Water Bill

Caroline Nokes Excerpts

2nd reading
Friday 28th March 2025 Commons Chamber

[Clive Lewis]

I thank my hon. Friend for an excellent speech. I have learned so much history; it has been very interesting. He might be surprised to learn that I do not believe in state ownership of our water assets either. The Bill gives the public the final say on that, along with the Secretary of State and the commission. There are so many other models to consider: municipalised models, mutuals, handing the companies partly over to the strategic authorities and the Mayors that the Labour Government are setting up. There are myriad opportunities, options and routes to go down.

People say that the change would not be cheaper. I draw my hon. Friend’s attention to research by Visiting Professor David Hall and Conor Gray at the University of Greenwich. They said that the savings from within the system on a transition to some form of public ownership would amount to between £3.2 billion and £5.8 billion annually for England and Wales—enough to deliver price cuts of between 22% and 34%—because there would be lower rates for the financing of future expenditure.

[Madam Deputy Speaker (Caroline Nokes)]

Order. That was a very long intervention.

[Neil Coyle]

I am not clear where in the Bill such savings are supposedly achievable. I think it is naive to assume that things would automatically be better if the ownership of a water company were changed and it was run by the Department for Environment, Food and Rural Affairs or the Treasury. We also have comparisons with France: Paris has a publicly owned water system, yet during the Olympics triathlon, events were repeatedly delayed due to poor water quality caused by sewage spills.

The cost has been touched on. The Social Market Foundation estimates that nationalising the water industry would cost a small fortune. Share and debt holders would need to be compensated, costing an estimated £90 billion—that is based on Ofwat’s regulatory capital value for companies in England and Wales. It would cost billions, take time and be extremely complex, and the burden of financing investment in the water and sewerage infrastructure would simply be transferred to my constituents, with no guarantee that future Ministers would provide the funding that the water system needs. And, of course, the debts would become public and go on to the Government’s balance sheet.

A state-owned system might also deter overseas investors in other water companies; that was one of the features of the debate we had in my constituency last week. All that would come at a time when the country is seeking to step up investment not only in water and sewerage infrastructure but in energy generation. I am not keen on anything that would block investment and slow growth, particularly when it comes to green, more environmentally friendly energy production.

I think it is right that the Government have not set out plans to nationalise water. I am interested in results for the people I serve. I welcome the fact that Ministers want to tackle the problems in the sector as quickly as possible by improving what we have. In 2019, frankly, voters were scared—so scared of our former leader and our manifesto commitments that they chose Boris Johnson over us. I know that my hon. Friend the Member for Norwich South commends an element of populism in the support for water nationalisation, but given the populism that we have lived through and how we got into the situation the country faces now with Brexit, we should be more mindful and wary of simply saying that we should all welcome populist ideas. The public generally support the death penalty, but most of us would not recommend adopting that.

We went to the polls last year and did very well, in case anyone has not noticed. Our manifesto said specifically—on page 59, in case anybody does not remember, although I am sure everyone read it avidly:

“Labour will put failing water companies under special measures”

and that we would prevent dumping and empower the regulator. It went on:

“We will give regulators new powers to block the payment of bonuses to executives who pollute our waterways and bring criminal charges against persistent law breakers. We will impose automatic and severe fines for wrongdoing and ensure independent monitoring of every outlet.”

The water industry is not represented here today, so I want briefly to be the devil’s advocate. The industry would say that it has responded to our election and to some of the public concerns. For example, it would say that it has set out plans to invest £104 billion between 2025 and 2030 to support economic growth, build homes and secure our water supplies. It would outline that our drinking water is, I think, the joint third best in the world, which is something to be proud of. It would also say that between ’89 and ’23-24, the water industry invested more than £236 billion in real terms and £431 billion in total expenditure terms. The water industry would want us to focus on Ofwat and the role it has played. It claims that, had water bills risen with inflation, there would be £18 billion of additional funding—that is the figure from Water UK. From April 2020 to April 2025, Ofwat cut investment plans by £6.7 billion; that sum could have dealt with some of the issues. How we deal with the regulator is an important focus going forward.

On pollution, the water industry would say that it is not just about the water industry. Agriculture is believed to contribute to 40% of water-quality failures, and we do not spend enough time focused on other problems. On quality of service, apparently just under 16 billion litres of water are supplied to customers every day, which is the equivalent of 140.4 litres a day per person according to Ofwat’s figures. I am not sure how everyone is using their share—I intend to use mine.

The water companies would highlight the support that they provide to customers. They have provided £1 billion of financial support since 2020, including supporting 100,000 people during the pandemic with payment breaks, according to the Consumer Council for Water. They would also say that leakage is down, but, as I have said, my constituents think it is still too high and want to see further action.

Another issue affecting my constituency is blockages. We have not focused on this very much today, but in the UK there are 300,000 sewer blockages every year according to Utility Week. That is partly the result of 7 million wet wipes, 2.5 million tampons, 1.5 million sanitary pads and other things being incorrectly flushed down our toilets, including condoms and nappies. I ask people please to stop that—I am not suggesting that anyone in the Chamber or in this debate is responsible.

