There are no shortcuts: we will all have to pay to fix sewage leaks

Therese Coffey, the environment secretary, has obviously decided that if she cannot beat the hue and cry against the privatised water companies, she might as well join it. She has responded to the latest opportunist attacks from the opposition parties on the government’s record on sewage with a populist plan to “crack down” on discharges into English rivers and coastlines.

Labour and the Liberal Democrats have been competing with each other to produce ever more dreadful-sounding statistics. The latest, from Labour’s Jim McMahon, is that, on average, “there’s a new sewage dumping event into our waters every two and a half minutes” since 2016.

This is one of those facts that is impossible to assess without context. The immediate context is that discharges were 19 per cent lower in 2022 than in the previous year, which ought to be good news – except that this figure, too, needs to be understood in context. John Leyland, the executive director of the Environment Agency, said the reduction was “down to dry weather, not water company action”.

Once all the context is provided, however, the facts are clear enough. Sewage has always been discharged into rivers and the sea. The water companies, and before them the water boards, have always worked to reduce discharges; these have indeed been reduced over the decades, but everyone agrees that this has not happened quickly enough.

The real questions are how best to speed up the investment in water treatment, and how much we, the public – the water companies’ customers – are prepared to pay for it. One part of the first question is whether the water companies would be more efficient if they were returned to the public sector.

The Independent is agnostic on this question. Generally we believe that the private sector is more efficient, but the water industry is more of a natural monopoly than most, and one in which the problem of effective regulation is most testing.

Scottish Water, the public corporation that oversees the industry in Scotland, is rated highly for customer service and pays its bosses less than the privatised English companies pay theirs, but it loses more water per person through leaks than England and Wales do, and its record on sewage is hard to compare.

All told, we are also unconvinced that the expense and disruption of renationalising the English companies would be worth the trouble. Indeed, renationalisation is one of those apparently simple solutions that seems to offer an easy way out of the hard grind of gradual improvement while preserving value for money.

Another is a “crackdown” on the companies, with higher fines for those allowing sewage to overflow illegally into rivers and the sea. That is what Ms Coffey has announced: she proposes to lift the cap on civil penalties. Fortunately, she seems to recognise the problem with simple punitive action, which is that if the water companies pay fines – such as the £90m paid by Southern Water two years ago – to the Treasury, that money is no longer available for investment.

That was the reason fines were capped in the first place. Hence her plan to have the higher fines paid into a new fund to be used for projects to improve water quality. As the fund would be controlled by her department, this would be a small measure of renationalisation.

Ultimately, demands for renationalisation or crackdowns are distractions from the difficult business of designing effective incentives for investment in better sewage management – and from the painful business of paying for it.