Latest news with #Cunliffe
New Statesman
a day ago
- Politics
- New Statesman
Why isn't Labour nationalising water?
Photo byYesterday morning (21 July), in Kingfisher Wharf in Fulham, Steve Reed announced the start of the 'water revolution'. Following the findings of the Independent Water Commission, led by Sir Jon Cunliffe, the Environment Secretary outlined what is now being dubbed the 'Reed Reforms'. The water regulator Ofwat will be abolished and a new consolidated body will be set up in its stead, intended to 'prevent the abuses of the past'. Speaking in Parliament later that day, Reed confirmed the Government would take up five other recommendations included in Cunliffe's review. These include: a new statutory ombudsman to help customers resolve complaints, an end to companies monitoring their own pollution, and region-specific operations within the new regulator. This is all part of Reed's plan to cut sewage pollution by 50 per cent by 2030. However, full nationalisation of the water industry is off the table. This is partly because the possibility of nationalisation was not part of the remit given to Cunliffe for his review. His 88 recommendations instead covered how the British water system is regulated, how to manage competing demands on water, and how to maintain the resilience of critical infrastructure. But the response to the review's findings from outraged sewage campaigners suggests that perhaps nationalisation should also have been included in the scope of Cunliffe's report. The symbolism of the waterfront location chosen by Reed was somewhat lost on the assembled journalists: the studio's blinds were closed, effectively blocking the Thames from view. But Reed remained buoyant as he stepped up to the lectern to answer journalists' questions afterwards. Insiders at the Department for Environment, Food and Rural Affairs recently told me that water has monopolised the work of the department, ranking consistently highly among voters. In the huddle following his speech Reed ruled out nationalisation. 'The reason that nationalisation wasn't included is because, first of all, it would cost £100bn, according to figures produced by my department,' he said. 'That money would have to be taken away from the NHS and from schools, to be given to the people who have polluted our rivers.' This justification makes sense. The country currently finds itself in a tricky financial position; Rachel Reeves's welfare cuts have been defeated and she will likely be forced to raise taxes in the autumn. Making big political spending commitments is unlikely to be at the top of the Government's agenda. But regardless of cost, nationalisation remains popular with voters. A poll from last year showed that 82 per cent of the public said they thought water should be brought back into public ownership. The UK is a European outlier in its privatised status quo, and water is an emotive issue. Ruling the measure out leaves Labour exposed on left – but increasingly on the right, and it is already being challenged on the issue by Nigel Farage and Reform. Farage said on Sunday that his party would nationalise 50 per cent of the water industry (although when asked where he would find the money from, the MP for Clacton couldn't answer). Reed's response to Farage was to point out this £50bn unfunded commitment would come alongside an additional £80bn worth of unfunded commitments Reform has already made. 'That's more than double the amount that Liz Truss committed when she crashed the economy,' Reed said. 'It looks like Nigel Farage is offering us a rerun of Liz Truss.' Still, voters may be more likely to believe intention over detail – the stridency of Farage and his deputy Richard Tice on public ownership sets them clearly apart from Labour. Subscribe to The New Statesman today from only £8.99 per month Subscribe These reforms have been received sceptically by the robust camp of anti-sewage campaigners. Feargal Sharkey, the former lead singer of the Undertones and the most best-known of the group called on Reed to resign. Sharkey, who campaigned alongside Labour MPs in the run up to the general election told LBC, 'He's made it worse!' (When asked if he would heed Sharkey's call, Reed said: 'Fergal has been campaigning for cleaner rivers, and I'm cleaning up the rivers.') Others have expressed regret at the government's rejection of nationalisation. Matt Staniek, who leads the Save Windermere campaign said the fact the Cunliffe review did not include nationalisation meant it was 'not a root and branch review'. Save Windermere is currently calling on the Government to make it unlawful to release any kind of sewage (treated or untreated) into the Lake. He was unimpressed by the Reed reforms and pointed out that tinkering with the regulator would not fix the fundamental problem with the UK's water system: privatisation. It is accepted that the UK's water infrastructure has fallen into such disrepair because the money which should have gone back into improving the system has instead gone to shareholders in dividends. This, coupled with the Conservatives' preventing water companies from raising consumer bills fast enough, has created a vicious cycle (ending with the 30 per cent increase to bills customers saw at the end of April). 