Good businesses would never have allowed the water infrastructure to reach this point - Ismail Mulla

No one should begrudge a business doing its job rewarding its executives and shareholders. But the water companies have made a mockery of any goodwill customers would have had towards them.

Politicians and large sections of the public are rightly cautious when it comes to nationalisation. Competence and efficiency haven’t historically been bywords of nationalised industries.

But my jaw dropped when a colleague pointed out to me that no new reservoirs had been built in the three decades since the sector was privatised. It kicks the central plank out from under the argument for privatisation - that it would bring in investment.

So on top of the endless streams of sewage being pumped into our rivers and the sea, we may now end up with severe water shortages in the future.

All the while it is the customer that has paid and the expectation is that they should pay more. Where is the justice in that? And the brass neck on these companies to continue rewarding executives bonuses.

Speaking to the BBC last year, Nicola Shaw, chief executive of Yorkshire Water, even said: “My shareholders are paying for that bonus and want to make sure I am incentivised to keep turning the business around".

Having a go at water companies is one thing. We all know custodians of the most precious resource on this planet have somehow made themselves villains in the eyes of the public.

However, the failure of regulators is unforgivable. Nine reservoirs are now needed, among 30 major projects to address a shortfall of nearly five billion litres of water per day by 2050. It will cost another £52bn on top of the £290bn set to be spent keeping the current network running.

What exactly have the water regulators been doing over the decades? Well this is where the National Audit Office (NAO) shed some light in its report last week.

On the issue of water infrastructure, the NAO found despite three separate regulators having some involvement – the Environment Agency (EA), OfWat and the Drinking Water Inspectorate – “none of the regulators have a duty to ensure there is a coherent national plan for the water sector.

“Despite increasing pressures on water supply and unprecedented investment in new infrastructure, there is no coherent national system where integrated decision-making can take place.”

This points to a failing of successive governments and an overhaul of the regulatory regime is clearly needed.

At least Labour is trying to give an impression of taking on a water industry that has become a law unto itself.

The Water (Special Measures) Act 2025, means water executives who cover up or hide illegal sewage spills can now be locked up. We’d be naive to expect any executive spending time behind bars.

Instead it’ll be left to the consumers to pick up the mess that these companies have made of the water network. Whether that’s through nationalisation or rising bills.

What cannot continue is the payouts to shareholders and executives. Until water companies are able to provide an independently ratified resilience plan with costings, the flow of rewards should stop. In fact, while customers are facing rising bills to fix these issues that the water firms have failed to address, there should be no bonuses or shareholder payouts.

As Sir Geoffrey Clifton-Brown, chairman of the Committee of Public Accounts, says: “The consequences of Government’s failure to regulate this sector properly are now landing squarely on bill payers, who are being left to pick up the tab.

“After years of underinvestment, pollution incidents and water supply issues, it is no surprise that consumer trust is at an all-time low.”

That is the crux of the matter. Trust has washed away because the public has seen what the water companies have done to the rivers and sea. And people care about the environment, especially when it affects them and their communities.