Will Labour be our sewage saviour or find themselves up the creek?

Water companies need flexibility and lower compliance costs, not overzealous regulation that will drive private investment away, says Kitty Thompson

Kitty Thompson | Head of Campaigns

Sewage has dominated the environmental conversation for years. Responding to public pressure, successive governments have lumbered water companies with more and more regulatory burdens in an attempt to show that they are tackling the issue. So why is this problem of poor water quality not going away?

As the water quality debate has grown in toxicity, the flexibility of water companies has diminished over time, replaced with an overly prescriptive approach that sees water companies submit a staggering 53,000 pages of plans and spend over £250m on the most recent price review process alone. Piling regulations onto water companies is only making it harder for them to solve the problems they’ve been tasked with.

A lot of the blame can and should be laid at the feet of Ofwat, the sector regulator, which has tried to keep water bills artificially low for decades. Low water bills might sound great, but they come at the price of action to improve our water system, limiting how much companies can invest. Blame for the lack of investment to clean up our rivers, therefore, partly rests with Ofwat. That being said, it can also be laid with successive generations of politicians who have mandated Ofwat.

The Cunliffe Review, published yesterday, has rightly called time on our ridiculous approach to water sector regulation. Cunliffe offers up a smorgasbord of sensible recommendations, including bringing all of the regulators under one roof, rationalising the number of plans water companies must produce and allowing ‘constrained discretion’ for regulators to exercise greater flexibility. 

In short, tinkering at the edges and taking action only against water companies will not suffice.

Additionally, while public anger is understandably focussed on sewage, other water pollutants – from agricultural run-off and industrial chemicals, to microplastics and roads – must not be overlooked. 

While there is no doubt that the regulation and regulators for water companies must be reformed, we cannot improve water quality by tackling sewage alone. This means tackling water pollution from source to sea. For this ambitious approach to work, we simply cannot continue to throw money at storm overflows or new layers of bureaucratic busywork, and hope this brings about real improvements to our water quality. 

Our water companies and regulators need greater flexibility, so that they can tailor solutions to local priorities, rationalise regulations, cut compliance costs and ensure this is all underpinned by a regulator that is fit for purpose. This new approach will unlock the innovation we need to reduce the full range of pollutants and stresses facing water in Britain. 

But this demands political bravery – to admit that the sticks to flagellate water companies might make us feel good but do not deliver the goods. In fact they even scare off the private investment we need to improve water quality.

To its credit, the Conservative Party did take unprecedented – and often ignored – action on sewage and took some welcome steps towards reforming the broken regulatory system. They set ambitious and legally-binding targets accompanied by plans of action, and directed public money to novel projects, like localised catchment partnerships. 

In many ways, the party had no choice. Although sewage had been entering our waterways for centuries, it was not really until the party decided to start monitoring all storm overflows in England back in 2013 that the sewage issue gained notoriety, giving campaigners the data they wanted to demand immediate action. 

Having promised to be our sewage saviour, Labour now finds itself up the proverbial creek and has forgotten to pack its paddle. 

Its Water (Special Measures) Act 2024 achieved very little but at least gave the impression that it was busy solving the problem. Funding has been cut for projects, like the River Wye Action Plan, that sought to tackle non-sewage pollution, and as recently as this weekend, the Environment Secretary trumpeted new plans, money and targets for water, only for campaigners to reveal they are actually a watered down version of what was set by their Conservative predecessors. 

Since the general election campaign, Labour tried to cast itself as the hero of the sewage story, but increasingly looks set to be the stooge. Having asked Sir John Cunliffe to lead this review of the water sector, it would be wise to now heed his advice and deliver the vital but unglamorous reforms that our waterways desperately need. 

First published by CityAM. Kitty Thompson is CEN's Head of Campaigns.