Gareth Thomas
MP for Harrow West · Labour (Co-op) · United Kingdom
“Local councils such as Harrow need to invest more in youth facilities that divert young people away from crime. Some of the CCTV projects in my constituency that Harrow council has turned down—in Wealdstone, south Harrow and central Harrow—should get funding.”
“I congratulate my hon. Friend the Member for Pendle and Clitheroe (Jonathan Hinder) on securing the debate and on the way in which he approached the subject. I join him and my hon.”
“I also want to suggest that the Metropolitan police does not get recognition across the whole of the UK for its hugely important work in tackling national and international crime, and that perhaps more recognition of that is required in the funding formula.”
“In particular, in Harrow, we recently saw enforcement teams contracted out to an organisation called Kingdom. The responsibility for that contract was with Harrow council. There was widespread criticism of the way some of the staff employed by Kingdom tried to levy fines on a number of young people in south Harrow, in my constituency.”
“One way we can further support the Metropolitan police is by allowing it to keep more of the proceeds from successful operations, such as recovering stolen funds hidden in bitcoin assets. I congratulate my hon.”
“Mayor of London Sadiq Khan has done a huge amount to try to redirect funding from other parts of his budget to minimise the impact of that cut.”
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“As the father of a four-year-old daughter, I have been struck by how little coverage of women’s sport there is on mainstream television. There has been some improvement of late, and it is certainly true that there is a spike whenever a major women’s championship takes place. However, the highly commendable organisation Women in Sport, which did research into this issue, notes that only 10% of TV sports coverage is dedicated to women’s sport at the moment, compared with 7% across all media. When it looked at a number of countries, it identified that there were more hours of women’s sports coverage in the media in Romania than here in the UK. It is not as if there is not substantial interest in seeing more coverage of women’s sport. Recently released figures show that there is a growing appetite for watching women’s sport.”
“It is a pleasure to follow the hon. Member for Moray (Douglas Ross). Many community organisations in England would recognise his concern about funding cuts. I come from the constituency that produced Sir Roger Bannister. Members of organisations such as Harrow Athletic Club, Metros Running Club and Jetstream Tri Club pound the paths in Harrow that Sir Roger once trod. I am only too well aware of the funding constraints facing Harrow Council and, indeed, other local authorities. I want to concentrate the bulk of my remarks on two issues, and if time allows, I will raise one other issue at the end. The first issue is the one I raised in my intervention on the Minister, which is the coverage afforded on television and in the media more generally to women’s sport.”
“Unsurprisingly, the consumer voice in England carries little weight against the interests of distant investors, whose decisions have seen water bills rise by 40% above inflation since privatisation.”
“Nationwide, John Lewis, the Co-operative Group, the Royal London insurance company and NFU Mutual are just five successful examples of people-run businesses—mutuals—where profit is sought not to line the pockets of wealthy investors, but to reward customers and employees, and to invest in local communities. Such businesses are inspiration for reform of the water industry. Margaret Thatcher’s decision 30 years ago to privatise our water industry has created an expensive, unaccountable and unfair system. No other country has a fully privatised system of water and sewage services with so little competition. The resulting monopoly businesses are overseen by a woefully weak water regulator.”
“I beg to move, That this House has considered the future of the water industry in England and Wales. Customers and employees should be helped to take back control of the companies providing our water and taking away our sewage. The people of England should once again be front and centre of their water industry. Democratic, publicly owned businesses operating in the private sector, regulated with vigour by a more effective Ofwat is the Co-operative party’s vision of the future of the water industry. I am proud to chair that political party. I am grateful to the Backbench Business Committee for the opportunity to explore that agenda through this debate.”
“Instead, much of the income generated by water bills appears to have been used to pay the interest on debt built up by the privately owned water companies, in turn to fund dividend payouts. Despite similar levels of capital investment, we are now in a situation in which, according to research by the University of Greenwich, consumers in England are paying £2.3 billion a year more for their water and sewerage bills under the current privatised system than if the utility companies had remained in state ownership.”
