Water Bill: Lib Dems to force vote on protecting customers from water company bailouts

27 Jan 2025

EMBARGO: 22.30 27th January 2025

Today (28th January), the Liberal Democrats plan to push a vote to ensure customers do not have to foot the bill for failing water companies. This comes after both government and Conservative MPs rejected 44 Lib Dem amendments to hold companies to account and protect customers.

In the Commons, Liberal Democrat MPs will force a vote that will ensure it is creditors, rather than customers, who pay when water companies go bankrupt. The Bill, as currently drafted, leaves customers on the hook when a water company goes into special administration procedure.

This comes after Ofwat revealed last month that the average water bill will rise by an average of £31 over the next five years. Customers are already paying the price for the financial failings of water companies; more than a third of customers’ bills are being spent on servicing water company debt instead of improvements to fix leaks and clean up waterways.

Both the government and Conservative MPs rejected 44 Lib Dem amendments at the Bill Committee to protect customers and hold water companies accountable. They either voted down or failed to support amendments including measures to set clear pollution reduction targets and ensure champions for the environment and customers have a seat on water company boards.

Other amendments Labour and Conservative MPs failed to back include bringing forward the ban on bonuses for water company bosses, scrapping Ofwat and introducing a new regulator with more powers to hold failing water companies to account. They also did not support Liberal Democrat amendments to make water companies monitor the volume of sewage spilled into rivers, lakes and beaches.

The Liberal Democrats have long spearheaded the campaign in Parliament to end the sewage scandal, calling for a new regulator that would ban water company executive bonuses, fine water companies for sewage pollution and ensure the industry is accountable and transparent with the public about their polluting habits.

Commenting, Liberal Democrat Environment Spokesperson Tim Farron MP said:

“It is an absolute scandal that customers are forced to foot the bill of failing water companies, whilst executives line their pockets with extortionate bonuses.

“That is why the Liberal Democrats have put forward an amendment to protect customers from water companies’ incompetence.

“Under the former Conservative government’s watch disgusting sewage was pumped into British waters and vital infrastructure was neglected. And the current Government seems content to continue the Conservatives' appalling track record.

“Liberal Democrat MPs will continue to hold the government’s feet to the fire until they knuckle down and get tough on polluting water companies.”

ENDS

Notes to Editor:

Amendment can be found here:

Amendment 9 would ensure that creditors, not bill payers must fund the bail out of water companies, not bill payers in the event of a water company going into special administration procedure.

What this would achieve:

Clause 12 of Labour’s Bill, as currently drafted, enables the Secretary of State to “ensure that any shortfall following the provision of financial assistance by the Secretary of State to a company in special administration can be made good” and “can require a water company to raise amounts of money determined by the Secretary of State from its consumers, and to pay those amounts to the Secretary of State to make good any shortfall”. These are quotes from the Government’s own Explanatory Notes briefing (Page 12, paragraphs 67-69) .
Special administration is an insolvency process for businesses that provide a critical service or supply and involves ensuring the continuation of essential services. Essentially: “A special administration regime… would take the company into temporary government ownership in order to ensure that vital water supplies continue to function even if the company becomes bankrupt” ( Guardian).
When a water company goes into special administration procedure - essentially bankruptcy – we do not think it is right that the customers foot the bill.
The management of those water companies and their creditors are responsible for the mess the company is in. So we think it is those creditors, who have heaped on more and more debt who should cover the costs.

Liberal Democrat amendments rejected by government and Conservative MPs cover topics such as:

Setting clear pollution reduction targets so we can measure progress and hold water companies to account against them.
Labour’s Bill stipulates that when a water company goes into special administration, customers can be asked to pay for any losses the Government incurs. We proposed an amendment which would require creditors – largely hedge funds and other big financial companies – who have loaded debt onto water companies and then profited from the interest, who should cover those costs instead. Labour opposed this.
Introducing a clear threshold for when a failing water company should be put into the bankruptcy process – rather than letting them continue to rack up more and more debt indefinitely, with customers paying the price for the ever-increasing interest payments.
Stopping water companies using offshore holding companies.
Ensuring there is a timeline in the Bill for when the ban on bonuses for water company bosses would come in. Labour voted to remove a binding timeline from the Bill.
Preventing a revolving door between the regulator and water companies by banning Ofwat from employing people who have recently worked at a water company.
Including champions for the environment and for customers on boards of water companies.
Making water companies install volume flow meters so they can properly monitor sewage spills.
Making water companies report the amount of sewage spilled into our water.
Scrapping Ofwat, who has clearly failed to hold these companies accountable and introducing a new regulator with more powers and funding.
Limiting the amount of poly-and perfluorinated alkyl substances in drinking water.

The Ofwat final price determination report is here.