Yes, we need to do more. When compared with other European countries, we are absolute laggards: we use much too much water, wash our cars
with potable, drinking-quality water, and do all kinds of things that we should not. We have to change our lives, and I hope the Minister will be able to inform us about what will be happening in that area in the future.
On the topic of dividends, which is a key point, Ofwat says that each company’s licence requires it to declare or pay dividends
“only in accordance with a dividend policy which has been approved by its Board and which complies with both of the following principles.
The dividends declared or paid will not impair the ability of the company to finance the regulated water and sewerage business.
Under a system of incentive regulation, dividends reward efficiency and the management of economic risk.”
In the past, some companies have certainly played a bit fast and loose with those principles, and have developed levels of gearing that I, as a manager of a small business when I entered DEFRA, found quite eye-watering. However, the hon. Member for Harrow West does tend to pick on the bad players, and in talking about Thames Water, he was perhaps not talking about the Thames Water of today. He might have been talking about a model that applied under previous ownership, and I urge him to look more closely at what Thames Water is trying to achieve today.
We should encourage companies to look at employee share ownership schemes. That whole concept of finding ways to democratise capital is a huge, rich seam that we could collectively work on. Water companies are good places to encourage not just employees, but customers, to develop a higher interest in the ownership of that company, which is a better way to get more people involved without damaging any investment potential. I worry about Labour’s proposals for nationalisation right across the sector. It recently published its plans in a publication called “Clear Water”, but stopped short of explaining how the big challenges faced by the water industry, such as climate change and an increasing population, would be addressed by its substantial re-organisation of structures and ownerships. That publication makes no attempt to acknowledge the many improvements made since privatisation in 1989, let alone the further benefits such as falling bills, improved services and increased investment that companies have set out for the future.
If water is nationalised, it could seriously damage the service and quality of water in England. It could create a future in which decisions are driven primarily by short-term political expediency rather than the needs of customers, and in which the high levels of investment needed to improve services are not sustained. The result would be bad for customers, bad for the environment, and bad for the economy.
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