Will Labour's water 'revolution' work?
As Environment Secretary, Steve Reed has the unenviable task of cleaning up this mess. 'Loyalty and gratitude are the hallmarks of politicians. And that's the only way I can account for being rewarded with the department for sewage and angry farmers,' he quipped at a recent Parliamentary Press Gallery lunch.
Since entering office, aides say, he has focused on 'three Rs'. The first – 'reset' – saw Labour pass the Water (Special Measures) Act, which introduced new criminal penalties for polluting water company bosses and banned the payment of bonuses to those who fail to meet high standards. The second – 'rebuild' – saw Reed secure £104bn of planned private sector investment that he says will allow the government to halve sewage pollution by 2030. The third is 'revolution'. Today's 465-page report by Jon Cunliffe, the former Bank of England deputy governor, calls for the abolition of Ofwat (a recommendation Reed has accepted) and the creation of a new regulator to ensure water companies 'act in the public as well as the private interest'.
After its fraught first year in government, Labour senses a political opportunity. Action against water companies is both salient – polling by More in Common, shared with the New Statesman, shows that 95 per cent of people regard reducing sewage pollution as important or very important to them – and unifying. Reform voters (73 per cent) and Green voters (75 per cent) alike view it as a high priority.
Yet for all the talk of revolution, some will be disappointed by Labour's reformism. Though England is one of only two countries in the world with a fully privatised water and sewage system (the second being Wales), Cunliffe's report did not assess the case for nationalisation, which Reed ruled out of scope.
The revival of public ownership under Labour – the railways, GB Energy, steel (almost) – has prompted new demands to 'take back water'. But Reed insists that this is neither feasible nor desirable. 'The franchises for rail are seven years long and then they come to an end, so [renationalisation] is possible without having to buy them back. If you wanted to buy back the water companies, it would cost in excess of £100bn – and that's money that would have to be taken away from schools and the health service,' he told me earlier this year, arguing that weak regulation was the greatest problem.
Reform, by contrast, in its populist guise, has vowed to bring 50 per cent of the water industry under public ownership. Nigel Farage's struggle yesterday to explain how much this would cost ('I don't know') gave Labour much pleasure but water remains a paradigmatic example of the challenge this government faces.
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An industry that was neglected under the Conservatives now requires emergency intervention. Bills, like taxes, will rise – by an average of 36 per cent in England and Wales over the next five years – to fund investment in creaking infrastructure. Reed, seeking to put himself on the side of the public, has declared himself 'furious'. But as they pick up the tab, will they accept his solidarity?
Reed hopes that water will become a visible example of the difference Labour has made. 'This beautiful, iconic lake will once again be pristine and full of fish,' he told me of a recent visit to Windermere (sewage discharges have turned the lake green). 'It's by focusing on the politics of place that we can start to rebuild trust and address the challenge from the extremes.'
But in an age of outrage, the risk for Labour is that no amount of delivery trumps Reform's raw populism.
This piece first appeared in the Morning Call newsletter; receive it every morning by subscribing on Substack here
[See also: The decline and fall of Great Britain]
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