Water nationalisation plans risk significant funding shortage

Nationalising the water industry in England risks losing essential funding for the future and would undo “years of improvements”, according to the chief executive of Water UK.

Michael Roberts argues that proposals outlined by Labour to renationalise the water sector have not yet included details such as how the environment would be protected and how leakage levels would be reduced.

Shadow chancellor of the exchequer, John McDonnell, used his keynote speech at Labour’s conference last month to unveil the party’s plan for a publicly-owned water system.

He lined up water as the first industry Labour will bring back into public ownership if the party gets elected to power.

During a debate with Labour’s shadow water minister Luke Pollard this evening (9 October), Roberts said: “Nothing we have heard so far on the proposals for nationalisation in England give any clue about how the environment would be protected, how water quality would be maintained and improved, how leakage would be cut or how the big challenges of climate change and population growth on the future supply of water would be dealt with.

“Instead of building on nearly 30 years of improvements, made possible by bringing in billions of pounds of private investment to undo the problems created by nationalisation, there’s a real danger that we go backwards to a world where decisions are driven by political short-termism rather than the needs of customers and the environment.”

The debate titled “Public vs private: Is the water industry working for consumers and the environment?” was co-hosted by Water UK and the New Statesman magazine.

Roberts added: “Putting water back in the same constrained public sector funding pot as health, education, housing, defence, transport, policing and the rest would relegate water companies to taking part in an annual competition for the chancellor’s support, hoping they would somehow be higher up the list of priorities for taxpayers’ cash than other issues which might be more attractive to ministers.

“It’s what happened before when companies in England were publicly-owned and it’s an issue today in Northern Ireland where, due to current public expenditure constraints, there’s a big gap between the money Northern Ireland Water needs for vital new water mains and upgraded wastewater treatment plants, and the money they get from government.

“The bottom line is that water companies, private or public sector, need the confidence that they will be adequately funded. There is a fundamental risk that nationalising the water industry in England would potentially cause far greater problems than any it is supposed to solve.”

Speaking at Utility Week’s Congress event in Birmingham earlier today Chris Loughlin, group chief executive of Pennon Group said “significant investment” is required in the water industry.

“Whatever we do in the future, we are going to need that investment,” he said.

Meanwhile Colin Nicol, managing director of Scottish and Southern Electricity Networks (SSEN) said he believed putting electricity networks back under state ownership would be a “mistake”.

He said: “The energy networks of the future must be built by privately owned utilities working – at all times – in the public interest.”