Water and Sewage Companies: Directors’ Remuneration

Lord Brooke of Alverthorpe Excerpts

Thursday 22nd February 2024 Lords Chamber

[Lord Brooke of Alverthorpe (Lab)]

My Lords, I thank my noble friend Lord Sikka for securing this debate and for his powerful speech, the majority of which I support. Like him, I will make a suggestion, and will add to his contribution—although I suspect that it will not find any great favour with the government spokesperson.

The background to this is that about three weeks ago, our shadow Minister for Defra, Mr Steve Reed MP, came to speak at the Labour Peers group weekly meeting about his Defra brief. As your Lordships might have expected, he talked about the long-standing problems so fully catalogued by my noble friend Lord Sikka: the difficulties faced by not just the Labour Party or other individual parties but the country, due to the water industry’s performance failure. He described issues on which he felt that Labour will have to take firm action. Contrary to the view of the noble Baroness, Lady McIntosh, there is now a feeling within the country that we need to move away from such privatisations, which are not delivering in the way people thought they would.

I suggested to our shadow Minister that if he was looking to get better performance from the water companies—indeed, there has also been a failing on the part of the regulator—we might look to make changes. A novel way might be for the Labour Party to dust down the programme it ran when it first came to power: public/private partnerships. I speak with some experience in this area; I was appointed government director of the public/private partnership that was established for the National Air Traffic Services. As I saw it, the failing there was too much emphasis on the public side, with government representatives, and not enough involvement of the wider interests that constitute the public interest.

I suggested to the shadow Minister that we explore revamping the public/private partnership concept, and that we look in particular at the public side. Yes, the Government would have a part to play, but we should also involve local authorities and charities. Indeed, we might even contemplate floating shares, so that members of the public with a particular interest, especially those in rural areas, could buy into the public element. We would then end up with 51% owned by the public, constituted in the way I have just described, and a minority shareholding remaining with the existing private owners.

If a privatised company is not performing particularly well—there is certainly one such in this area—it should be told that unless it can improve, meet the legal requirements and act in a much more socially responsible way, it will be faced with a public/private partnership takeover. In this way, we would get better performance from that company, push up overall performance and, in turn, have an impact on the other privatised water companies. However, if they do not respond, we should, in turn, extend PPPs throughout the industry. Indeed, the concept could be applied way beyond just the water industry. Other industries have been privatised, and the performance of some of the companies is pretty abysmal and way below what the public would expect.

The Minister’s response will not, I expect, be of great favour. I am not sure what my Front Bench will say, but I have already run it by our shadow Treasury Minister. I hope that when we write our manifestos, there is a very firm view expressed by the prospective Labour Government about what we need to do within the water industry and that some of it is very much along the lines of what was said by the noble Lord, Lord Sikka.