One of Labour’s biggest donors has urged the party to renationalise the water industry as households face bill increases of 21 per cent on average.
Water companies in England and Wales have been given approval by regulator Ofwat to increase bills by an average £19 a year over the next five years as they ramp up investment to solve the sewage crisis in rivers.
But Dale Vince, who has donated around £5m to Labour since 2020, said water companies should not be asking consumers to pay for the cost of sewage remediation while still paying out dividends and bonuses.
“These bill increases reward the incompetence and greed of our privatised water companies,” the green energy tycoon told i. “£85bn in dividends taken out of this industry and our economy since privatisation, coupled with a chronic failure to invest, has led us here.
“We should not reward this failure with bill increases, shareholders of these companies should be footing the bill,” he said, adding that “these guys have been having a laugh at our expense. It’s time we regulated them properly.”
Mr Vince, who owns electricity company Ecotricity, said that once Labour had settled in Government, he hoped the party would re-nationalise water – the industry was privatised in 1989 – in a similar manner to how the party has pledged to nationalise the railways.
Labour plans to create Great British Railways, a state-owned body for rail franchises, which will be gradually taken into public ownership when their existing contracts with the private sector expire.
Mr Vince said: “I advocate a ban on dividends, a ban on bill rises and to take water back into public ownership. In the same way Labour has pledged to do with rail, we should take back into public ownership where companies are failing.
“The bonuses to executives are just the tip of the iceberg.”
Labour has so far been cold on a potential water nationalisation as having to manage multi-billion pound companies with infrastructure in desperate need of improvement would require significant political capital.
The heavily indebted Thames Water, which was put in a turnaround regime by Ofwat, faces the prospect of being temporarily nationalised if it does not secure the funding it needs to keep it afloat.
Mr Vince said Ofwat should set strict financial parameters for the water companies. If they “break” financially, they should be nationalised, he suggested.
“The water companies are failing to provide infrastructure, while piling on debt and racking up bills.”
Mr Vince has been a strong supporter of Labour, endorsing the party’s environmental and economic plans, appearing in front of campaign material that said to “vote for a green government” and calling for sceptical voters to “lend your vote to Labour, and give them the benefit of the doubt in this next election”.
Before the election, he urged Sir Keir Starmer to endorse i’s manifesto to Save Britain’s Rivers and urged Labour to clampdown on water firms if it wins power.
He also told i that he hoped to see some further policy action and legislation by the Autumn Statement later this year.
“I think we can expect to see some detail on Labour’s green pledges by the Autumn Statement. Removing the offshore wind ban within 72 hours of getting into Government is incredible. The 2030 target for decarbonised power is a demanding and ambitious, but a doable target.”
Unison, the trade union and Labour donor, said an overhaul of the UK water industry was urgently needed.
Its head of environment, Donna Rowe-Merriman, said: “Ofwat has been asleep at the wheel. Its failure to manage has plunged the water industry into chaos. The latest recovery plan is way too late to have any impact.
“Consumers are once again facing rising bills while shareholders pocket hefty dividends. The infrastructure has been critically neglected, causing irreversible damage to the environment and eroding public trust.
“The rot must stop. Water companies and the regulator must be held accountable to ensure the public interest always comes first. A complete overhaul in the management of the industry is urgently needed.”
Gary Carter of the GMB union, and another Labour donor, added: “The current water sector and privatisation hasn’t worked. I think there needs to be a fundamental change to the water sector and just putting up bills and giving water companies lots of money is not the answer.”
The bill rises announced on Thursday, under draft proposals from Ofwat, are a third less than the increase requested by companies.
Ofwat’s chief executive, David Black, said: “Let me be very clear to water companies – we will be closely scrutinising the delivery of their plans and will hold them to account to deliver real improvements to the environment and for customers and on their investment programmes.”
Chancellor Rachel Reeves promised that the Government will “get a grip” on the water sector, saying: “It’s clearly a bitter pill for people who are seeing today’s announcements about higher water bills.”