Darren Jones: Labour’s powerful business committee chair ‘sick’ of Ofwat failings amid Thames Water woes
Today is Wednesday, June 28, 2023, and the time is 11:53 am.
Darren Jones, the Labour Member of Parliament (MP) who heads the influential committee overseeing business and trade in parliament, has strongly criticized Ofwat's oversight of the water industry.
During an interview with BBC's Today Programme, he expressed his growing dissatisfaction with witnessing repetitive shortcomings. He emphasized that the regulatory authority has a responsibility to address the prevalent problems within the heavily criticized industry.
"We acknowledge that companies of utmost significance, whose failure would have severe consequences, should be subject to distinct regulations compared to other companies," he commented.
Jones’ remarks come after reports that Thames Water, the biggest provider in the UK, is facing escalating financial strain as the government is purportedly considering various backup plans in the event of its possible failure.
A representative from the government informed City A.M. that they are getting ready "for various possibilities" in all their supervised sectors, which includes water.
It stated that the entire industry is financially strong, but refrained from commenting directly on Thames Water.
Jones contended that the regulatory authority had excessively prioritized reducing prices after privatization, thereby disregarding its responsibility to ensure that the behavior of the owners and managers served the best interests of both the nation and the consumers.
"For far too long, many years in fact, we have permitted these corporations to run with a considerable possibility of failure, burdened by substantial amounts of borrowed funds, while the profits are siphoned off, and insufficient investments are made," he stated.
However, he refrained from endorsing a revival of state ownership, acknowledging that it was a "possibility, but not necessarily the correct choice."
According to his perspective, the issue did not lie in the model of ownership, but rather the conduct displayed by "the individuals in charge and the individuals who possess and manage these enterprises."
Jones also condemned the reports that suggest customers might encounter significantly elevated bills, reaching up to 40 percent, in order to combat issues such as sewage leakage, escalated water consumption, and the impact of climate change. These reports were initially published in The Times.
He stated: "We find ourselves in a predicament where we are being informed that customers and taxpayers will be responsible for covering the expenses resulting from the lack of ethical conduct exhibited by these companies, as well as inadequate regulatory measures, as it appears."
"These corporations have been granted the liberty to refrain from making future-oriented investments, despite us being aware of the actions we expected them to undertake for the betterment of the future. Moreover, the regulatory authorities have permitted them to evade responsibility for their negligence."
Jeremy Hunt, the chancellor, plans to address the issue during a meeting scheduled for later today with the water regulator Ofwat.
Water UK, an organization representing the industry, has recently announced that the sector's plan to address the problem of sewage leaks, which requires a £10 billion investment, will be financed by increasing the bills of its customers. This decision comes after publicly apologizing for its inability to effectively address this issue.
In the mean time, Thames Water is encountering a more difficult position as chief executive Sarah Bentley unexpectedly resigns without providing any reason yesterday. The supplier is also burdened with a massive debt of £14 billion and is dealing with a growing problem of sewage spills and leaks in its aging infrastructure.
Seeking a statement, contact has been made with Ofwat.
