Water UK has proposed companies “retain the benefit of private sector investment” but champion the public interest in their operations, in response to a Labour consultation on renationalisation.
The industry body’s response calls for an “alternative way forward” instead of the party’s plans to renationalise the sector.
It accuses Labour of not considering the new public interest commitment announced by the sector in April.
Companies have agreed to a series of pledges which complement individual business plans, as well as five goals as part of the commitment:
- Triple the rate of leakage reduction
across the sector by 2030
- Make bills affordable as a minimum for
all households with water and sewerage
bills which are more than 5 per cent of their
disposable income by 2030 and develop
a strategy to end water poverty
- Achieve net zero carbon emissions for
the sector by 2030
- Prevent the equivalent of 4 billion
plastic bottles ending up as waste by
- Be the first sector to achieve 100 per cent
commitment to the Social Mobility
Water UK’s response to Labour’s Democratic Public Ownership paper also examines the party’s 2018 ‘Clear Water’ paper which outlined the party’s thinking behind its plans for the water sector.
The trade body says Labour’s plans could “seriously damage” the provision and quality of water and sewerage services in England.
Water UK also warned the proposals outlined in the Clear Water document could create a future where decisions are driven primarily through “short term political expediency rather than the needs of customers”.
It said both documents stop “far short” of explaining how the big challenges faced by the water and sewerage industry – such as climate change and an increasing population – would be addressed by its substantial reorganisation of structures and ownership.
In a summary of its response, Water UK said: “We have sought to establish whether the proposals provide the basis for delivering an equivalent or better service than that which is being delivered by the current industry model in England. Our conclusion is that they do not, and that they are fundamentally flawed.
“The proposals will not deliver an equivalent or better service and create the significant risk of a return to the poor performance of the English water industry when it was last owned and run by the government.”
Water UK’s response also highlights its concerns about pension funds that may be affected if Labour brings the water sector back into public ownership at less than market value – a point which has caused concern for many from both inside and outside the sector.
Specifically Water UK points to the fact that at least 67 pension funds are invested in the industry, with any plans to take over the sector at below market value having a detrimental effect on the pensions of nearly 6 million people, including 4.1 million public sector workers.
A forward to Labour’s public ownership document claims the party’s proposals are about “handing economic power back to workers, citizens and communities to a degree that has never been before”.
It adds: “Democratic public ownership is a chance for the biggest devolution of economic power the UK has ever seen – a way of putting people in control of their lives, not just after clocking off, but at work too.
“Giving people a direct say in decisions about working hours, wages, investment, new technology, and health and safety, promises to make people both more fulfilled and more secure.
“But democratising economic decision-making is not just a political question – it is also a practical and economic necessity.”
In response to Water UK’s submission, a Labour Party spokesperson said: “It is disappointing but not surprising that instead of engaging constructively in an exciting discussion about how to give citizens genuine democratic control of their key resources, Water UK is doubling down on defending the interests of a narrow group of shareholders.
“Ordinary people know that the privatisation of water was an organised rip off, which is why public ownership is so popular.
“We will respond to the consultation through the National Policy Forum’s annual report, which will take into account all submissions.”
Last September shadow chancellor John McDonnell used his keynote speech at his party’s conference to unveil plans for a publicly-owned water system should it win power.
He said that it would be run by local councils, workers and customers under a new ownership model that seeks to avoid the top down, centrally controlled model that characterised post-war nationalisation.
McDonnell said: “Water bills have risen 40 per cent in real terms since privatisation. Water companies receive more in tax credits than they pay in tax. Each day enough water to meet the needs of 20 million people is lost due to leakages.
“With figures like that, we can’t afford not to take them back. But let’s be clear, nationalisation will not be a return to the past.
“We don’t want to take power away from faceless directors only to centralise it all in a Whitehall office, to swap one remote manager for another.”