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The revelation that ministers are considering bringing Thames Water into temporary public ownership has reopened the fierce debate over the privatisation of the country’s water industry.

The sudden resignation of the company’s chief executive and Sky’s exclusive report into government contingency plans for the firm’s potential collapse comes amid growing calls for change following a string of controversies and scandals to hit the sector in recent years.

‘Vast improvement’

The current system of private monopolies dates back to 1989 when Conservative prime minister Margaret Thatcher sold off the publicly-owned water and sewage industry in England and Wales for £7.6bn.

She vowed it would lead to a new era of investment, improve water quality and help bring down bills. Her government also wrote off all debts and established Ofwat to regulate the industry.

Supporters argue that the water industry is now significantly better, while also acknowledging improvements are still needed.

Water UK, the industry body which represents firms, said on the 30th anniversary of privatisation in 2019 that the situation had “vastly improved” with a fall in supply problems, pollution, and leaks thanks to nearly £160bn worth of investment over the decades.

It also claimed that “average bills today are broadly the same as 20 years ago, once inflation is taken into account”.

However this is disputed.

Thames Water

‘The most egregious rip off’

Opponents say privatisation has led to soaring bills, poor performance and years of under-investment, and claim that the pay of executives and shareholders has been prioritised at the expense of long-suffering customers.

They also point to a National Audit Office study in 2015 which found that average household bills had risen 40% above inflation since 1989.

Water firms have also accrued £54bn in debt since privatisation – but paid out dividends to shareholders of £66bn, according to an analysis by The Guardian newspaper last year, with 20% of bills going towards servicing debt or paying out dividends on average.

Those calling for renationalisation include Labour’s former shadow chancellor John McDonnell, who responded to Sky’s latest report on Thames Water by describing it on Twitter as “the most egregious rip off” of all the firms.

Regulator row

Meanwhile regulator Ofwat has also been accused of lacking the necessary teeth to take on water companies.

Critics include the Liberal Democrats, who have called for the body to be abolished and “replaced with a tough new independent regulator with real powers”.

The government has vowed to increase penalties, with Environment Secretary Therese Coffey proposing earlier his year measures including unlimited fines for firms caught polluting.

Public opinion

Most of the public support renationalisation of the water industry, according to opinion polls.

YouGov found in September 2022 that 63% of the public believed it should be run “entirely in the public sector”.

Even among Conservative voters the idea is popular, with 58% in favour, according to the same survey of more than 1,700 adults.

However there appears to be little appetite for such a move from the government, while Labour has backtracked on supporting the policy.

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A huge sewage spill caught on camera in Cornwall

Scandals

For or against privatisation, public dissatisfaction at water firms remains following a string of scandals and controversies.

Water UK confirmed earlier this year that bills would see the biggest increase in almost 20 years from April.

The 7.5% hike means average customers are now paying £31 more annually this year – taking the typical bill to £448.

The industry body then made an an unprecedent public apology following mounting fury over raw sewage being released into Britain’s waters.

Figures from the Environment Agency revealed it was pumped into England’s rivers and seas at least 301,091 times last year – an average of 824 a day.

Water UK said campaigners had been “right to be upset about the current quality of our rivers and beaches”.

But there was then further anger when firms admitted a planned £10bn investment in measures to tackle the issue would be funded by a “modest increase” in customers’ bills.

Water leaks have become another major issue – especially at a time of shortages and record high temperatures.

South East Water, which this week introduced a hosepipe ban for two million people in Kent and Sussex, has enraged customers over supply issues.

Residents in East Sussex said they had been left without water for 23 days despite the firm admitting that its reservoirs were topped up and said its infrastructure had struggled to cope with demand.

Meanwhile another firm, Welsh Water, admitted earlier this year that it been under-reporting the amount of leakages it was responsible for.

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Ruth Kelly apologises on behalf of Water UK for sewage in rivers

Multi-million pound profits and eye-watering pay packets for firms have further fuelled discontent.

Thames Water reported pre-tax profits of £493.5m in the six months to September 2022, despite the firm introducing a hosepipe ban for its 15 million customers during the year.

In 2021 the firm paid out £11m compensation after it was caught overcharging customers.

Read more:
Ministers weigh contingency plan for collapse of Thames Water
Thames Water boss resigns with immediate effect

The boss of the company who resigned, Sarah Bentley, was reportedly set to receive pay and perks worth £1.6m this year.

It came after Ms Bentley said earlier this year how she was “heartbroken” about the company’s historical failings – while admitting there had been “decades of underinvestment”.

Sky News understands that talks over the future of Thames Water remain at a preliminary stage and the contingency plans may not need to be activated.

Either way, the pressure and scrutiny on such firms is unlikely to go away any time soon.

