This exchange took place in The Commons yesterday as Clive Lewis MP asked Steve Reed MP, the Environment Secretary, about nationalisation of the water industry:
Clive Lewis
(Norwich South) (Lab)
I am afraid that the report feels like a missed opportunity for the Government to show the public whose side they are on. It entrenches a privatised model that has already failed economically, environmentally and democratically. With 20% to 50% of bills going on servicing debt, why is public ownership—if it is good enough for rail, GB Energy and renewables—not good enough for water?Steve Reed
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 hon. Friend claim, from the water companies; they are provided by officials in my Department under the influence of nobody externally. 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.
Reading what the Cunliffe Report has to say about the future regulation of the water industry is meaningless for reasons this exchange makes clear.
The tame and ultra-compliant chair of this review accepted the commission to prepare it because, no doubt, he agreed with the massive untruth propagated by Steve Reed in the above exchange.
As my research has shown, taking environmental considerations into account (or even just part of them) means that every single English water company is likely to be bankrupt.
The usual value of a bankrupt company on sale is £1, and nor is the acquirer obliged to take on any or all of the debt obligations at face value. However, if they were to do so, they would simply accept them and pay nothing for them. In that case, the debts are simply cleared over time, and no money changes hands to debt financiers on the takeover date.
In other words, the acquisition cost of the bankrupt water industry would be less than £20.
If the civil service is unaware of this, those who prepared the valuation should be reassigned to the paperclip department.
If Steve Reed doesn't know this, he is not fit to hold public office.
If Sir Jon Cunliffe is unaware of this, then he should never have held a senior appointment at the Bank of England.
What is more, if any of the person involved thinks that the cost of water orvatisatiion would come out of what they call 'taxpayers' money' (even though no such thing exists) and that the consequences, as Steve Reed has claimed, is that spending on health education and defence would need to be cut, then they are not just economically ignorant, they are wilfully so.
As a matter of fact, since 1946, all nationalisations have been paid for through the issue of government bonds, which are costless to issue, are redeemed (in principle, although never in practice) thirty to forty years after they are created, and carry interest in the meantime at rates if interest considerably lower than those now paid by the water industry. As a result, supposed taxpayer money is never used to fund nationalisation, and other services will not be impacted in the slightest.
It is not just dogma that Labour is using to deny the need for water privatisation; they are also using a straightforward lie.
As I have also made clear with regard to tax this morning, yesterday was one when the full economic ignorance of the government, its advisers and the Treasury were on display. The result is disastrous policy. We will all pay a heavy price for it, not least when clean water is fundamental to our well-being. Labour, however, thinks the pursuit of profit for a few dodgy dealers is much more critical. If they are never in government again, at least in their current form, it may be too soon.
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I don’t believe this is incompetence, but a deliberate ploy by the establishment and neoliberals. Read:
“The Invisible Doctrine: The Secret History of Neoliberalism (& How It Came to Control Your Life)” by George Monbiot and Peter Hutchison.
https://amzn.eu/d/czj6icR
Confessions of an Economic Hit Man, 3rd Ed. by John Perkins.
https://amzn.eu/d/fiXzi2x
“Steve Reed ………….is not fit to hold public office” (you didn’t need anything else)
“Sir Jon Cunliffe is unaware of this…………..& should never have held a senior appointment at the Bank of England” (we don’t need an “If”)
The point is: monopolies are nice earners for the UK finance mafiosi – lobbyists (being paid by the monopolists – using revenues from … water bills) bending ministerial ears – as for Cunliffe – he is part of that mafiosi – which is why he was annointed. The only way out of this mess is a down-sizing of the UK finance mafiosi.
In the case of LINO – if UK serfs had half an ounce of brain – they would mount a recall of Reed – get rid of him as an MP – he is a creature of the banksters – who at the moment control public narratives.