'If you remove the profit motive, remove shareholders and owners, you are left with 100 per cent of a customer's bill being able to go back into fixing the water system,' Staniek said. Cunliffe's review included the admission that water bills will still need to rise in the short-term to patch up the UK's leaky system. But in the middle of a cost-of-living crisis in which voters have been sold the idea that this Labour government was elected to cut their bills, such a reality is politically dangerous for the government. Staniek said that when it comes to water, the rise in bills is not necessarily the issue: it is what they will go towards which will make an electoral difference. 'People have been paying for a service that has never been fully provided,' Staniek said. 'Why is it fair that the customer has to pick up the bill?' Reed is walking a fine line here; between keeping disgruntled voters onside by cleaning up Britain's rivers, and doing so within an ongoing political and fiscal framework which prevents radical changes being brought from the Labour benches. But people are already furious about this affront to nature and politics, one which unites voters of all persuasions. If, by 2029 Britain's rivers remain polluted, they will take their support elsewhere. [Further reading: Will Labour's water 'revolution' work?] Related
Spectator
2 days ago
- Business
- Spectator
A new regulator won't help solve the issue of Thames Water
Hurrah! We are going to get a new water regulator. Sir John Cunliffe's independent water commission has recommended that Ofwat be abolished and replaced with a new body which also incorporates the drinking water inspectorate. It will be yet one more opportunity for a quangocrat to take a plumb job, while Ofwat's bosses are pensioned off generously, no doubt. But what are the chances of getting rid of Thames Water, Southern Water or any other failing water company? That doesn't seem so likely. Rather, Cunliffe has pitched his report as an attempt to rebuild confidence in the existing water companies. It doesn't recommend what the government should do when faced with businesses which have mortgaged their assets to pay themselves fat dividends and bonuses, failed to invest properly in new infrastructure – and which then go to the government with a begging bowl. If the likes of Thames Water are not allowed to go bust, then just what was the point of privatising the water industry? Surely the two main objectives of privatisation are to transfer financial risk from the taxpayer to private capital and to improve performance by introducing competition. In the case of the water industry, neither was achieved. All it succeeded in doing was to swap a state monopoly for private monopolies, while water customers are left with the tab of picking up the pieces when water companies get into trouble. It says all you need to know about the water industry that companies are still threatening hosepipe bans even after a sopping weekend when many places received half a month's rainfall. Water companies bleat about climate change causing more droughts and therefore making rationing necessary; what they don't say is that actually rainfall in Britain has increased by around 10 per cent over the past 60 years. Why can't they capture some of that extra water and provide the water we want rather than trying to patronise us by telling us how we could use less water? No significant new reservoir has been built in Britain since Kielder Water, which was completed in 1981. Thames Water once built a desalination plant but then chose not to use it even during a drought, saying it was too expensive. Water companies don't really want to supply us with water – they remain stuck in a public sector rationing mindset, even though they act very much as private companies when it comes to paying salaries and bonuses. The Cunliffe Review is a damp squib which will do little to improve the current situation. If we want a private water industry, it needs to be one with multiple players which compete to supply us with water, inviting us to choose between providers and tariffs. If that is too difficult to organise – and it is difficult to see how we could ever have more than one network of water pipes, so it would require complex market structures such as those which haven't always worked well in the electricity and gas industries – then there is little point in keeping the industry in the private sector. Water companies which get into financial trouble should be allowed to go bust and their assets picked up by the government from the receiver at the sort of discount you would expect when the assets of any failed company are auctioned off. I am no great fan of nationalised industry, but then at least we would have a monopoly which was accountable, unlike what we have now. Instead, we look doomed to carry on pretty much as we have been for the past 35 years, with water companies choosing to sweat their assets rather than invest in new infrastructure, and a regulator rather than consumers deciding how much water we need and how much we should be paying for it. The only difference is that that regulator will have a new logo.
