Nationalising water would turn off the investment taps
Government has neither the money nor the capacity to run our water industry and nationalisation would be the surest way to stop investment in it. Only the private sector has deep enough pockets to fund that level of investment, says Natascha Engel
People across Kent and Sussex have had to use their neighbour’s toilets and wash their children with bottled water, as more than 30,000 homes spent up to six days without water this week. It comes just weeks after a water treatment centre was forced to shut down. Leaving tens of thousands of homes in Tunbridge Wells without water for 14 days.
It’s a nightmare for residents, but also a disaster for South East Water, whose chief executive is now facing calls to resign amid accusations of failing to maintain ageing infrastructure.
Bashing the water industry, its executives and owners might be therapeutic, but it does nothing to solve the problems faced by an industry that supplies us with one of life’s most essential commodities. Without it, schools and hospitals remain closed and at worst, people die.
We urgently need more investment in our ageing water infrastructure, and we need to build a lot more of it. We need more reservoirs to store it, more pipes to transport it and more waterworks to clean it.
Private investment
None of that is cheap. Government has neither the money nor the capacity to run our water industry and nationalisation would be the surest way to stop investment in it. Only the private sector has deep enough pockets to fund that level of investment.
No-one wants sewage in their rivers and seas, nor does anyone want it backing up through their toilets.
No-one thinks water companies should be given carte blanche to flout regulations, but we need private investment in the water sector, and we need talented leaders to run the industry. But the current levels of political risk and uncertainty mean that global investors and leaders are increasingly looking to other countries as destinations.
Government is actively working with regulators to prioritise UK economic growth – and that means ensuring that regulations don’t stifle innovation and stop infrastructure from being built.
Emma Reynolds, secretary of state for environment, food and rural affairs recently pledged in these pages to fix a sector that has suffered from whole system failure.
I was a Labour MP from 2005 to 2017 and know Emma Reynolds well. During her time away from Parliament, Emma Reynolds led TheCityUK, a trade association for the UK’s biggest financial institutions. For a politician, let alone a Labour minister, that is rare experience, and it means that she knows exactly what investors need to be persuaded to put their cash into our public utilities: long-term policy certainty and returns on their investments. If anyone can find the answers to the many problems facing the water sector, then it’s Emma.
But she can’t do it on her own. The government needs the private sector’s help.
Industry can help by explaining that investors need robust and predictable regulations on infrastructure. The UK’s oil and gas sector has developed some of the best health and safety rules in the world and is a good example of sensible regulation stimulating growth.
In return for providing policy certainty and the necessary changes in regulations and planning laws, industry will have the confidence to invest and pledge to play by the rules knowing that they won’t constantly be changed. Industry need to be good neighbours in those communities in which they have a stake and help them to grow.
If that happens, and if that is what the public sees, then politicians will find it easier to persuade voters that business needs to make a profit if we want them to invest.
Emma Reynolds talks of a partnership with business to fix the water sector, and that’s exactly what’s needed.
Done right, that means both government and industry keeping to their ends of the bargain and working together to create the growth in a sector which is so in need of reform, so crying out for investment and so critical for the UK’s economic wellbeing.
Natascha Engel is chief executive of palace yard and a former Labour MP