THERE is a strong possibility Labour’s plans for a new “single powerful regulator” for water will make life easier for polluting water companies and worse for customers and the environment.

Since privatisation, water firms took out too much profit and failed to invest enough in anti-pollution measures or build reservoirs.

The public is angry at profiteering polluters, but Labour is sticking with privatisation. Instead of renationalisation, it is rejigging regulation.

This rejigging could make water worse. Currently water has two main regulators: Ofwat, an “economic regulator,” and the Environment Agency, an environmental regulator.

Ofwat is a weak regulator because it fundamentally accepts the core idea of privatisation: investors owning water firms — including Chinese billionaires, Malaysian oligarchs and rapacious investment funds — should make big profits. Ofwat often accepts arguments that water firms can’t “afford” vital investments or must put up customer bills.

The Environment Agency looks at pollution and is less affected by this “economic” argument. The Environment Agency is deliberately made weaker by underfunding and understaffing, but it isn’t fundamentally hobbled like Ofwat.

You can see the difference in the biggest water scandal of recent years: in 2021 Southern Water was fined a record £90 million for illegally dumping billions of litres of raw sewage off north Kent and Hampshire coasts.

The water company claimed sewage spills were caused by storm overflows — when unusually high rain overwhelms sewage systems — but were actually regularly dumping filth because it was cheaper.

The prosecution was launched by the Environment Agency, not Ofwat. The Environment Agency found “very serious widespread criminality” at Southern Water. The Environment Agency uncovered the crimes in part by insisting Southern Water install monitors to show the size and frequency of sewage overflows.  

The agency also uncovered similar crimes at other water companies after insisting they too installed monitors. Ofwat has joined the Environment Agency’s investigation, but only after the agency took the initiative.

Labour claims its new plan will mean “tougher oversight and stronger accountability for water companies.”

However, it is taking the Environment Agency — the regulator that uncovered the biggest scandal — off the job.

Labour says it is “abolishing Ofwat,” but its new “single regulator” could easily become much more like Ofwat than the Environment Agency.

The white paper published by Environment Secretary Emma Reynolds says they will create “a new integrated water regulator to provide greater stability, transparency and an integrated view of both economic and environmental performance,” by “integrating” economic and environmental oversight, the new regulator could easily put the economic case — water firm profitability — above the environment.

Reynolds’s white paper is open about how they see pleasing the investor as their key aim, saying they want to “strengthen the water sector’s financial resilience and ability to attract the long-term investment required to meet its ambitions, ensuring that the sector supports economic growth.”

The paper repeatedly talks about how the government plans to “making water a more attractive and reliable sector for investors seeking stable and fair returns.”

It even contains an illustration of Labour’s enthusiasm for attracting private investment into water industry which shows a pound sign being dropped into an investors hand.