Listening to Steve Reed is really depressing. He’s either clueless or doesn’t care. Lewis Goodall got nothing sensible out of him and he’s actually Lewis’s MP. Here in the South West my bills have literally doubled this year because the government has taken away a subsidy they used to pay because our prices are so high. And that’s for a company throwing out so much sewage that it’s not safe to swim at many of our beaches that previously were safe.
We have to nationalise not bail out these companies and without doing this we are just pouring money literally down the drain.
Agreed
If Labour believes the false £100Bn claim (and they certainly cannot prove it*), and believes in water privatisation and the Cunliffe Report as the answer; then Starmer should expect Anas Sarwar (Scottish Labour) to fight the 2026 Holyrood election on a ‘privatise Scottish Water’ ticket.
If Labour do not run on a ‘privatise Scottish Water’ ticket next year, then clearly they are not telling the truth when they argue there is no working alternative to privatisation.
* The £100Bn figure, I suspect was conjured up in some corner of Whitehall, simply to avoid the Banks facing an eye-watering haircut on the debt they irresponsibly gave the water companies; and do not wish to face the calamitous write-offs. This is actually just another form of banking failure. Government bails them out again, by maintaining a bankrupt privatised monopoly industry in business; but paid for this time – directly by the domestic customer; and through the nose.
Think on this. In some creepy corner of vulture capitalism, some bright-spark is even now trying to work out how he can access a private monopoly over the air you breathe. And this Conservative Party, and this Labour Party would privatise air at the drop of a hat and sell it to the public as The Only Alternative:
“We Do Not Have the Money to Keep Air in Public Ownership”.
Tht is crazy enough to be true, John.
The £90-billion figure comes from a report by the very nice sounding Social Market Foundation (SMF), who say they are “independent of any political party or group”, in “The cost of nationalising the water industry in England” (Feb 2018). https://www.smf.co.uk/publications/water-nationalisation/
They also mention that the “report was commissioned by Anglian Water, Severn Trent, South West Water and United Utilities”, and although SMF claim “Any views expressed in the report do not necessarily reflect those of the commissioning bodies”. Are they really going to bite the hand that feeds it?
Many media outlets picked up on the report, but some completely forgot to mention the conflict of interest, as did the government.
That is, almost certainly, the source used by the cvil servants advising Steve Reed used. They just upped it a bit for infaltion, and forgot to mention who paid for it.
Steve Reed stated that taxpayer owned Scottish Water had worse quality water than England. He is either misrepresenting the Cunliffe Report or lying, in either case he should give an apology to the Scottish Government. The Cunliffe Report states that 66% of Scottish water bodies were of good ecological status, compared to 16.1% in England and 29.9% in Wales.
,
Correct, and agreed.
Let’s settle on lying, since he has repeated it sveral times. That’s not a mistake.
I think he said it was worse on sewage spills specifically (Scottish Water has a weakness in its monitoring system, therefore it is not clear how Reed knows it is worse, if the problem is measurement); not general water quality. At least, that is my recollection.
In the early 1980’s I used to read the 2000AD sci-fi comic and there was a Judge Dredd story about an evil company cutting off the clean air supply to customers living in the more radioactive areas of Mega City 1 for not paying their bills resulting in them dying.
Judge Dredd declared that he was the law and delivered justice – I think it was summary execution for the managers and long sentences in the iso-cubes (prisons) for the company owners.
It’s so strange that a comic of all things gets it just about right with regard to how to deal with greed.
Remember this. The government controls the radio waves in the territory over which it is sovereign. That is why it can claim sovereign authority over the electromagnetic spectrum that allows it to give a Charter to the BBC, and franchise parts of the spectrum to broadcast TV and radio companies. It has no control over space, which is why it cannot franchise DBS (satellite) TV operators.
It could, of course (theoretically) claim Crown sovereignty over the air we breathe, and sanction or tax everyone for using it. I say this, not to suggest it is feasible, or isn’t crackpot; but simply to illustrate how Crown sovereignty and political power actually work; and how it conjures power and resource out of what seems nothing at all. Notably, it doesn’t exercise any power over the digital, Big Tech masters of the universe; but dances to their tune. Government has simply lost control.
