The Labour government has been accused of using an “economically illiterate” analysis paid for by water companies to argue against nationalising the sector in England. The Guardian revealed that a letter from the Department for Environment, Food and Rural Affairs (Defra) to anti-sewage groups cited a 2018 report by the Social Market Foundation, commissioned by United Utilities, Anglian Water, Severn Trent and South West Water. The letter claimed renationalisation would cost £90bn, a figure disputed by Moody’s rating agency, which estimates the cost at £14.5bn.
Sir Dieter Helm, a leading economist, described the analysis as “economically illiterate”. The Labour government has ruled out nationalisation, with Environment Secretary Steve Reed announcing a review of water companies and regulators but stating that nationalisation would not solve the sewage crisis. Reed has been courting private finance, hosting a round table with investors including a representative from Macquarie, the firm blamed for raising Thames Water’s debt.
Campaigners have criticised the government’s stance. Matthew Topham of We Own It said: “Keir Starmer’s government is at a crossroads: it can protect households and our waterways or it can protect shareholders.” He warned that continued privatisation at Thames Water could spark a borrowing crisis. Feargal Sharkey, clean water campaigner, questioned why the government would believe a “sham of a report” over data from Moody’s.
Labour MP Clive Lewis has pushed for nationalisation, arguing that the current model has failed. He said: “No amount of tinkering with new regulatory powers is going to work. This is one river turd you will not be able to polish.” The government has also faced scrutiny over Reed accepting almost £2,000 in football tickets from bosses linked to Northumbrian Water.
