Sir Ed Davey argues nationalisation would 'let water companies off the hook'

Sir Ed Davey speaks to ITV News Meridian's Political Correspondent Kit Bradshaw about the Liberal Democrats' policy on water at the party's conference in Brighton.

The Liberal Democrat leader has argued that nationalising water companies would be “letting them off the hook” for their pollution of the rivers and seas in the South of England.

Sir Ed Davey told ITV News Meridian that the privatised utilities model had “failed” by allowing firms to pay dividends while discharging sewage into seas and rivers.

But Sir Ed insisted it was now up to those private water companies to “put it right” and that shouldn’t mean higher bills for customers.

The water firms in England and Wales have invested more than £200 billion in real terms since privatisation, according to industry sources.

Companies have in recent months asked regulators for permission to increase customer bills by between 24% and 91% over the next five years, according to figures compiled by the Consumer Council for Water (CCW).

Asked why he wouldn’t commit to nationalising water firms, as some campaigners have called for, Sir Ed Davey said: “There's no doubt that the Conservative model for the water industry has failed. That doesn't mean you have to go back to nationalisation, not least because that would be letting the water companies off the hook.

“I don't think the taxpayer and the bill payer should pay for this, it’s the water companies [that should]. They've had billions of pounds of dividends from bill payers. They need now to put it right.

“And that's why Liberal Democrats have focused on getting a much tougher regulator. We call it the Clean Water Authority, taking Ofwat’s powers, powers from the Environment Agency, the Drinking Water Inspectorate. So, they can get tough on these water companies and make them make the investment to clear up their sewage.”

Asked if that policy would mean higher bills for customers, Sir Ed told ITV News: “Well, it shouldn't do. And if we had a tough enough regulator who would look them in the eye and say: ‘Look, you've had your good years, now you've got to invest’ – and make sure that their shareholders realise they've had a really good deal.

“Now, they've got some lean years for them, but this is their duty. If we had a tough regulator, that could happen.”

The Labour government has published draft new laws which would hand Ofwat and the Environment Agency new powers to take tougher action against water firms which damage the environment and fail customers.

Proposed new penalties include banning executive bonuses and creating jail terms of up to two years for managers who obstruct investigations.

The Environment Secretary, Steve Reed, has also ruled out any future nationalisation of water firms under Labour.

A spokesperson for Water UK, which represents the water firms, said: “Water companies have proposed investing a record £105 billion to support economic growth, build more homes, secure our water supplies and end sewage entering our rivers.

“The regulator Ofwat can only allow bills to rise for investment that is new, necessary and value for money.

“We understand that bill rises are never welcome, but water bills would be nearly a fifth higher today than if they had merely risen with inflation since 2010.”

Sir Ed Davey was speaking at the Liberal Democrat Autumn conference held in Brighton. 

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