Baroness McIntosh: Water firms need to connect with youth to shake off ‘fat cat’ stereotype

Water is once again featuring in this year’s general election thanks to Labour’s revived threat to renationalise the industry. As part of Utility Week’s Election 2019 series, David Blackman speaks to Baroness McIntosh, the co-chair of the All Party Parliamentary Group on Water.

After nearly ten years on the Conservative front bench, serving in a series of shadow ministerial roles, former lawyer Baroness McIntosh was chair of the House of Commons environment, food and rural affairs select committee from 2010 to 2015.

Since standing down from the House of Commons that year, she has maintained a close interest in the sector, serving as both co-chair of the All Party Parliamentary Group on Water and vice-president of the Association of Drainage Authorities.

The 65-year-old hasn’t always seen eye to with her party, suffering a bruising vote of no-confidence from local members before stepping down as an MP in 2015.

But there is no question that she is loyal to the legacy of the party’s privatisation, describing ownership as the “key issue” facing the water sector in this year’s general election.

“The lasting benefit of water privatisation has been access to capital and its appeal to investors: anyone who has a private pension has benefited from steady income in terms of dividends.”

And it’s those same retirement investors who will suffer if Labour’s plan to renationalise the industry is carried out, Baroness McIntosh says: “This will hit pension funds particularly hard if they are not given the commercial rates.”

However, the benefits delivered by water privatisation must be viewed in the context of the improved water quality standards that the EU has imposed on the UK, she says: “More or less in the same period that we invested in the water sector through privatisation, there were game-changing European directives going through.

“We were known in the 80s as the Dirty Man of Europe. Through privatisation, additional investment and EU directives, we gradually cleaned up both the rivers and the bathing water,” says Baroness McIntosh, who is old enough to remember the days when it was unsafe to catch salmon from the River Tees, near where she grew up.

“Having joined the EU in 1973, we would have been bound by these EU directives but it would have fallen on customer bills or general taxation, so it has helped to ease the burden.”

Brexit burden

Beyond the election, the UK’s departure from the EU will be the key issue for the industry, particularly the post-EU future of environmental regulation, she says: “We have some of the highest environmental protection: we want to make sure we have those going forward.”

The baroness says that the House of Lords energy and environment committee, which she has recently joined , has exchanged correspondence with junior environment minister Lord Gardiner about progress on the establishment of the Office of Environmental Protection, the new body that is due to take over the European Commission’s regulatory duties in this area.

“We’ve been assured that OEP is in shadow (form), but we don’t know what the penalties will be for infringements.”

In the meantime, it doesn’t look like there is much chance of Labour’s nationalisation plans coming to fruit though , she says: “It hasn’t caught public imagination in the way Labour might have hoped in this election, probably because people don’t view it as required.”

But there is scope for refreshing the existing ownership regime, says the former MP.

For the first 20 years post-privatisation, the idea was not really contested, partly because the actual process was well thought through, she argues.

But that has changed during the last decade as questions have grown over the industry’s pricing regime and ownership structures, Baroness McIntosh says: “They have to show they are restructuring and are not fat cats, which is an easy hit for Labour.”

Next generation is key

Younger voters, having grown up with the cleaner water delivered over the last three decades, don’t appreciate the benefits that this combination of tougher regulation and improved investment has delivered. It is the job of the water industry to more effectively communicate these benefits, she says: “They have to demonstrate to a younger generation what they have done in terms of cleaning up what was the Dirty Man of Europe

The peer says the industry should capitalise on the current wave of concern about climate change by developing a new environmental and social contract with the communities that it serves.

A practical change would be to make water companies statutory consultees when planning application are being determined for major new developments in the way that the Environment Agency is currently is.

And she urges companies to capture the imagination of climate change conscious school children by taking them on tours of their reservoirs and water treatment plants.

“The idea of environmental contract would fire up the nation because we are all contributing as water customers.

“For the first 20 years, they made great strides cleaning up and delivering consistently high standards and good quality drinking and bathing water. Privatisation is something to celebrate but they can’t rest on their laurels.”