‘Economically illiterate’ Defra letter sent to anti-sewage groups cites 2018 report commissioned by water companies
Labour used “economically illiterate” analysis paid for by water companies in order to argue against the nationalisation of the sector, the Guardian can reveal.
In an official letter recently sent to anti-sewage groups, civil servants cited a paper by the Social Market Foundation as a reason to avoid nationalisation as part of its review of the sector. The report from 2018 was commissioned by United Utilities, Anglian Water, Severn Trent and South West Water.
The letter, sent by the Department for Environment, Food and Rural Affairs (Defra) to the Rivers Trust, Surfers Against Sewage, River Action UK and Greenpeace states: “The Social Market Foundation calculated the likely cost of renationalisation to be £90bn, drawing on publicly available data from Ofwat, the London Stock Exchange and the annual accounts of the water companies. Renationalisation would impose a huge burden on the public purse at a time when public finances are already stretched.”
Sir Dieter Helm, a leading economist, called the analysis “economically illiterate”.
Moody’s rating agency has disputed this figure and estimated that nationalisation could actually cost £14.5bn – a fraction of the analysis amount.
Earlier this month, Steve Reed, the environment secretary, announced a review into the water companies and the regulators, but said nationalisation was firmly off the table. He said it would cost “billions of pounds” and would not solve the sewage crisis.
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