Water Companies: Regulation and Financial Stability
Julian Smith Excerpts(4 weeks, 1 day ago)
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Tim Farron
I very much agree. Regulation is the key. Welsh Water is not for profit and Scottish Water is publicly owned, yet they both still face major problems with sewage discharges. As my hon. Friend is getting at, there is evidence that although ownership and finances matter, effective regulation is the key, and we simply do not have that at present.
Sir Julian Smith (Skipton and Ripon) (Con)
I thank my constituency neighbour for giving way. Does he agree that as well as regulation, commissions and the initiative proposed by his party, there is a massive breakdown of trust within the industry? I spoke to one of the major investors in Thames Water and asked them to tell me the last time that the regulator, the Government and the company’s investors were in a room together, and that had never happened. Among all these initiatives, does the hon. Gentleman agree that getting people together to talk about their different equities and priorities, and how they deliver for the consumer, is also key?
Tim Farron
I agree. Although I also think an urgency is needed that many people who own water companies do not demonstrate, and that is why the Government need to lead—but I do think it is right that we get people together to make things significantly better.
Over the past 33 years, for every pound that water companies have spent on infrastructure and doing their job, 80p has drained away to finance debt and pay dividends. That is an appalling waste of billpayers’ money and water company assets. The separation of operating companies from parent companies, where the regulated operating company racks up huge debts to allow the unregulated parent company to pay huge dividends, has been a disgraceful scam. I am sure that my hon. Friend the Member for Witney (Charlie Maynard) will say more about how that model has done such damage to the customers of Thames Water; suffice it for me to say that that model of ownership must cease. For the regulator to have stood idly by while that has happened is unacceptable, and for it not to step in as similar asset-stripping begins in other water companies is an abysmal dereliction of duty by it and the Government.
What is to be done? I just want our waterways to work and to be clean and safe. I am not convinced that renationalisation would be a good use of public money. It could mean putting taxpayers’ money into the pockets of those who have already made so much money out of them without a single extra penny going to improving infrastructure. We propose a radical move away from the current model: water companies should be community benefit corporations, ensuring that all revenue goes into keeping environmental standards higher and solving the long-term problems of our network. Given that 45% of all water company expenditure has gone on debt financing and dividends, that kind of ownership and governance reform should mean that there is more money available for infrastructure renewal.
Oral Answers to Questions
Julian Smith Excerpts(2 months, 1 week ago)
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Sir Julian Smith (Skipton and Ripon) (Con)
The Secretary of State for Environment, Food and Rural Affairs (Steve Reed)
First, I add my congratulations to the Speaker’s Chaplain on her distinguished tenure, and to Terry Wiggins, who has been here much longer than all of us.
I thank the right hon. Member for his question. The Government recognise the importance of innovation in supporting farmers to boost Britain’s food security, drive productivity and improve nature’s recovery. The UK has world-class science and innovation capabilities. The Government will promote the UK as a great place for technology innovators, which will drive investment, economic growth and create high-skilled jobs, supporting farmers to embrace the latest technology and best practice.
Sir Julian Smith
One of the challenges for risk-taking farmers is the regulatory environment. Will the Secretary of State update the House on how he will bring together Natural England, the Environment Agency and other agencies to reflect and be much more responsive to the enterprise culture in farming?
Steve Reed
I share the right hon. Member’s interest in the need for effective regulation. I will soon make an announcement about our intentions to review regulation to ensure that it is fit for purpose across the Department and helps to achieve the priority objectives that we have set out as a new Government and ministerial team.