“The Leader of the Opposition and, in particular, the shadow Chancellor deserve considerable credit for highlighting the lower cost of water bills in Scotland, where Scottish Water is publicly owned. While bills in Scotland are 2% less in real terms than they were 18 years ago, English water bills increased by some 13% in real terms over the same period. Privatisation has not meant more investment. Indeed, annual investment in water supply infrastructure was lower in 2018 than it was in 1990 and has fallen by about 10% in the past 10 years. All of the capital investment made since privatisation could have been covered using only the money generated by customer bills.”
“Analysis by Greenwich University suggests that the more than 40% increase in household bills in that time was driven mainly by the need to finance growing interest payments on debt—a point that the trade union movement in particular has highlighted. That analysis shows that accelerating debt levels are the result of the high dividend payments paid by water companies to their shareholders, which exceeded the privatised companies’ cash balances in every year bar one since 1989. Indeed, it is striking that total payments to shareholders are very similar to the total outstanding debt burden of privatised water companies, with at least £48 billion in payments in the past 30 years and at least £51 billion in total debt.”
“My hon. Friend and the trade union movement in general have pointed that out on a number of occasions. I will come on to one of the trade union movement’s particular campaign issues. Water companies have become a desirable global financial commodity, bought and sold by big banks, international infrastructure investors, pensions and sovereign wealth funds. Since privatisation, as my hon. Friend just pointed out, dividend payments have been very high, at an average of £200 million a year per company, and £2 billion a year in total. Over the past 30 years, at least £48 billion has gone directly to shareholders.”
“The only thing that went down during this period was customer satisfaction, which is now ranked 22nd out of 23 in the Consumer Council for Water league table.”
“My hon. Friend makes a good point. I will come on to how mutuals would allow customers to have a lot more say over—indeed, they would give them ownership of—the water services on which we all depend. Turning to one specific company, Thames Water was owned for 11 years by a complicated string of holding companies and offshore businesses, all ultimately owned by Macquarie bank, receiving returns of between 15.5% and 19%. Research by the Financial Times suggests that between 2006 and 2016, Macquarie and its fellow investors paid themselves £1.6 billion in dividends, while Thames Water was loaded with £10.6 billion of debt and ran up a pension deficit of some £260 million. Dividend, debt and pension deficit were not the only things to increase under Macquarie’s control of Thames Water; customer bills and complaints also soared.”
“It is worth pointing out that, adjusted for leakage per kilometre of pipes, Scottish Water performs just as well as an average English company, with 10.2k litres of leakage per kilometre as opposed to 22.1k for Thames Water, 10.8k for United Utilities and 9.5k for Yorkshire Water. Thames Water is not alone in poor performance. In truth, more than 20% of all water is currently lost through leakages from water pipes. In total, it is estimated that some 7.5 trillion litres of water has been lost through leakage, which is equivalent to the total volume of water currently in Loch Ness.”
“Thames Water is, by its own admission, failing to meet targets to reduce the number of properties experiencing chronic low water pressure; failing to reduce the number of complaints; and wasting almost 700 million litres of water annually through leakage. It is failing to meet basic standards in 17 out of 41 key areas. That dismal record also includes record fines for poor performance. In comparison, Scottish Water, which is publicly owned, has debt levels 5% lower than 17 years ago; its interest payments have remained consistent; and, with no dividends having been paid out, all the profit has been reinvested.”
“The hon. Gentleman makes an extremely good point. Given that we are in the middle of the latest pricing review, if Ministers had the gumption they could put pressure on Ofwat to use its existing powers to bear down on those exact issues. I agree with the hon. Gentleman’s general point that we need a full review of the powers available to Ofwat. I am sure that they need to be increased. Thames Water’s credit rating is the worst in the industry, according to Standard & Poor’s. Thames Water’s tax bill also declined during the period in question, as it regularly paid no corporation tax on its £1.8 billion turnover.”
“It is time that there was new ownership of the water companies in England, and I commend the mutual model to the House.”