Yomiuri Shimbun
2 days ago
- Business
- Yomiuri Shimbun
UK to Create New Water Regulator Amid Crisis at Thames Water
LONDON, July 21 (Reuters) – Britain will create a new powerful regulator for its water industry following public fury over sewage spills, accepting the key proposal of an independent report that also suggested easing up on pollution fines to prevent companies from collapsing. The Labour government, which promised major reforms for the debt-laden industry when it was elected last year, said the new system combining several different regulators in one would better protect the environment, investors and consumers. The privatized water sector in England and Wales has sparked a public outcry by dumping record levels of sewage into rivers and lakes following years of under-investment, at the same time as paying big executive bonuses and dividends. But the government faces a tricky task in turning round an industry where high debts have left some companies struggling for survival. Symbolizing the failure of the sector, Thames Water, the country's biggest water supplier with 16 million customers and 17 billion pounds ($23 billion) of debt, is teetering on the brink of nationalization, and warning that it cannot pay the sewage fines it is facing. Former Bank of England Deputy Governor Jon Cunliffe, who led a review of the sector published on Monday, said a new powerful regulator should replace several bodies and that a formal turnaround regime should be established to give struggling companies space to recover under 'regulatory forbearance.' Environment minister Steve Reed said he had agreed to abolish financial watchdog Ofwat as part of the regulatory overhaul, with a new consultation and legislation to be proposed later this year. But asked if Thames Water could be given breathing space on fines – a key demand of its bondholders who have proposed taking over the company in a last ditch effort to avoid nationalization – Reed said the current legislation did not allow for that. 'We're going to publish a white paper in the autumn, which will be our response to Jon's report today, and then consult, but as things stand, Thames need to resolve the situation themselves as a stand-alone, private company.' Thames Water has warned it could collapse next year without new investment, as it faces 1.4 billion pounds in pollution fines and penalties over the next five years. INDUSTRY RESET While Cunliffe's proposals are the biggest shake-up of the sector since it was privatized in 1989, critics said they did not go far enough. Environmental campaigners want more radical change, such as the whole industry nationalized. 'Abolishing Ofwat and replacing it with a shinier regulator won't stop sewage dumping or profiteering,' said Giles Bristow, the CEO of campaign group Surfers Against Sewage. Cunliffe's remit did not allow him to consider nationalizing the water sector. Reed said that would cost 100 billion pounds, take money away from health and education, and lead to legal battles that would delay any improvements. Under plans already set out by Ofwat, British water companies will get more than 100 billion pounds of investment in the next five years to respond to population growth and climate change, funded by an average 36% increase in customer bills – a huge rise that Reed told reporters was a one-off. On Thames, Reed said the government was prepared for special administration – a form of temporary nationalization – but that would put Thames's debt on the national balance sheet, a situation it can ill afford. 'My hope and expectation is that the creditors will come to an agreement themselves,' he added. A source close to a Thames bondholder welcomed the recognition that regulatory support was required.
Qatar Tribune
2 days ago
- Business
- Qatar Tribune
UK to create water regulator amid crisis at Thames Water
Agencies Britain will create a new powerful regulator for its water industry following public fury over sewage spills, accepting the key proposal of an independent report that also suggested easing up on pollution fines to prevent companies from collapsing. The Labour government, which promised major reforms for the debt-laden industry when it was elected last year, said the new system combining several different regulators in one would better protect the environment, investors and consumers. The privatized water sector in England and Wales has sparked a public outcry by dumping record levels of sewage into rivers and lakes following years of under-investment, at the same time as paying big executive bonuses and dividends. But the government faces a tricky task in turning round an industry where high debts have left some companies struggling for survival. Symbolizing the failure of the sector, Thames Water, the country's biggest water supplier with 16 million customers and 17 billion pounds ($23 billion) of debt, is teetering on the brink of nationalization, and warning that it cannot pay the sewage fines it is facing. Former Bank of England Deputy Governor Jon Cunliffe, who led a review of the sector published on Monday, said a new powerful regulator should replace several bodies and that a formal turnaround regime should be established to give struggling companies space to recover under 'regulatory forbearance'. Environment minister Steve Reed said he had agreed to abolish financial watchdog Ofwat as part of the regulatory overhaul, with a new consultation and legislation to be proposed later this year. But asked if Thames Water could be given breathing space on fines - a key demand of its bondholders who have proposed taking over the company in a last ditch effort to avoid nationalization - Reed said the current legislation did not allow for that. 