Too late….the rich and powerful have already thought of water. Air will be next
https://aarhusclearinghouse.unece.org/news/nestle-ceo-water-not-a-human-right-should-be-privatized
Don’t bother clicking the link – surprise surprise, the proposal has been removed.
Might this article be of interest/relevance?
https://en.wikipedia.org/wiki/Water_supply_and_sanitation_in_the_Netherlands
If the low lying Netherlands can and does have a clean, responsively monitored, affordable water and sewage system, why do we not have one?
Might it be that the Netherlands system, in adverse topographical contexts and a similar population works well, indicates that our dirty, ill monitored and extractively expensive set up is a (corrupt) political choice?
Thanks
The Netherlands is the de facto capital of hydrology. For very obvious reasons the Dutch have brilliant hydrologists and understand why it needs funding properly. The UK also have a history of excellence in hydrology, but sadly this is not funded as well and especially since Brexit enabled looser environmental regulation. We can however thank the EU for forcing considerable upgrades and funding quite a lot of this. How we are going to clean up the mess whilst share holder dividends are involved and considerable debt needs servicing is beyond me.
Monopoly money and the Water Works spring to mind, what a mess!
And Monopoly was originally warning against capitalistic accumulation not a celebration of it….
‘The earliest known version, known as The Landlord’s Game, was designed by Elizabeth Magie and first patented in 1904, but existed as early as 1902. Magie, a follower of Henry George, originally intended The Landlord’s Game to illustrate the economic consequences of Ricardo’s Law of economic rent and the Georgist concepts of economic privilege and land value taxation.’
Totally agree. May be I should invest in paperclip manufacturers because if any of these clowns get put in charge of HM Government paperclip procurement the prices are bound to soar!
🙂
It is so clear that Reed had prepared the answer ‘ £100bn to be taken from the health service and schools etc ‘ much more thoroughly than anything to do with the precise details of how the new regulator would actually work to solve all the problems of sewage, bills, company failures etc.
If only someone had asked Reed Richard’s question – ‘ surely these companies are essentially bankrupt and so should only cost £1?’ Or ‘why couldn’t the public ownership option have been considered in detail within the inquiry instead of being ruled out from the start?’.
Labour have got to rethink their view of the economy – as Richard , re emphasised by Mike Parr say – but they wont, they have already been paid not to.
How depressing.
Even an innocent question by a BBC interviewer – ‘but arent these companies bankrupt?’ to Reed – could leave him publicly exposed
I think they are all aware of what you are saying, but their priority is to maintain a lie.
It is the Neoliberal way of doing things, tell a lie often enough and people will believe it, especially if the media just report the lie without question.
Companies on the stock market go bust all the time. Shareholders and debt holders will regularly get nothing. It’s the risk they take when investing in the market. Why should it be any different for water?
Technically, the privatised water industry is bust. It is only being kept alive by the fact that this Labour government has done nothing to stop the water companies from screwing us for as much money as they can get.
In opposition, Labour said the water companies should not be allowed to pass on the cost of their failure to the people. In power, Labour have done the exact opposite and allowed it to happen.
It is New True Blue Labour that are keeping the criminal water companies alive.
We also have the prospect of 30% over inflation bill rises for the next five years, and Labour tells us that by then, they will have cut sewage pollution from water companies by half in 2030.
So, we have to pay all this just to get it cut by half? And the water companies are still increasing the sewage — last year was a record.
And no doubt the top management will still be getting their top bonuses.
And dividends will still be increasing every year for shareholders in these “bust” companies.
What makes me laugh, is that the Government say: “Bills are now ringfenced to force companies to invest in upgrades.”
Labour think that is an achievement that upgrades are “ringfenced”. Yes, look at the inflation busting bills that we are being charged for them to do that!
What a total con.
