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Labour Government Refuse To Stop Shareholders Profiting From Sewage Contaminating UK Waters -The Worst In Europe

Calls For Water Companies To Be Put Into 'Special Administration' Rejected By Steve Reed Environment Secretary

Campaigners are calling for Thames Water and other failing water companies to be placed into special administration to allow the government to implement much-needed reforms. Special administration, a legal tool under the 1991 Water Industry Act, would place these companies under government control, replace their directors, and stop dividend payments to shareholders. This step would also allow for the transfer of ownership, potentially into public hands, without costing taxpayers, according to Professor Ewan McGaughey of King’s College London, who supports the campaigners' push.

He spoke after the environment secretary, Steve Reed, was accused of using “economically illiterate” analysis, paid for by water companies, to reject calls to take the industry back into public ownership.

McGaughey said: “The best way to clean our water is with more investment. Forty per cent more investment would be possible if we stop bailing out banks and shareholders with billpayer rises. It will cost us over £12.5bn this parliament to keep paying shareholders and banks … the right way to close this black hole is to make failed companies lose their licences, cancel the debt and transition to public water … this is all possible under the existing law.”

Thames Water, the largest privatised water company, is struggling with £15 billion in debt and may face a cash shortage by December. Its situation worsened after credit rating agencies downgraded its debt status. The broader water industry has faced criticism for paying out £53.1 billion in dividends since privatisation, while accumulating £60.3 billion in debt, raising questions about financial management and the industry's capacity to invest in necessary infrastructure.

Environmental groups such as Ilkley Clean Water, Surfers Against Sewage, Windrush Against Sewage Pollution, SOS Whitstable, River Action and Save Windermere; have been campaigning against the illegal discharge of sewage into rivers and coastal areas for many years since Thatcher privatised the Water industry.

They now argue that attempts to reform the industry through regulation have failed, and special administration could be a solution to halt the diversion of funds away from investment in clean water and sewage treatment. They highlight that the government already has powers it could use to hold failing companies accountable, but those have not been enforced effectively.

Matt Staniek of Save Windermere said: “The government is trying to distract us from one simple fact: they already have numerous laws and powers at their disposal right now, which they are choosing not to enforce, and special administration is one of them.

The water industry has consistently breached its statutory obligations, and Labour could place it into special administration on this basis alone. Doing so would halt the extraction of dividends and the servicing of debt at the expense of captive customers.”

In a joint statement the environmental campaigners said:

“We urge the government to exercise the legislative powers granted under the Water Industry Act 1991 by initiating special administration procedures for Thames Water. This action would serve as a critical measure to halt the diversion of customer payments to shareholder dividends, hold failing company bosses accountable and allow the government to focus on the necessary reforms to address the systemic issues within the water industry more broadly.”

Despite these calls, environment secretary Steve Reed has rejected the idea of bringing the water industry back into public ownership. Instead, the government is pursuing measures like banning bonuses for water company executives and strengthening penalties for environmental breaches. However, critics say the government is overlooking the deeper issues, and that stronger intervention, such as special administration, is necessary to protect customers and the environment.

The campaigners believe that attempts to reform the multibillion-pound privatised water industry over several years has failed.

With growing public pressure on the government to resolve the crisis in England's water industry, a number of groups have organised a protest in London, the 'March for Clean Water', over the state of the water industry and the impact of pollution on English rivers, on Sunday 3rd November 2024.

You can download the latest Water Quality Report done by Surfers Against Sewage by clicking the pic above right.

Source: The Guardian / Save Windemere / Surfers Against Sewage

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