Water industry is ‘deaf' to crisis facing sector, warn MPs
The environment, food and rural affairs committee said the water sector had 'completely lost sight of its purpose' and urged a government review to recommend a bold overhaul.
A report by the committee said that special administration for debt-laden firms such as Thames Water should remain a last resort. But it was unclear if it was better to let a 'failing company' keep piling up more debt or to assume temporary national control more quickly, it said.
The prospect of the collapse of Thames Water, Britain's biggest water firm, increased after a US private equity firm withdrew its rescue plan this month.
The wide-ranging report by the committee, published on Monday, painted a damning picture of the state of the water industry and regulation. 'The water sector is failing. During the course of our inquiry, we have heard too many examples of corporate failure and unacceptable pollution incidents,' the MPs said. They said 'root-and-branch reform' of the sector's culture was now needed.
Their verdict follows an interim report by the Independent Water Commission, which was appointed after Labour came to power. Sir Jon Cunliffe, chair of the commission, suggested his final report — expected in July — could recommend rationalising decades of legislation, better water planning across river basins and new laws on the health of wild swimmers. Campaigners fear it won't go far enough.
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Cunliffe should be 'open-minded' about alternative ownership models for water firms, the MPs said, though the government has ordered him to rule out full nationalisation. The committee's report said alternatives such as not-for-profit enterprises, community interest companies and co-operatives should 'be on the table'.
'The control of seven out of ten water and sewerage companies by private equity investors (serving over 60 per cent of the population) and approximately 70 per cent foreign ownership may not be fostering the necessary culture for the sector,' the MPs said.
The report said companies had been allowed to rack up too much debt in the past, which must not be allowed to rise again. Despite poor performance, there had been 'egregious examples of dividend and bonus payments', it added. Six water company leaders recently had their bonuses banned this year for failing to meet standards, after a new law was passed in February.
With water bills rising by 36 per cent on average by 2030, the MPs urged Cunliffe to consider establishing a single social tariff rather than the current arrangements for lower-income households, which vary from company to company. Citizen's Advice, the consumer group, welcomed the idea, which would end a 'postcode lottery for support'.
However, the environment committee said it feared government limitations on Cunliffe could mean his final recommendations disappoint. 'A lot of onus has been placed on the commission to deliver, but the limitations of its scope may mean its proposals fall far short of what is needed to reform the sector.'
• I've driven 4,858 miles around the UK coast. Our seas are in a bad way
A spokesman for industry group Water UK said: 'Everyone agrees that the water system is not working, and we have been calling for fundamental reforms which allow investment to get quickly to where it needs to go.'
The Times' Clean It Up campaign is calling for better regulation, effective investment and greater transparency to improve the country's waterways
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