“The new employee and consumer trusts should also have a role in the scrutiny and decision making of Ofwat, with a scrutiny panel that reviews the operations of the regulator, led by consumers, and also playing a role in Ofwat’s appointments to its board. In conclusion, comparisons of public ownership and private ownership of the water industry do not come out favourably for England’s privatised water companies. They do not look like they are committed to environmental investment and the other challenges facing the water industry. The latest price review should herald the beginning of the transformation to new not-for-profit owners—the very consumers and employees who depend on the services of the water industry. Public ownership works in Scotland and the model for mutual transformation of the rest of the water industry works in Wales.”
“As the ownership of water companies changes, legislation should be passed to embed the not-for-profit principle. The new not-for-profit water companies would also require protection, with an asset lock to prevent demutualisation in the future. Consumer and employee trusts—like those at Nationwide, John Lewis and other mutuals—would enable customers and the workforce to have an active role in the key decisions taken by their organisation. The board would include employee and customer directors, and the trust membership would enable members—including consumers—to vote for board members, and to agree audit, remuneration and company governance decisions, as well as how profits are invested or distributed. Ofwat should be given new powers to ensure that water companies encourage employee and customer participation in the democratic process.”
“Over the longer term, as equity investors seek to sell up because they recognise that they can no longer make a fast buck, consumer and employee trusts could use bond issues to buy those equity investors’ stakes in the business. These trusts would need to be underwritten by a buffer, or internal equity reserves, to borrow against. That could be achieved through a Government guarantee on loans or debt, to ensure that any large unexpected investment needs will be met, and to ensure that if anything should go awry, lenders are in a first loss position. Similar initiatives already take place in other areas of Government policy. Government guarantees could be replaced over time through the accumulation of non-distributed reserves, or of retained profit, by the trusts.”
“These trusts would have the power to appoint non-executive directors to water company boards, and they would have access to independent advice from management, so that they can make well-informed and independent decisions. Ofwat should discourage investment in the water industry that requires a fast return to the owners of expensive equity. Instead, it should steer water companies towards the lower-cost debt market, with responsible investors such as public sector pension funds, whose interests are aligned with those of the water sector and whose investment could help to ensure that there is a modern, resilient water infrastructure.”
“Welsh Water now has the strongest credit ratings in the water industry, which reduces its financing costs and allows for even more future investment in its infrastructure and services. Customer bills have been reduced steadily in real terms and so far it has returned about £180 million to customers in the form of customer dividends. In addition, it has provided some £10 million of support for vulnerable and low-income customers, through social tariffs and an assistance fund. The first step on that path for the water industry in England, so that it can match and then go further than Welsh Water, would be the formation of consumer and employee trusts.”
“For some of the reasons that I have set out, there is growing concern about the ownership model in the water industry, and there are alternatives to the current privatised system. Long-term alternatives that the Government should consider include, in particular, a mutual approach, with democratic public ownership by consumers and employees, modelled on the success of Welsh Water and inspired by other similar success stories. Welsh Water, or Glas Cymru, does not pay dividends to shareholders, and yet it operates in the private sector. It has an ownership model that forces it always to operate in the interest of its customers and it has changed the way in which it raises finance, in order to reduce the cost of credit.”
“Lastly, every English water customer should see their bills reduced after 30 years of being used as cash cows by the owners of water companies. It is time that consumers and their pockets were treated better. In October last year, the Select Committee on Environment, Food and Rural Affairs suggested that an independent review to determine whether the water industry was fit for purpose was required. The Chartered Institution of Water and Environmental Management went further, suggesting that such a review needed to examine the ownership of water companies. The Select Committee also raised concerns about the powers available to Ministers and Ofwat to improve governance and prevent pollution. With climate change approaching and a creaking infrastructure, the Committee argued that the need for change was urgent.”