Hardly surprising that conman Farage sees water “nationalisation” as something that he can beat Labour on.
I think that Labour’s failure to address all the issues, especially inflation busting bills to pay criminal water companies to clear up the mess they created, will come back to haunt them.
Thanks
I am neither an economist or an accountant. Even so, I am fully aware that a company whose outgoings exceed its incomings will sooner or later become unviable, and therefore become bankrupt and worthless. Thames Water, and likely many other privatised water companies, have clearly reached that stage. Without a bailout, and obviously no private bank would view such companies as a reasonable risk, this would have to come from government, aka socialise the costs, privatise the profits.
So this is where we are. Anyone who believes, or argues, that renationalisation would cost 100 million, is either grossly stupid, bribed, or a liar.
But what else can we expect from Starmer and his cronies? They are all lining themselves up by the revolving door for a lucrative post-office role, when they should be clapped in irons and sent to the Tower as traitors to the people.
I wonder what the net tangible book value of Thames Water is – even with assets revalued to present day values and how this compares with the ridiculous postulated £100bn cost to nationalise?
In 2022 the total net assets of them all was £13 billion. See the links I provided in the post.
I have said for a long time that if someone could work out a way of charging us for fresh air, they would do it without a second thought, and be lauded for it in certain quarters.
Step 1. Pretend ULEZ and CAZ are unfair to ordinary working people. Step 2. Scare election-sensitive mayors into dropping plans to initiate them. Step 3. Run an election campaign attacking those in operation (and their dodgy, left wing proposers, especially if “ethnics”). And so on. You’ll end up taxing clean air, only accessible via gas-masks, sold at a premium the more gangster they look, not the dirty fumes cherished by the “ordinary working people” who love their poison-spouting vehicles and think breathing the emissions will make their children tough and true Brits, fit for the SAS.
A long time ago I watched a TV program about sampling the air in the London play grounds. I laughed was that the sampling was done 20 feet in the air. Considering they were worried about lead which would be concentrated at ground level, A biased method to try and lie about it.
“We have to take a rational, not ideological, approach to tackling this problem.” Neoliberalism IS an ideology. The rational approach is to take back our strategically important assets without compensating the owners, who have failed. They have already reaped all the rewards they can and are entitled to nothing further. And, if the companies are in such debt, such as Thames Water, then they have no value.
Hi Richard. Many thanks for all of your valuable research and commentary, it really is much appreciated.
Could you please advise on pension fund management impact on a nationalisation situation ie would that need to be bought out or just taken over as per the business side?
Also, are there implications for any added debt burden should the pensions have to be bought out or are they underwritten in some way?
Thanks again, Regards, Steve.
Hi Steve,
I am not sure I understand your question. Are you asking about the pension funds for the water companies, or pension funds who have bought the shares of water companies, or their debt? Until I understand that I’m not sure what answer you are looking for.
Richard
Hi Richard
apologies!
I refer to pension funds that have invested in water companies but also firms or institutions have bought any debt relating to the companies themselves
thans
regards
steve
These funds record a loss. That’s it. USS has done this on Thames Water, already. It really is that straightforward. They made a poor judgement. Their members pay the price. I have a USS pension, albeit not a very big one.
It could be argued that the Government already owns that £100 billion mythical figure, in that the only value left in the shares of the bankrupt water companies is the prospect that they might be purchased at their face value as part of the nationalisation process.
Any normal company which ran out of cash would either declare bankruptcy (making the shares completely worthless), or find itself forced into a deal where existing shareholders were diluted to near worthlessness. The Government is just scared to acknowledge that reality, because it would mean some ‘rich’ bastards (probably including those whose pension funds held water company shares) would become a little less rich. And we know Labour is terrified of that. So we continue to perpetuate the myth that these shares have value. For how long can this particular can be kicked down the road?
