Water Companies: Regulation and Financial Stability

Jeremy Corbyn Excerpts

Wednesday 23rd October 2024 Westminster Hall

[Jeremy Corbyn (Islington North) (Ind)]

It is a pleasure to serve under your chairpersonship, Mr Pritchard.

Water is fundamentally a human right; everyone needs to use water at some point. The water companies, all now in private ownership, are responsible not just for the supply of water but, jointly with the Environment Agency, for river basin management, flooding and many other things. The private ownership of water since 1989 has resulted in £78 billion paid in dividends, mostly to foreign-owned companies, many of which do not pay tax in this country. It has resulted in a £60 billion debt collectively and £9.1 million has been paid to chief executives in utterly excessive salaries.

The argument for privatisation was that there would be more investment, and the water would be cheaper and the service more efficient. Well, that has worked out well, hasn’t it? We have massive levels of sewage discharged into rivers and the sea, lower-quality water all over, and less and less investment in many areas.

[Rosie Duffield (Canterbury) (Ind)]

Does the right hon. Gentleman agree that the 285,000 people who signed the petition about renationalisation that I helped to present to Downing Street a couple of years ago, particularly those in the beautiful coastal town of Whitstable, have been badly let down by Southern Water on a daily basis?

[Jeremy Corbyn]

I thank the hon. Member for that intervention. She put forward an excellent initiative at that time, calling for public ownership of the water industry. I will conclude my short remarks in a couple of minutes by addressing the question of public ownership.

I now want to refer to Thames Water, which covers my constituency and much of London and the south-east. It is one of the biggest water companies, the most indebted and the most inefficient, and it would be interesting to know how it survives. Two years ago, when even the Financial Times called for public ownership of the water industry and said that it was the norm around the world, I am sure it was Thames Water it had in mind.

Thames Water on its own has racked up £14 billion of debt. In 1989, on privatisation, its debt was zero. It has paid out £2.7 billion in dividends and £37 million in what it euphemistically calls internal dividends to its parent companies. The company could require as much as £10 billion to get its infrastructure up to regulatory standards. That would be compounded by the interest payments on its massive debt pile. My constituents suffer flooding and endless traffic disruption because of the lack of maintenance over many years. There have to be endless replacements of short sections of pipework, because there has been no proper planned investment programme.

My call is simply this. I am sure that the Government’s proposed regulatory regime would be better than what we have at present, and it is good that the Secretary of State acknowledges the issues facing the water companies and all of us as consumers around the country. However, I simply say that once more we are into a debate between a regulator and the water companies, who this morning claimed they could not invest because of the regulatory framework.

I think we should go back to the issue of public ownership. I have no idea where the figures given by the Secretary of State today came from; perhaps he can explain that. The reality is that under public ownership Parliament would decide the share value and the amount of compensation paid, which would have to take into account the inefficiency and waste of the companies, and people would be compensated with Government bonds at a fixed rate of interest. That would give us public ownership and control. I do not want an old-style nationalisation; I want community nationalisation.

I will finish by saying that were local authorities, the workers in the industry, local communities and the Environment Agency jointly involved in how the water companies are run, their performance would be a lot better than it is with distant shareholders raking in massive profits from our water supply.

--- Later in debate ---

[Dr Danny Chambers (Winchester) (LD)]

We have talked about how disgusting, and what a public health issue it is to have sewage and other pollution pouring into our rivers, but I want to touch on the ecological damage. In Winchester, a chalk stream, the River Itchen, goes right through the heart of the city. Chalk streams are very rare, with fewer than 210 of them in the entire world, and 85% of them are in southern England. Many of them are designated sites of special scientific interest because their ecosystems and biodiversity are unique. I found out recently that the type of Atlantic salmon found in southern chalk streams are genetically distinct from Atlantic salmon in the rest of the world. Chalk streams have taken millions of years to form, and they can be destroyed in just a few decades by companies that are either breaking the law or working within the law but, because there is such a lack of regulation, causing great environmental damage. That is bad for public health, consumers, prices and the environment.

In my constituency, it is frustratingly clear that Southern Water, which is 82% owned by an Australian investment firm, has been prioritising profit over pollution prevention. It is that simple.

[Jeremy Corbyn]

Is the hon. Gentleman aware that the problem is exacerbated by over-abstraction upstream, particularly in chalk streams, which to survive environmentally need water flowing through them throughout the year? Many chalk streams are completely dry for some summer months, and that destroys all fish and all ecological sustainability.

[Dr Chambers]

The right hon. Gentleman makes a very important point: it is not simply pollution, but the over-extraction of those environments that is horrendously damaging to chalk streams.

The Liberal Democrats have long been calling for reform to water companies so that they have environmental experts on their boards to ensure they meet their minimum environmental standards before they are allowed to make profits. Putting social and environmental good at the heart of what they do is absolutely necessary to ensure that we are not still talking about how we are struggling with pollution, leaks and a lack of investment in 30 years’ time.

Thank you for calling me to speak in this debate, Mr Pritchard. Protecting our natural environment is one of the top priorities for probably all our constituents.