“As I indicated earlier, the latest price review is under way and already the Consumer Council for Water is concerned that Ofwat’s grand promises are unlikely to be met, with “companies bidding for significant rewards for performance levels that aren’t particularly stretching”. In part, prices are decided by the cost of equity and the cost of debt, plus investors’ expected UK tax burden. In my view, Ofwat should reduce the cost of equity in its calculations while maintaining fair treatment on debt finance for genuine capital investment. In short, Ofwat should drive down the profit that the owners of water companies make. It should also scrutinise the tax behaviour of those owners, to crack down on tax avoidance, and demand that owners do not use tax havens to receive the profits from our water companies.”
“The Public Accounts Committee, which looked at regulation of the water industry as far back as 2015, criticised Ofwat for overestimating costs and poor benchmarking of efficiency, resulting in higher bills for customers. The hon. Lady also made the point that even the Secretary of State for Environment, Food and Rural Affairs suggested in March last year that water companies have not been acting in the public interest. Granted, the Secretary of State’s criticism came a month after a detailed critique of the water industry by the shadow Chancellor; nevertheless, the Secretary of State’s criticism is welcome.”
“I find myself in the slightly unusual position of agreeing almost completely with the hon. Lady. Leakage is a huge problem. Much tougher regulation by Ofwat in particular, and ultimately an increase in the regulator’s powers, are required to bear down on the shocking levels of leakage, not least because the Environment Agency has said publicly that England and Wales could suffer major water shortages by 2030. The agency also noted that enough water to meet the needs of 20 million people is lost every day through leakage, which surely further supports her significant point. To be frank, in the past Ofwat has not demanded enough investment from water companies, given the scale of the rise in customer bills. It appears to have been asleep at the wheel under various leadership teams.”
“I am enjoying the trip to Venezuela that the right hon. Gentleman is taking us on. May I draw him back to my remarks about the mutual model of democratic public ownership, which would see the water companies remaining in the private sector, albeit run by their customers and employees, a bit like at John Lewis and Nationwide?”
“I wonder whether the right hon. Gentleman would comment on two things. The first is the National Audit Office’s calculations, which suggest that there has been a 43% increase in real terms in water bills since privatisation, and the second is the significant difference in water prices between publicly owned Scottish Water and the privatised water companies in England, which I mentioned.”
“Far be it from me to help the Scottish National party out, but as I understand it, from analysis done by Greenwich University, the levels of leakage per kilometre in Scotland are better than for many English water companies, and are certainly in line with the average at worst.”
“Will the Minister comment on two points? I mentioned in an earlier intervention that, since Scottish Water was set up in its current form, the price of water is 2% lower in real terms, while water bills in England have gone up by an average of 13% in real terms. Secondly, in the current price review, does the Minister intend to require Ofwat to significantly lower the cost of capital, which is included in the amount that Ofwat allows water companies to charge?”
“I am grateful to the Backbench Business Committee, to you, Mr Gray, for chairing the debate, and to my hon. Friends and other hon. Members for taking the time to take part. I think the mutual route to democratic public ownership offers significant advantages over the current privatised system. Customers and employees would be in charge of the very services they depend on. There would be no cost to the taxpayer involved in the change of ownership. Profits would be reinvested in the business and continued borrowing for investment would be feasible. On that basis, this has been a very useful debate. Question put and agreed to. Resolved, That this House has considered the future of the water industry in England and Wales.”
“The Minister said that St Mary’s University in Twickenham already offered accelerated degrees, but he then said that the financial circumstances of other universities meant that they were not willing to provide accelerated degrees. Why does he think financially St Mary’s can offer two-year accelerated degrees, but other universities cannot?”
“Further to the intervention by my hon. Friend the Member for Oldham East and Saddleworth, a number of years after the Government decided to put tuition fees up to £9,000, mature students were one of the groups in which significant numbers had been deterred from going to university. What discussions have the Minister and his Department had to check that the measure would not be a further discouragement to mature students?”
“If the Minister wants to be the Minister for students, presumably he has talked to student representative bodies. What is their assessment of the proposed 20% fees hike?”
