Labour plans new water regulator for England and Wales

The Labour party is drawing up plans to create a new water regulator as it seeks to address public anger over the dumping of raw sewage in Britain’s rivers, lakes and beaches.

Under the proposals, a Labour government would merge most of the Environment Agency, the pollution watchdog, with the financial regulator Ofwat and the Drinking Water Inspectorate to create a new oversight body, according to people familiar with the plans.

The party would also create a separate flooding agency with the remnants of the Environment Agency to protect communities in England and Wales in the case of extreme weather events.

With a general election expected next year and Labour showing strong gains in the local elections this week, there is growing focus on the party’s policy agenda.

Public outrage around the practice of water companies tipping raw sewage and storm water into Britain’s waterways has become a political priority in recent months.

The scandal has prompted widespread protests and led to beaches being closed for swimming several days last summer with a repeat expected this year.

Ofwat regulates the water and sewerage industry in England and Wales, which is made up of privatised regional monopolies.

It sets how much companies can charge customers and their required level of infrastructure investment, which is reviewed every five years.

Labour would retain this regulatory model but extend the five-year term to encourage longer-term capital planning, according to people familiar with the plans.

Scotland’s water system would remain in state hands while Wales may also be given its own separate settlement with a separate economic regulator.

Labour declined to comment on the plans but Jim McMahon, shadow environment secretary, has previously criticised the current system of water regulation as not “fit for future”. Ofwat and the Environmental Agency were contacted for comment.

Figures close to Labour’s discussions said its proposals to overhaul the regulatory system have not been finalised and may not be announced until the party’s autumn conference in Liverpool.

Labour’s proposed reforms mark a steep climbdown from the party’s former leader Jeremy Corbyn’s manifesto pledge to renationalise the water utilities three decades after they were privatised.

Cat Hobbs, director of We Own It, a pro-nationalisation campaign group, said: “Water companies and regulators have had more than 30 years to get this right and they have failed.

“We need full public ownership not more regulatory manoeuvring so the money that households pay goes towards stopping sewage and investing in infrastructure, not into paying dividends and CEO salaries.”

Labour’s proposals could spark conflict with unions such as the GMB and Unite, which favour nationalisation, as the party enters into consultation with its members and other groups through its national policy forum.

Therese Coffey, Conservative environment secretary, has insisted the government has its own “fully costed and credible” plan, telling the House of Commons in late April: “Labour says that its plans will not impact household bills, but it cannot say how much they will cost.”