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Water industry privatisation has been defended in the House of Lords this week following mounting anger that costs to improve sewer infrastructure would increase household bills.
After an apology issued by Water UK, which included £10 billion of investment, public anger rose at the prospect of consumers paying more.
It has led to calls for the water sector to be renationalised. However,
Lord Benyon, minister of state for the Department for environment, food and rural affairs (Defra) rebuffed the notion that nationalisation could lead to an improved investment landscape.
“Nationalisation was a soundbite, not a solution”, Benyon said as he acknowledged that capital investment has been 84% higher since privatisation than before it.
Labour peer Lord Sikka said that consumers should not have to foot the bill for upgrades, suggesting that they already pay enough.
Instead, Sikka called for government to insist that shareholders fund investment to upgrade sewer and wastewater assets to improve river water quality “no customers, who have already been fleeced for the last 34 years.”
In response, Benyon stressed billpayers need honesty, not be told there are straightforward solutions or cheap ones.
“We want to be absolutely clear that everything that happens comes at a price,” he said. “We want companies to be able to pay out dividends, because that is what encourages investment in our water sector. It is about getting that balance right.”
The duke of Wellington Arthur Wellesley, who previously weighed in on debates around discharges, said the magnitude of the problem necessitated higher consumer bills, smaller shareholder dividends as well as general taxation. “I know that it is difficult for politicians to even contemplate,” Wellesley said, “with the Treasury sharing part of this burden.”
Despite a need for higher investment, Benyon said the current privatised model “is right” because the alternative would put the investment demands of the water sector “in a queue behind the health service, the police and the armed forces”.
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