“Would it be fair to say that today we are being asked to vote for a 20% hike in tuition fees, albeit for accelerated degrees, without any commensurate guarantees of an improvement or at least maintenance of quality of tuition and other provision from universities?”
“Further to the question from the right hon. and learned Gentleman, the Father of the House, to the Prime Minister earlier, and in the context of the House having voted against the Government twice over its concerns about the possibility of no deal, does the Secretary of State accept that it would be the Government’s responsibility, if they were defeated next Tuesday, to bring forward legislation to suspend article 50?”
“Does the hon. Gentleman accept that if the deal does not pass this House next Tuesday, agreement to extend article 50 will be an urgent priority for the Government to bring forward a measure on?”
“To allow those discussions to take place and to allow serious parliamentary discussion, the Prime Minister should bring forward urgent legislation to extend article 50 for at least 12 months. Every careful independent analysis of the benefits and risks of Brexit overwhelmingly reveals that our country will be weaker; we will be weaker with the Prime Minister’s deal, and certainly weaker without any deal. I will not vote to make our country weaker.”
“There will not be millions of pounds extra each week for the NHS as a result of leaving. The claim by the right hon. Member for Haltemprice and Howden (Mr Davis) that there would be no downside to Brexit looks even less believable two years on. Given that the facts have changed, how divided the House and the country are, and how much more we know now, I remain firmly of the view that we will have to go back to the people. It is not an abuse of democracy to have a further referendum. It would be elitist to think that we in the House know best. The divisions in our country are not a reason not to go back to the people. If anything, they are a major reason why we should. Every serious alternative scenario to the Prime Minister’s deal would take time to achieve.”
“It is not just the lack of any serious detail about our future trading relationship that I worry about. The country should take seriously the warnings of the cross-party Home Affairs Committee about the implications of the Government’s deal for our future security. The lack of progress in locking down the detail about our future relationship with other security services via Europol, about the European arrest warrant and about how security will operate at our borders in the future is a significant concern. All the great promises made by the different parts of the Conservative party have, one after another, been revealed to be little more than the emperor’s new clothes. The Prime Minister promised that a deal would be easy to get, yet here we are, years off from knowing what our future relationship with the EU will look like.”
“Once upon a time, a trade deal with the US, too, was touted as easy to agree, the benefits being said to be more generous than anything the EU could or did offer. In my experience, the Americans fight even more ferociously than the French for their trade interests. Donald Trump will demand more access to the NHS for big American companies, and significant reductions in our health and safety standards; chlorinated chicken will be just the start. Brexiteers will not admit—to his great credit, the hon. Member for Huntingdon (Mr Djanogly) mentioned it—that every trade deal Britain seeks to negotiate on its own will require us to grant immigration access to our country. India will insist on it, Latin America will insist on it, and Europe will insist on it, too.”
“It is a dangerous myth to claim that there are huge new trade deals just around the corner to offset the economic damage that people on most sides of the debate accept—at least privately—would be the consequence of our leaving the EU. No country will want to negotiate a trade deal with the UK until we have settled our future relationship with the EU. Indeed, 90 countries already have deals with the European Union that give them a back-door route into the UK market. Worse, the European Union will be in a very strong position in trade negotiations with us, because the backstop will protect its £95 billion surplus in goods while doing little to help us get a good deal on services, where we have the surplus. That backstop will kick in years from now unless we can agree terms.”
“Let us take just one example: although reform is still needed to the financial services industry, it is critical to our country’s future, brings huge financial benefit, particularly to my constituents and others in London, and creates thousands of jobs, yet there is little commitment in the political declaration to the UK and the EU trying to provide each other with significant market access for financial services. That is deeply worrying. Quite apart from any other considerations, it is difficult to see why the UK would be offered better treatment in a trade deal than EU’s existing partners, given the most favoured nation protocol. The EU would be required to extend the same better offer to those partners, without receiving anything in return.”
