any shortfall”.

In other words, when a water company goes into special administration, there is a cost to the Government of ensuring that supply is maintained, and the Government need to recoup that cost. That sounds reasonable at first glimpse, but it does not seem reasonable that bill payers should have to pick up the tab, despite bearing none of the blame for the financial mess a water company finds itself in.

My hon. Friends and I are keen to press amendment 9, which would make it explicit that it should be the creditors of the companies—the big financial investors that have loaded debt on to the water companies—that cover those costs instead. The amendment would strike out the Government’s provision in the Bill that opens up bill payers to carrying the cost of paying off company debt, even in the event of bankruptcy.

[Bobby Dean (Carshalton and Wallington) (LD)]

I fear that the Government’s drive for growth has meant that they have become fearful of the tough regulation that my hon. Friend suggests. They see it only as an impediment, instead of the basis for a stable economy. Does he agree that weak regulation is not only bad for consumers and for the environment, but also for investment over the long run?

[Tim Farron]

Somebody representing the water industry will say that the water industry, as structured, is deeply unappealing to investors. There is a case for changing the model of how we structure those companies. When a company goes into special administration, we do not think it is right that innocent customers should have to foot the bill. The management of those companies, and their investors and creditors, are responsible for the mess the company is in. They took the risks and speculated in order to make money, so it is only right that they should have to cover the costs of the risks that they took, not our constituents.

One of the positive aspects of the Bill is the Government’s decision to deploy volunteers, citizen scientists and campaigners to ensure scrutiny of the water industry. Only last week, I spent time speaking with the leaders of the Save Windermere campaign and the Clean River Kent Campaign. I also enjoyed getting my hands dirty and my legs very wet alongside the Eden Rivers Trust in the River Eden not long ago. We are lucky across the whole country to have passionate, committed, expert volunteers who are dedicated to cleaning up and protecting our precious waterways, yet we are saddened that the Government have failed to provide those volunteers with the resources they need or the power they deserve.