Water Companies: Regulation and Financial Stability

Grahame Morris Excerpts

Wednesday 23rd October 2024 Westminster Hall

[Grahame Morris (Easington) (Lab)]

Thank you for calling me, Mr Pritchard. It is always a pleasure to serve under your chairmanship.

I congratulate the hon. Member for Westmorland and Lonsdale (Tim Farron) on securing this important debate. There is no doubt about it: his constituency is blessed with some of the most stunning natural beauty in the world, never mind the country, from the fells and woodlands to the Lake district, a UNESCO world heritage site. The illegal sewage dumping at Windermere by United Utilities does not just shame our nation; it should be considered an ecological crime, and those responsible must be held accountable and face the full force of the law.

Although the Lake district is world renowned, I am equally proud to represent a hidden gem: the Durham heritage coast—or, to be precise, the east Durham heritage coast. Our magnificent magnesian limestone cliffs offer spectacular views of the North sea and in the summer the coastal grasslands are alive with rare wildflowers, creating a habitat for the Durham brown argus butterfly and other wildlife. That coastline, once scarred by industrial waste from coal, has been reclaimed by nature, yet now it faces a new threat: sewage.

Sewage overflows, far from being a rare event, have become routine in the water industry. In 2023, Northumbrian Water discharged raw sewage for over 280,000 hours in 46,492 incidents, including into the bathing waters off Seaham and Crimdon in my constituency. The environmental disaster is compounded by the economic abuse by water companies. Since privatisation in 1989, companies such as Northumbrian Water have neglected infrastructure while accumulating staggering debts to pay out dividends.

[Richard Burgon (Leeds East) (Ind)]

My hon. Friend mentions his local water company. People in Leeds and Yorkshire feel ripped off, and it is no wonder, as Yorkshire Water has just announced its intention to increase prices by 35% by 2030. Does he agree that that is a compelling reason why the water companies should be brought into public ownership, so that they can put public service, the public good and environmental good ahead of the accumulation of profits for shareholders?

[Grahame Morris]

I thank my hon. Friend for that intervention. Indeed, Northumbrian Water is not alone. Across the industry, financial mismanagement has gone hand in hand with environmental failure. Northumbrian Water alone has built up £3.5 billion in debt while paying out £4.1 billion in dividends to shareholders. That means that 19% of consumers’ bills in my region go towards servicing debt.

I welcome the Government’s Water (Special Measures) Bill. Its provisions to block bonus payments for executives, require annual pollution reduction plans, and improve transparency on sewage discharges are crucial. The tougher penalties, including the threat of imprisonment for those impeding investigations, are a necessary step. But while we are moving in the right direction, I fear that will not be enough to address the scale of the problem. Yes, the Bill strengthens regulation, and it is certainly more robust than anything proposed by the Opposition now or when they were in government, but will it solve the underlying issues? I suspect that the answer to that one is no.

We cannot ignore the fact that the public are already paying the price for this industry’s failure. We pay through higher bills, polluted waters and an industry debt that now exceeds £60 billion. When the sector finally collapses under the weight of its own excesses, it will be the taxpayer who is left to pick up the pieces. I support the public ownership proposals. I think the costs are vastly exaggerated in the context of the scale of the challenge and the liability.

We must take steps now to fix the debt, pollution and infrastructure crises in the water industry, so we need to go further than is being proposed. Blocking executive bonuses is not enough. Without determined measures, the consequences will be higher bills for consumers, more money lost to debt repayment, and an industry that continues to prioritise profit over public good.