“Not only are the issues at the heart of the future trade deal between the EU and the UK complex, but the process of reaching an agreement will change after exit; the exit agreement has to be approved only by a qualified majority vote, but the trade deal would require the agreement of every EU state, each with its own specific interests. The French have already made clear that they will have demands on fishing, and Spain has made it obvious that it will have Gibraltar once again firmly in its sights. There is then the question of services, which others have mentioned.”
“Each trade deal strand has implications for other trade deals. The House should not underestimate just how lengthy and complex the negotiations with the European Union would be before any signing ceremony for a UK-EU trade deal. Turning the non-binding wishlist that is the political declaration into a legally binding trade treaty between the EU and the UK will certainly take longer than the 21 months claimed. It is true that trade experts disagree on how long it will take, but Professor Alan Winters of the independent UK Trade Policy Observatory thinks a further two or three years at a minimum is inevitable. Uncertainty will become the new normal for export and import businesses here in the UK.”
“We will have no say on rules that will continue to have a profound impact on businesses and jobs in the UK. Crucially, none of the detail about our future relationship with our closest trading allies has been locked down. The fact that we have not even begun seriously to negotiate the future trade deal between the UK and the European Union is deeply worrying. In my seven years as a Minister, from 2003 to 2010, I worked on trade negotiations. I attended numerous meetings of EU Trade Ministers, made many visits to the World Trade Organisation headquarters in Geneva, attended many meetings with ministerial colleagues from around the world and had many conversations with businesses here in the UK, trade experts and non-governmental organisations. Trade deals are immensely complex. Negotiations take years.”
“Many of us know from discussions with those running our public services in our constituencies that the shortages of staff in many of those services have been exacerbated as EU nationals start to believe that they are not welcome in Britain anymore. The Government would have us believe that the choice is between their deal and no deal, but as others have said in this debate, that is simply not the case. They could take off the table the prospect of no deal. I believe that this deal will be defeated, and I hope that when the Prime Minister comes back to the House, she will move very quickly to rule out the possibility of no deal. Among the many problems with the Prime Minister’s deal is the fact that we are being asked to commit huge sums of money—£39 billion and upwards—but we will be a rule taker.”
“If the Government had handled negotiations better and Parliament had been allowed an earlier vote on this deal, the Prime Minister could have averted much of the huge costs and considerable uncertainty that the country faces. Companies are already transferring assets and jobs, notably services businesses, particularly those in financial services. Car manufacturing industries that are of huge importance to the midlands and the north, such as Land Rover and Vauxhall, have delayed investment, cut jobs and shifted parts of their operations overseas—and that has happened while we are still in the European Union.”
“It is a pleasure to follow my hon. Friend the Member for Pontypridd (Owen Smith). I very much agree with his conclusion that we need to consider the suspension of article 50 and go back to the people of this country. As others have said, the deal before the House is a bad deal for Britain, and the Prime Minister knows that as well as the rest of us. Her own Government’s analysis shows that there is no Brexit scenario in which we would be better off as a country, and Opposition Members know that it will be the poorest of our country who will be most at risk of losing out further. Crashing out without a deal is clearly the worst option before us. The prospect of food price hikes due to tariffs kicking in, the supply of key goods being disrupted, and huge transport delays is profoundly worrying.”
“Schools, too, face ever-increasing financial pressures, making it harder for them to accommodate as many requests to help children with special needs as they might want to. As I mentioned, Harrow is having to cope with a significant increase in violent crime. We have already lost just short of 200 police officers, and the fear is that we will have to lose even more.”
“Other public services in the borough with a significant interface with the council are also under severe pressure. Harrow is having to cope with a significant increase in violent crime at a time when police numbers are set to decrease further and funding for youth services has been cut by more than 75% in cash terms since 2010. The clinical commissioning group faces a deficit of approximately £50 million and has already cut popular healthcare services such as the Alexandra Avenue walk-in service in my constituency. With the highest proportion of over-85s in London, the absence of a local NHS service that might absorb with less fight some of the financial pressures arising from having proportionately more vulnerable older adults exacerbates the pressure on the council.”