Labour looks to a second water Bill to further sector reform

Baroness Hayman, the new Parliamentary under secretary of state for environment, food and rural affairs, told the House of Lords last week that the Government would bring forward a second water Bill to continue its reform of the water sector.

She was speaking in a debate brought by Lord Sikka, on water company financial resilience. She said: “We will work on another water Bill that will come forward, and I look forward to working with all noble Lords, including my noble friends, on what that could contain in order to make the biggest difference to the current situation.”

Hinting at possible content, she said “officials are exploring options for improving affordability measures in the sector” and “We are looking at all options and ways forward to improve the situation, and, clearly, modelling of how companies operate will be part of those discussions.”

She restated that the Government has no plans to nationalise Thames Water – “It would cost billions of pounds and take years to unpick the current ownership model, during which time underinvestment in infrastructure and sewage pollution would only get worse.” Pressed on whether special administration is being considered, Baroness Hayman replied: “Currently, the regulator is working with the company to look at the best way forward, and the company is looking for further investment.”

Lords questioned Ofwat’s future, including whether it is fit for purpose and whether “a new and powerful single regulator for the water sector” is a prospect, to replace the “feeble” existing ones (Lord Whitty). She replied: “At the moment we are working closely with the regulators, including Ofwat, to ensure that they are fit for purpose and can deliver what is needed in the sector.”

Baroness Hayman described Labour’s current Water (Special Measures) Bill as “a first legislative step towards improving the sector”. She said that would feature a bonus ban for serious environmental breaches; strengthen Ofwat’s ability to “bring robust charges against water companies and executives when they have committed offences, including through automatic and severe fines” and require water companies to install real-time monitors, “so that we can actually see what is going on”.