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Brexit impact on UK economy ‘negative for foreseeable future’, Bank of England chief says

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Brexit impact on UK economy 'negative for foreseeable future', Bank of England chief says

Brexit will have a negative impact on the UK’s economic growth “for the foreseeable future”, the UK’s most senior banker has warned.

Bank of England governor Andrew Bailey said a decline in the UK’s potential growth rate from 2.5% to 1.5% over the past 15 years was linked to lower productivity growth, an ageing population, trade restrictions – and post-Brexit economic policies.

But he did add that the economy is, however, likely to adjust and find balance again in the longer term.

“Over the longer term, there will be – because trade adjusts – some at least partial rebalancing,” he added.

Speaking at an international banking seminar on Saturday in Washington DC, Mr Bailey said: “For nearly a decade, I have been very careful to say that I take no position per se on Brexit, which was a decision by the people of the UK, and it is our job as public officials to implement it.

“But, I quite often get asked a second question: what’s the impact on economic growth?

“And as a public official, I have to answer that question.

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“And the answer is that for the foreseeable future it is negative.”

Former prime minister Boris Johnson was a champion of Brexit. Pic: Reuters
Image:
Former prime minister Boris Johnson was a champion of Brexit. Pic: Reuters

However, Mr Bailey did say investment in innovation and new technologies, including AI, may help address the decline in productivity growth in the long run.

“If we take account of the impact of ageing and trade restrictions, we’re really putting our chips on investment,” he added.

“We’re putting our chips on general-purpose technology, and AI looks like the next general-purpose technology, so we need to work with it.

“We need to ensure that it develops appropriately and well.”

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Mr Bailey warned that, although AI is likely to usher in a breakthrough in productivity long-term, it may “in the current circumstances, be a risk to financial stability through stretched valuations in the markets”.

“It doesn’t undermine the fact that AI, in my view, is likely, in addressing this slower growth issue, that we have and the consequences of it – that it is actually the best hope we have, and we really do need to do all we can to foster it,” he said.

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Has Rachel Reeves changed her tone on budget?

The Bank of England governor’s prediction comes as Chancellor Rachel Reeves is under pressure ahead of next month’s budget, with official figures showing muted growth in August following a surprise contraction in July.

Inflation surge

The Office for National Statistics (ONS) said gross domestic product (GDP) rose by 0.1% month-on-month in August and fell by 0.1% in July, in a revision to the previous estimate for no growth.

In the three months to August, GDP grew by 0.3% compared with 0.2% growth in the three months to July, the ONS said.

The latest figures come after the International Monetary Fund earlier this week forecast UK inflation was set to surge to the highest in the G7 in 2025 and 2026.

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Oil and gas workers offered cash to retrain, in major plan for future clean energy workforce

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Oil and gas workers offered cash to retrain, in major plan for future clean energy workforce

Ministers have unveiled their flagship plan to train and recruit workers for the booming clean energy sector, which it is hoping to supercharge in the next five years.

Up to £18m of new money has been pledged by the UK and Scottish governments specifically to move those working in the oil and gas sector into new roles.

Their jobs are about to fall off a cliff as the industry declines, with at least 40,000 of the current 115,000 jobs forecast to disappear by the early 2030s.

Almost all of those roles are thought to be fairly easily transferable into green industries – requiring little more than a few months of extra training.

But in the absence of government help, workers have been moving abroad, industry says, taking with them the expertise Britain badly needs to for its new greener energy system.

And it has left them feeling forgotten about after years of working to keep the lights on, and increasingly swayed by Reform UK, both GMB and Unite unions have warned Labour.

Pledge to double green jobs by 2030

More on Renewable Energy

Energy Secretary Ed Miliband told Sky News that creating jobs in sectors like carbon capture and storage and hydrogen would help “create a future for those in the North Sea communities”.

The new £18m will pay for careers advice, training, and “skills passports” to enable oil and gas workers to make the switch without having to repeat qualifications.

The cash was announced on Sunday in the new Clean Energy Jobs Plan, which details how the government hopes to make good on its promise to double green jobs by 2030.

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Renewables overtake coal for first time

Mr Miliband said in an interview: “This plan shows 400,000 extra jobs in the clean energy economy by 2030.

“This isn’t a target. This is actually what we believe is necessary to meet all the plans we have across the economy.”

The first strategy of its kind hopes to plug the UK’s massive skills gap that threatens to derail the government’s target to green the electricity system by 2030.

It identifies 31 priority occupations that are particularly in demand, such as plumbers, electricians and welders, and lists a target to convert five colleges into new “Technical Excellence Colleges” to train workers.

‘You can’t train people for jobs that aren’t there’

Unions welcomed the plan, but pointed out that skills and training do not equate to new jobs.

