Water (Special Measures) Bill [Lords]

Layla Moran Excerpts

Report stage
Tuesday 28th January 2025 Commons Chamber

[Tim Farron (Westmorland and Lonsdale) (LD)]

I pay tribute to the Minister and the Bill team from the Department for Environment, Food and Rural Affairs who are in the Chamber, as well as to all my colleagues who sat on the Committee for what was a genuinely enjoyable and collegiate experience. I hope they will forgive me for making a few criticisms in the next few minutes.

We tabled 44 amendments in Committee, but only 34 today, you will be delighted to know Madam Deputy Speaker—[Interruption.] I know—I am failing. I will not speak to all of them for blindingly obvious reasons. We tabled those amendments because we in the Liberal Democrats, humbly yet enthusiastically, have taken on the mantle in this place and beyond of being the voice for many thousands of campaigners, volunteers and citizen scientists who continue to lead the way in exposing the failures and injustices in the water industry, and fighting for meaningful change. We are immensely grateful to those people all across the country.

Our water industry has become a money-making vessel for speculators, who appear to care little for the quality of our rivers, lakes and seas—something I can tell the House is a source of great fury in England’s precious Lake district. The water companies have accumulated £70 billion in debt since privatisation, while still managing to pay out £83 billion in dividends. That is more than a third of the total spent on infrastructure during that time. In the last year, water companies paid out £9.3 million in executive bonuses, and Thames Water’s bonuses doubled to £1.3 million that year. Money leaks out of the industry, infrastructure is failing, and it is our constituents who pay the price.

Meanwhile the regulatory framework has failed utterly and is not fit for purpose. As I speak, £164 million in fines has been levied against water companies by Ofwat, following an investigation that began four years ago, of which it has so far failed to collect a single penny.

[Layla Moran (Oxford West and Abingdon) (LD)]

Thames Water has had an increase in the number of pollution incidents, which went up 40% in six months last year. It has been issued with fines, but that has not changed anything. Does my hon. Friend agree that we need regulation with proper teeth, and that new clause 25 would do exactly that by putting water companies into special measures when they fail our constituents?

[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.