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The Guardian - UK
The Guardian - UK
Helena Horton Environment reporter

Can Labour clean up England’s dangerously dirty water?

Foamy water flowing from a sewage outflow across mucky terrain
A sewage outflow in Kent. Water firms have been trying to get on the front foot in anticipation of a Labour victory. Photograph: Dylan Garcia Travel Images/Alamy

Since the UK’s general election was called, the Labour party has been seeking to capitalise on voters’ fury over the sewage filling England’s rivers and seas.

The debt-ridden, leaking, polluting water industry, owned largely by foreign investment firms, private equity and pension funds, has overseen decades of underinvestment and the large-scale dumping of raw sewage into rivers. It has become one of the touchstone issues of this election, with voters across the political spectrum angry at the polluting of waterways treasured by local communities. Groups have sprung up to look after rivers and lakes; protests pop up most weekends along the coast.

Labour is keen to present itself as having the answer – though the Liberal Democrats have also been making a splash on the issue – with the shadow environment secretary, Steve Reed, talking tough by threatening to put water bosses in prison, ban their bonuses and impose fines for sewage spills.

But after vowing to end the “Tory sewage scandal”, Labour – predicted by multiple polls to win the election with an outright majority – will have to act quickly and ambitiously to clean up the mess, say experts.

With no rivers in good condition, water bills projected to skyrocket, crumbling infrastructure leaking sewage into groundwater, people getting sick from tap water, and water companies in dire financial straits, this is not an easy problem to fix. It will take focus, investment and potentially an entirely new regulatory and ownership system.

Labour has identified the potential collapse of Thames Water, the country’s largest water company, as a key crisis issue that will have to be immediately tackled by the incoming government. The party leadership does not want to nationalise water, arguing that it would cost the taxpayer tens of billions of pounds.

But some within Labour have been pushing hard for nationalisation – England is the only country in the world that has a fully privatised water system.

Clive Lewis, who was the MP for Norwich South until the general election was called, recently tabled an early day motion asking for water companies to be brought into public ownership. He thinks this should start with Thames Water and gradually include all of England’s water companies. He has been supported by a group of Labour MPs, including the former shadow chancellor John McDonnell, and it is also a key policy of the Green party. Launching the motion, Lewis said: “Water companies in England have incurred debts of £64bn and paid out £78bn in dividends since they were privatised, debt-free, in 1989 … Water companies paid out £1.4bn in dividends in 2022 even as 11 of them were fined in the same year for missing performance targets.”

Mathew Lawrence, the director of the Common Wealth thinktank, said the potential collapse of Thames Water could give a new Labour government an incentive to act boldly. “A crisis is also an opportunity: to show how they will govern differently and end financial extraction from essential services. If we want to see fairer bills, clean water and well-run services, our water system must be brought into public ownership, just as it is in Scotland, and most of Europe.”

Water companies have been trying to get on the front foot in anticipation of a Labour victory at the election. The industry fears a shake-up, and has been briefing heavily that if companies are fined too heavily and end up failing, it will dent investor confidence in the UK.

Liv Garfield, the chief executive of Severn Trent, last year proposed to her fellow CEOs: “One idea we believe might be attractive to the Labour leadership is repurposing utilities and utility networks into a new breed of declared social purpose companies – companies that remain privately owned, who absolutely can (and should) make a profit, but ones that also have a special duty to take a long-term view.”

Water UK, the trade association for the water industry, is working alongside the regulator, Ofwat, to avoid higher fines for water companies and potential jail time for chief executives. Water UK has recently appointed a number of people who are well-connected in Labour circles. David Henderson, the body’s new CEO, was a longtime adviser to Gordon Brown, and the former Labour cabinet minister Ruth Kelly was appointed as its chair last year. Its head of policy, Stuart Colville, used to work for Ed Miliband, the shadow energy security secretary. Colville then moved to the Department for Environment, Food and Rural Affairs (Defra), which is in charge of regulating the water sector, before joining Water UK. He has a public-facing role at the lobbying group, recently hitting the airwaves to tell people the water industry was “working really hard” to stop sewage spills.

This has led to concern about a revolving door between the UK’s political and corporate classes, which risks preventing action to tackle the water crisis. James Wallace, the chief executive of River Action UK, said: “If the leaders of Water UK speak the same political language as a potential new government it could go one of two ways: collegiate and urgent transition of a failing sewage and water industry for the benefit of people and planet; or a cosy continuation of the scandalous degradation of waterways permitted by under-resourced regulators and profiteering corporations.

“We will be pressuring for the former … History will judge harshly any more broken promises.”

A Water UK spokesperson said: “We are focused on securing regulatory approval for £100bn in new investment. At almost twice the current rate, this investment is vital for ensuring the security of our water supply and reducing the amount of sewage entering rivers and seas as fast as possible. Regardless of which party is in government, the industry will remain focused on securing approval for this investment.”

Also keeping Labour on the straight and narrow is its unofficial water adviser, Feargal Sharkey, former frontman of the Undertones and now one of the country’s most vocal water campaigners. Keir Starmer, the Labour leader, has been seen socialising with Sharkey and the campaigner has accompanied Reed on the campaign trail . Now touring the country to campaign for Labour candidates, Sharkey has been clear that any wavering on their part will cause them to lose his support – which would in turn tarnish the party’s credibility on the sewage issue.

Sharkey, who also chairs Sera, an environmental campaign group affiliated to the Labour party, told the Guardian: “The simple truth is they are going to have to conduct a complete root and branch review and potential restructuring of the ownership and funding not only of the water companies, but the whole system of regulation that oversees their activities.” He said he did not know yet if nationalisation was the answer, but the current system had to change: “For example, in the case of Thames Water, there is not a single year since privatisation the Thames Water shareholders put in more money than they took out. It’s always been a cash-sum game to them. They’ve always abstracted more money out of that company than they ever invested in it.”

There are rumours that Labour is planning a review of the regulators, and to potentially scrap Ofwat and replace it with a new, stronger body. The investment for the new reservoirs that are needed – London is projected to run out of water in coming years if there are any more droughts like that of 2022 – and for sewers to stop human effluent being poured into waterways, also has to come from somewhere. How much of this will a Labour government allow billpayers and taxpayers, rather than shareholders, to shoulder? Sharkey thinks it can force shareholders to pay for the bulk of it. But most think bills will have to rise. Labour has pledged not to raise taxes for working people and is sticking to stringent fiscal rules, so any large-scale investment would be unlikely to come from central government.

An equally pressing issue Labour needs to tackle, experts say, is farming pollution, caused largely by the spread of animal manure on fields that then leaches into waterways, causing harmful plant and algae blooms.

Shaun Spiers, the executive director of the Green Alliance thinktank, said: “Farming must be properly regulated and particular problem areas tackled.” He said an action plan must be put in place for the Wye, one of the most polluted rivers in the UK due to the muck from the intensive chicken farms surrounding it.

Farming unions will be lobbying hard against this, and it will be much easier to blame water company CEOs than farmers, who have more public sympathy. It remains to be seen whether Labour will stick to its guns and clean up the UK’s waters, or if, as has happened for the past 14 years, the tough decisions are deemed just too difficult to make. The harsh truth, however, is that many of England’s rivers and chalk streams do not have 14 more years to wait before ecological collapse.

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