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A Labour MP has accused the Environment Secretary of misleading Parliament for claiming that nationalising the water sector in England would cost £100 billion for the Treasury.
The figure amounts to roughly the annual spend of the Department for Education, though nationalisation would be a one-off move.
On Monday in the House of Commons, Labour’s Environment Sec Steve Reed brushed off Labour left-winger Clive Lewis’ call to nationalise the water sector, in a debate on the landmark Cunliffe Review into the scandal-hit industry.
Reed said: “We have to take a rational, not ideological, approach to tackling this problem. Nationalising the water companies would cost £100 billion.
“Those are not figures, as I have seen my honourable friend claim, from the water companies; they are provided by officials in my Department under the influence of nobody externally.”
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He added: “To pay that money—£100 billion—we would have to take it away from public services, such as the national health service and education, to hand it to the owners of the companies that have been polluting our waterways. That makes no sense to me and it makes no sense to the public. Frankly, I am surprised that it makes any sense to him.”
The Department for the Environment, Food, Rural Affairs (Defra) has now confirmed to Byline Times that the Government is using the (soon to be abolished) regulator Ofwat’s Regulatory Capital Value (RCV) calculations as the basis for monitoring the cost of nationalising the sector.
Ofwat’s latest figures for water companies in England and Wales put the RCV of the sector at around £106 billion, at the end of the 2024/25 financial year.
Defra says the RCV reflects the value of water companies’ assets and therefore provides a ‘reliable cost’ for any change in ownership, including moving to a nationalised model.
The independent Consumer Council for Water has previously come to a similar conclusion.
But Norwich South Labour MP Clive Lewis says the figures are misleading – because they do not account for the amount of financial distress the water companies are facing, or what shareholders could be forced to accept.
The RCV value of Thames Water, according to Ofwat, is currently £21 billion.
But the firm is on the brink of collapse and could be taken over by ministers under a so-called Special Administration Regime, a form of temporary nationalisation.
Only in June private equity firm KKR pulled out of a £4bn rescue bid to acquire a major stake. Thames Water is in £20bn of debt despite siphoning billions of pounds to shareholders in recent years. (Thames Water was also revealed as England’s worst polluter this month, with the firm responsible for 33 or the 75 most serious pollution incidents last year.)
Clive Lewis told Byline Times the Environment Secretary was being “naughty” and “misleading” with the figures, adding that “I wouldn’t say [he’s] lying, but misleading.”“
For Steve Reed to value water nationalisation at £100 billion, he’s also valuing Thames Water at £21 billion. It’s for the birds. He got away with that, and repeatedly used that figure.”
The Ofwat/Defra figures echo that of a 2018 Social Market Foundation report which produced almost the same price-tag for nationalisation. The report was sponsored by Anglian Water, Severn Trent, South West Water and United Utilities.
Lewis plans to put in a point of order when Parliament returns in September, to challenge Reed.
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He urged the Environment Secretary to “have a fight with the Treasury” to secure whatever funds are needed.
Lewis added: “If [Thames Water] is going to fold, they’ll fold during the summer when Parliament’s not there.
“If that happens, it will be brought back into public ownership. The current legislation that’s been passed means we take on the debt, and then some extractive private sector company will come in, shirking the responsibility for pollution.”
“You get the impression that, again, it’s us, the bill payer, the taxpayer, that’s going to be picking up the tab for these things rather than having a proper regulatory body that’s actually going to hold them accountable. It’s just one big gravy train for the private sector to exploit.”
While the Government has dismissed calls for nationalisation of water in England, on Monday, ministers announced that regulator Ofwat would be abolished and a “new, single, powerful regulator” would be established to cut water pollution in England’s rivers, lakes and seas, and “protect families from massive bill hikes.”
These reforms build on decisive action taken by the Government over the past year to clean up England’s rivers, lakes and seas:
Ministers say record investment is planned over the course of this Parliament in England’s crumbling water infrastructure, though it comes alongside soaring bills for many customers.
The Environment Agency is also getting extra funding to fund hundreds of enforcement officers to inspect and prosecute polluting water companies.
The Water (Special Measures) Act banned “unfair” bonuses for ten polluting water bosses this year and threatened prison sentences for law-breaking executives. However, Southern Water was among those which appeared to circumvent the bonus ban by simply doubling the pay of its CEO this year, a loophole many predicted would be used.
Compass, Momentum, Green New Deal Rising, Clive Lewis and others are spearheading a national campaign for public ownership of water in England, arguing that it is highly popular across party lines.
Lewis remains a prominent left-wing critic of many of Keir Starmer’s policies, despite a string of suspensions of outspoken Labour MPs in recent months.
Water is already publicly-owned and run in Scotland and Northern Ireland. In Wales, it is operated by a non-profit, Dŵr Cymru / Welsh Water.
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