A business on Blackfriars Road that had been directly affected in 2018 by a blockage came to me. The smell and disruption were disgusting. It was a fatberg—I think that is the polite term: a blockage the size of three buses and weighing five tonnes. Appropriately, it was near the bottom end of Blackfriars Road—where else? It was dissected on Channel 4—where else?—on a programme called “Fatberg Autopsy: Secrets of the Sewers”, which is how we know the weight and what was in it. It was not the biggest fatberg in my constituency, never mind in the country—I assume they are worse in London. There was also a 30-tonne monster fatberg under Southwark cathedral and Borough market. Those fatbergs and problems in the sewers and the size of the oldest sewers are why we need the Tideway tunnel.

As I said, Ministers in the former Government should have addressed the concerns of Thames Water and not built a whole new model to deliver a tunnel that will help to address some of those challenges. We can contrast that with the Minister since 2024, my hon. Friend the Member for Kingston upon Hull West and Haltemprice (Emma Hardy), who is in her place. We also have the Secretary of State, who represents a seat in Croydon—I should have looked that up. I thank them for acting on the manifesto that was raised with me and supported by so many constituents.

The Water (Special Measures) Act was delivered fast by this Government and delivers on the manifesto aims, but we should allow it to be implemented before we consider any other legislation. The Act delivers on promises by blocking bonuses for executives who pollute our waterways, bringing criminal charges against persistent lawbreakers, enabling automatic and severe penalties and ensuring the monitoring of every sewage outlet. Those are all useful and would have helped to tackle issues with Thames Water and other companies in the past. As I say, we should allow that legislation to be implemented before we look at further adapting and changing it.

The way in which we regulate is important; we cannot bind a future Government. A regulated market with clear safeguards for consumers, a ban on profiteering and a system that delivers long-term investment with a clear framework in regulation is far better. That is the aim of the Government, which was delivered within months of the election. Of course, that was followed by the review, which will shape further legislation in time. With apologies to my hon. Friend the Member for Norwich South, I believe this Bill should wait until we see its outcome. The Independent Water Commission has objectives for the water industry and strategic spatial planning—all the “blah, blah, blah” bits—but, importantly, it also has Labour values in its objectives on affordability for customers, water company governance, and operational and financial resilience.

The commission also includes key measures that have not yet been touched on in this debate, including ensuring the water industry’s long-term stability, allowing it to attract investment, rationalising and clarifying the requirement for water companies to achieve better environmental measures—[Interruption.] I am being encouraged to go faster. The commission’s objectives also include improving the industry’s capacity.

I apologise for talking a little longer than expected. Any new legislation on the water industry must be mindful that nationalisation without compensation damages the whole sector and, as my hon. Friend the Member for Norwich South must be aware, forces the state to do more at a time when the Government are having to cut other budgets.

As I said, the motion on this issue did not pass in my constituency, but we have more in common on tackling the abuses in the system, including Thames Water’s abuse of my constituents, the lack of care about operations, the abuse of customers on bills and leaks, and the abuse of the state when a company that believes it is too big to fail expects us to step in.

I do not put form before function, and I am focusing on the functions of an effective water company. I am proud that we have delivered our manifesto commitment, and I look forward to further action from Ministers.

--- Later in debate ---

[Tristan Osborne]

I am happy to take that criticism. I just say this—the hon. Member might like to come back on this—I understand from its manifesto that the Green party is for nationalised utilities. If she supports a citizens’ assembly, would the assembly’s conversation be narrowly confined to having a nationalised utility, or would she open discussion up to other forms of mutuals and other ways of working?

Moving on, this private versus state debate is not quite the issue it is made out to be. In Europe, there is a significant number of state-run utilities, and they have similar problems with pollution and outflows. The European water regulator has said that there is €75 billion of natural pollution and 37% of Europe’s surface water is in an unhealthy ecological condition. The reality is that that is happening under state utilities. The issue is not necessarily about what structures and bodies run water, albeit that I accept that privatised utilities have not worked in this country, but the regulations that they work with. The Government’s position is sensible and reasoned; they are handing the issue to a specialist, Sir Jon Cunliffe, who can give regulatory advice on how we can improve the system.

Moving on to the debate about people’s assemblies, I agree that they are a good idea. Let a thousand roses bloom. I am happy to receive representation from all bodies. If this people’s assembly is non-binding, I do not see the difference between it and any other group that will be engaging with us in a public space and in a public way. I do not see the necessity of having another non-binding body making recommendations via a structure that we would establish, because it would not have any more weight than any other non-binding body.

I understand that previously, national bodies and people’s assemblies have met in Birmingham over a series of weekends, but a lot of the proposed reforms are extremely technical. My worry is that political parties that have a mandate at a general election to either nationalise or not nationalise will simply tie the hands of people’s assemblies, binding them to an ideological viewpoint. That may not have a beneficial outcome. This House is the people’s assembly, so I do not believe that having non-binding institutions like those assemblies adds any value.

This Government are correct in their approach. If we hand responsibility to Sir Jon Cunliffe, he will be able to look at the issues in much more detail. As I have mentioned, regulatory reform is absolutely necessary, but he will also look at financial resilience—water companies have been able to borrow and leverage too much, which has had a significant impact on the cost of water for many people—and at nature-based solutions, which should be pursued more vigorously.

To conclude, we should wait and see what the independent water commission concludes. We should not make this into an ideological argument. Although people’s assemblies have a place, in this case they are non-binding and an unnecessary addition. I welcome other contributions.

[Madam Deputy Speaker (Caroline Nokes)]

I call the shadow Minister.