'We're going to publish a white paper in the autumn, which will be our response to Jon's report today, and then consult, but as things stand, Thames need to resolve the situation themselves as a stand-alone, private company.' Thames Water has warned it could collapse next year without new investment, as it faces 1.4 billion pounds in pollution fines and penalties over the next five years. While Cunliffe's proposals are the biggest shake-up of the sector since it was privatized in 1989, critics said they did not go far enough. Environmental campaigners want more radical change, such as the whole industry nationalized. 'Abolishing Ofwat and replacing it with a shinier regulator won't stop sewage dumping or profiteering,' said Giles Bristow, the CEO of campaign group Surfers Against Sewage. Cunliffe's remit did not allow him to consider nationalizing the water sector. Reed said that would cost 100 billion pounds, take money away from health and education, and lead to legal battles that would delay any improvements. Under plans already set out by Ofwat, British water companies will get more than 100 billion pounds of investment in the next five years to respond to population growth and climate change, funded by an average 36 percent increase in customer bills - a huge rise that Reed told reporters was a one-off. On Thames, Reed said the government was prepared for special administration - a form of temporary nationalization - but that would put Thames's debt on the national balance sheet, a situation it can ill afford. 'My hope and expectation is that the creditors will come to an agreement themselves,' he added. A source close to a Thames bondholder welcomed the recognition that regulatory support was required.
Business Times
2 days ago
- Business
- Business Times
UK to create new water regulator in plan that gives hope for stricken Thames Water
[LONDON] Britain said on Monday (Jul 21) it would overhaul water regulation to better protect the environment, investors and consumers, after an official report recommended a new structure that could also ease up on pollution fines to prevent companies from collapsing. The privatised water industry in England and Wales has provoked public fury by releasing record levels of sewage into rivers and lakes, prompting the Labour government to promise major reforms when it was elected last year. Symbolising the failure of the sector, Thames Water, the country's biggest water supplier with 16 million customers and US$23 billion of debt, is teetering on the brink of nationalisation, and warning that it cannot pay the sewage fines it owes. Former Bank of England deputy governor Jon Cunliffe, who led a review of the sector published on Monday (Jul 21), said water regulator Ofwat should be scrapped and the work of three other bodies merged into one new, powerful regulator. He also suggested that a formal turnaround regime should be established, giving struggling companies space to recover under so-called 'regulatory forbearance'. Environment Secretary Steve Reed said on Monday he had accepted the proposals and that Ofwat would be abolished, with a new consultation and legislation put forward. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up While Cunliffe called his proposals 'significant', critics said they did not go far enough. Environmental campaigners blame water companies for prioritising profits over sewage, and want more radical change such as nationalisation. 'Abolishing Ofwat and replacing it with a shinier regulator won't stop sewage dumping or profiteering if the finance and ownership structures stay the same,' said Giles Bristow, the CEO of campaign group Surfers Against Sewage. Cunliffe's remit was set by the government and did not allow him to consider nationalising the water sector, which has been privately owned by regional water companies since 1989. Under plans already set out by Ofwat, British water companies will get more than £100 billion (S$172.5 billion) of investment in the next five years to respond to population growth and climate change, funded by an average 36 per cent increase in customer bills. Cunliffe told the BBC that the major leap in bills would not have been needed if the industry and regulator had steadily increased investment over the years. The government wants to avoid Thames Water entering special administration, a form of temporary nationalisation, because it does not want its huge debts on the national balance sheet. Thames Water has warned that under the current regime it is facing £1.4 billion in pollution fines and penalties over the next five years, pushing it towards financial collapse. In a last ditch attempt to avoid administration, a group of Thames Water senior creditors are trying to take over the company. It welcomed Cunliffe's report. 'It is in the public interest to recognise that regulatory support is needed to reset struggling companies and return them back to compliance and performance while retaining long-term investor confidence,' a source close to a Thames bondholder said. Under Cunliffe's recommendations, the government would direct the new regulator to set out returns, improving investor confidence, while also protecting consumers and the environment, and setting up regional water planning authorities. REUTERS
