Noah Law

I welcome the fact that, under the Prime Minister’s leadership, the conversation on public control of the water industry has fundamentally shifted. We must no longer bury our heads in the sand over the question of public control of the water sector, but we owe our constituents honest answers, not easy answers. I am sure that there are few in this House who feel that they could credibly advocate that there is truly a cost-free form of nationalism out there—or for expropriation, as it more honestly should be called. Despite my background, I promise that I am very much not the “It’s all about the bond markets” guy in this case. I think we all know, however, that there is no free lunch at scale when it comes to the overall cost of funding the industry. At the same time, this industry should never have been privatised in the first place, and immense sums have been extracted from it over the years. Although some of the more recent investment expectations under this Government have begun to temper that, the extraction is still happening in egregious cases such as that of Thames Water. Let me briefly take Members through the four options for taking back control of the industry. Option one is a pragmatic approach to cost-free nationalisation, which says that even more stringent regulation would bankrupt the companies so that we could acquire them for nothing. The problem is that we can get as good of a deal with these companies as we like, but the British public would still have to foot the £100 billion-plus investment in upgrades over the next five years or so. Option two is that we pay the full whack. I think we all know that RCV is not a fair market valuation, but when the debt, which needs to be paid down or taken on, is factored in, the figure is up to the better part of £100 billion. Even then, there is the investment on top of that. Option three is to wait for the water companies to go bankrupt and then acquire them for next to nothing. Ofwat sees 10 of those companies with high financial risk, but the Government would still have to foot the infrastructure bill on a company-by-company basis—that would be cheaper, but slower. Option four is to start with what the British public actually want to see from its water system and have a democratic conversation about what they are willing to invest to solve the problem. We then work out the impact that that has on the value of the industry. The reality is that we have already had that conversation—we know what the British public want because they have been shouting it from the rooftops, often in wetsuits with surfboards in hand. I commend the work of the Good Growth Foundation, which has gotten to grips with some of the challenges and opportunities presented by the special administration scheme to take back control of the water industry for the public good, and enable us to take those profits and reinvest them into fixing our water system.