They say it will mean nothing without extra money and a revitalised domestic supply chain to build all the green technology needed, from fibreglass wind turbines to aluminium sub-sea cables.

Sharon Graham, the Unite general secretary who has threatened to cut ties with Labour over its policy to end North Sea oil and gas drilling and watering down of a ban on zero-hours contracts, welcomed the “initial steps” but called for “an equally ambitious programme of public investment”.

Professor Paul de Leeuw from the Energy Transition Institute in Aberdeen said the plan was “genuinely new and different”, and had for the first time joined up relevant information and strategies in one place.

But “you can’t train people for jobs that aren’t there”, he added, also calling for an investment plan.f

Reform heartlands could benefit from Labour’s jobs plan

The boom in clean energy jobs stands to benefit Reform heartlands along the east coast of Britain.

That fact is more by luck than design, given the east coast’s proximity to offshore wind farms and carbon capture and storage fields in the North Sea.

Reform promises a radically different vision for the country’s future, based on reopening coal mines and maxing out nuclear power and what’s left of North Sea oil and gas to boost jobs and the economy.

Its deputy leader, Richard Tice, objects to land being used for solar panels and pylons.

Government modelling forecasts an additional 35,000 direct jobs in Scotland, 55,000 in the East of England and 50,000 in the North West.

To keep the unions sweet, the government will also have to follow through on its pledge to boost the rights of those working offshore in green energy.

A current loophole gives protections like the minimum wage to oil and gas workers in UK territorial seas, but not to workers in the clean energy sector.

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Heathrow puts Jansen on runway as next chairman

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Heathrow puts Jansen on runway as next chairman

The former BT Group chief Philip Jansen is being lined up as the next chairman of Heathrow Airport as Britain’s biggest aviation hub prepares to deliver an expansion costing close to £50bn.

Sky News has learnt that Mr Jansen, who chairs the FTSE-100 marketing services group WPP, is in advanced talks with Heathrow’s board and shareholders about taking on the role.

If the discussions reach a successful conclusion, sources said an announcement could come within weeks.

Mr Jansen is said to have emerged as the frontrunner from a shortlist of candidates compiled by headhunters at Russell Reynolds Associates.

His experience as the boss of BT, a regulated utility, is said to have been key to his selection as the preferred candidate.

Mr Jansen has also run companies including MyTravel and Worldpay.

The appointment of a successor to Lord Deighton, who has held the post for nine years, comes at a critical time for Heathrow.

In August, the airport submitted a revised expansion plan consisting of a third runway costing £21bn, £12bn for a new terminal and stand capacity, and £15bn to modernise the current airport through the expansion of Terminal 2.

The existing Terminal 3 would ultimately be closed.

Read more: Full details of Heathrow’s plans for a third runway revealed

Heathrow handled a record 83.9 million passengers in 2024 and is adamant that a third runway is essential to the growth of Britain’s economy, given the volume of exports which pass through the site.

“It has never been more important or urgent to expand Heathrow,” the airport’s chief executive, Thomas Woldbye, said in August.

“We are effectively operating at capacity to the detriment of trade and connectivity.

“With a green light from government and the correct policy support underpinned by a fit for purpose regulatory model, we are ready to mobilise and start investing this year in our supply chain across the country.

“We are uniquely placed to do this for the country; it is time to clear the way for take-off.”

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The expansion remains opposed by many airlines alarmed by the prospective increase in charges to use the airport, as well

It has, however, been backed by the government, with Rachel Reeves, the chancellor, saying that a third runway “would unlock further growth, boost investment, increase exports, and make the UK more open and more connected as part of our Plan for Change”.

Heathrow’s next chairman will lead a board dominated by representatives of the airport’s principal shareholders.

Mr Woldbye apologised in May for being asleep during the power outage in March which forced Heathrow’s temporary closure.

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‘Serious questions’ after Heathrow fire

The airport said it would implement the recommendations of a review conducted by former transport secretary Ruth Kelly.

Heathrow’s search for a new chairman comes months after the most significant changes to its ownership structure in years.

Ardian, a French investment group, now owns 32.6% of the company following a series of transactions over the last 12 months.

Saudi Arabia’s Public Investment Fund has also become an investor.

Heathrow has never formally announced Lord Deighton’s intention to step down, other than a disclosure in its annual report in which he wrote:

“In light of the recent changes to the HAHL [Heathrow Airport Holdings Limited] board…the nominations committee…has asked me to extend my appointment for a limited period to help ensure a smooth transition whilst new non-executive shareholder directors become familiar with the business and a new chair is appointed.

“I have therefore agreed to extend my role as chair for a limited period to ensure continuity and stability on the HAHL Board during this period of transition.”

A Heathrow spokesperson declined to comment, while Mr Jansen could not be reached for comment.

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