SoS signals “a water revolution” ahead of Cunliffe recommendations this morning

Environment secretary Steve Reed told the Sunday morning political broadcast round that “our water sector is absolutely broken” and needs a “a water revolution” to fix it.

Speaking on Sunday morning with Trevor Phillips on Sky yesterday, ahead of Sir Jon Cunliffe’s final report and recommendations being published later this morning, Reed said: “We need to reform this system from top to bottom, so the failure of the past can never happen again.”

That, he said, would be the third block of water change from the Labour administration, following “resetting the sector” by banning executive bonuses and bringing in prison sentences for wrongdoing (block one), and “rebuilding the system” by securing £104bn over five years to invest in infrastructure (block two).

Reed said the three blocks together enabled him to now commit to cut sewage spills by half by 2030 from a 2024 baseline (and halve phosphorus from treated wastewater by 2028) – a pledge he told Laura Kuenssberg on her BBC programme that he was prepared to quit his job over if it is not delivered.

Phillips challenged the lack of ambition on the sewage commitment, remarking that halving spills effectively means swimming in sewage “Monday to Wednesday”. This drew Reed to defend the plan as the most ambitious milestone yet on the way to “eliminate” discharges within a decade. 

Phillips pressed on whether future (post 2030) Labour policy would be to peg bills to inflation or to support even higher charges to enable more investment. Reed said April’s big price hike was because the previous government had allowed underinvestment; that had to be corrected but the reformed system will make sure that kind of situation does not present again. “A small, steady increase in bills is what most people expect,” he shared, adding that he had “not been convinced yet” of the need for more social tariffs.

This position on underinvestment echoed the findings of a Public Accounts Committee report published last week, which accused “piecemeal regulators” of being “missing in action”. The PAC said: “The water system has been left to sink for too long, with hikes in customer bills now required to update and expand the failing infrastructure.” It called for urgent action to strengthen oversight, rebuild trust, explain what higher bills are being spent on and deploy fines on environmental remediation.

Reed would not comment directly on widespread speculation that one of the Cunliffe recommendations will be the abolition of Ofwat. However, he told Kuenssberg “the regulator is clearly failing” – having failed both customers and the environment – and that “clearly regulation must change”.

He dismissed calls for water nationalisation, arguing this would: necessitate stripping £100bn from the NHS to pay off water owners; “take years,” leaving pollution to fester in the meantime; and, referencing Scottish Water’s spill levels, not be a panacea for pollution anyway. On Thames Water specifically, Reed did not rule out temporary public control under special administration should circumstances necessitate it. We are “not there yet” he said, but “we are working on those preparations” to stand ready.

Panelist on Phillips’s show, broadcaster Stephen Sackur, commented that if tougher regulation featuring more controls, fines and punishments is to be combined with continued private ownership, “who on earth is going to want to invest?”

But “we’re turning a story of decline into a story of renewal,” Reed concluded – a message he gave to the water industry last week at Water UK’s Skills Summit.

Sir Jon Cunliffe will present the Independent Water Commission’s conclusions at a former Victorian pumping station in South West London this morning. The Government will respond to the recommendations in Parliament later today. As indicated in the interviews, Reed is expected to announce a root and branch overhaul of water regulation, and to provide assurances on future bill increases.

• Following Reed on Kuenssberg’s show, Reform leader Nigel Farage stuck by the party’s manifesto policy to take 50% of water into public ownership, with the other 50% owned by British  pension funds and investors. Citing rail, he reasoned it would be inefficient for government to run water companies but said some control was needed over such a critical national asset. He rejected that Reform’s policy would cost the taxpayer £50bn, arguing “It would be a lot less than that if you strike the right deal.” He indicated existing bond and equity holders should not be bailed out; as private investors, he said, they take the risk when they invest.