I wonder that sometimes
Steve Reed’s “inaccurate and misleading” comment about Scotland’s water being worse than England’s is called out by Gillian Martin, the Climate Secretary, as reported in The National: https://www.thenational.scot
“Inaccurate and misleading” is of course polite terminology for an out and out lie.
Correct
That £100B is a lie. Steve Reed is lying to the house.
Why is he not being fired like anyone in any other position over such a colossal lie and demonstration of ineptitude for the job?
Yes I know you shouldn’t treat these positions like a job, there is more to it, people make mistakes and no-one would run for government otherwise. I accept all that but, many of us see the lies and policy decisions completely at odds with the public and have to ask. At what point should they be held accountable? Who is going to push back on this and prove without a shadow of a doubt he’s lying and force him to admit it? All I have seen is MPs say he’s wrong and he simply repeats the same lines back. No accountability.
I remembered reading some time ago that, while the value of Thames Water is technically £1 or less, the Bondholders had set things up so they would need to be paid out if the Government took over as they have a “charge” over the assets.
AI tells me:
Bondholders:
These are creditors who have lent money to Thames Water. They are entitled to receive interest payments on their loans and to have their principal repaid at the end of the loan term. Bondholders do not own the company’s assets, but they do have claims on those assets in the event of a default or restructuring.
If the value of the assets is £13 billion does that become the actual cost to the government of nationalising?
It’s not £100 billion but it is not loose change either…
I have little doubt that some of them have tried to achieve this i.e. they have put a charge or a mortgage on assets. But, a charge on an asset is only worth what the asset is, it is not worth what the value of the loan might be. So, for example, if you bought a house for £300,000 and took a loan for that amount, and then the value of the house fell to £150,000, the charge is only worth £150,000, and the rest is lost. Technically, the company might have the full amount, but in practice it can’t pay it, and that is why haircuts happen.
Just to up set every one in UK
I live in Ireland and about 30% of the population have a private water supply and a septic tank. So when the Irish government wanted to charge for water supply there was an out cry.
Water supply in Ireland is free.
In Northern Ireland water is not charged separately.
But general rates (which pay for it) are much higher than in England. Anecdotally ie asking family, the sum of the two in England is much the same as the single charge in NI.
I, too, live in Ireland and on a well and septic tank. Each year there is maintenance to pay for.
Water charges are abolished in December 1996 by then environment minister Brendan Howlin, widely seen as a political move to block anti-tax candidates in a forthcoming election. Since then, the only domestic users who have paid for water are those in group water schemes. For the rest of us, the water is paid for from general taxation. So, NOT free!
In fact, anyone with a well is paying twice.
The other problem is that the lack of water infrastructure is having an affect on new housebuilding.
“Irish Water have said they can only supply 30 to 35,000 new houses a year”.
“The Government are insisting that we’re going to deliver 50,000 – so, there’s a gap.”
I wrote via email yesterday to Steve Reed asking him for the sources that underpin the calculations he claimed were solely undertaken by Defra officials that concluded it would cost the taxpayer £100 billion to nationalise English water companies.
Thanks
Not an FoI?
I was a sales rep selling to the water companies when they were privatised.
The moment privatisation happened my regular contacts all became far too important to see me again.
Mid level engineers were transformed at the drop of a hat into world beating business executives with salaries to match.
The writing was on the wall from day one.
From The Grauniad…
Headline: Thames Water refuses to claw back bonuses paid using £3bn emergency loan
Money was paid out from loan meant to stabilise firm’s finances weeks before it paused retention payments plan
https://www.theguardian.com/business/2025/jul/09/thames-water-paid-out-millions-in-bonuses-using-3bn-emergency-loan-documents-reveal
“Thames Water paid almost £2.5m to senior managers from an emergency loan that was meant to be used to keep the failing utilities company afloat – and has refused to claw back the payments, newly released documents reveal.
The struggling water supplier paid bonuses totalling £2.46m to 21 managers on 30 April.”
The rest of the of the article left me wanting to scream and tear my hair out!
Might I join you?