Steve Reed and his £100bn: a timeline

Environment Minister Steve Reed has said over and over that he won’t nationalise the water industry, because it would cost £100bn.

But where does he get that figure? Reed claims that it comes from within his own department. However, it looks suspiciously like the source is the private water companies themselves.

The story starts 7 years ago...

• On 5 February 2018, the Social Market Foundation publishes a report which puts the cost of nationalising the water industry at £90bn. This report is funded by the water companies themselves (specifically: Anglian Water, Severn Trent, South West Water and United Utilities).

• On 14 February 2018 Dieter Helm, Professor of Economic Policy at the University of Oxford and Fellow in Economics at New College, Oxford, writes a blog on his website debunking the report.

• In the blog he writes: “The SMF argues that renationalisation is going to cost around £90 billion, and that over a long period investment will be about £100 billion. Neither of these numbers should be taken seriously.”
  
  
• In April 2019 Professor Helm, in an interview quoted in the Financial Times, goes further, saying the SMF report had ‘“virtually no intellectual substance and the [£90bn] figure was wrong”. In the same article Moody’s, the credit rating agency, is quoted at valuing the water companies at £14.5bn.
  
  

• Fast forward to the present, and Professor Ewan McGaughey, Professor of Law, King's College, London, and a Research Associate at the University of Cambridge, Centre for Business Research, has put the true value at close to £0.

• On 23rd July 2024, Lord Prem Sikka asks Baroness Hayman, Under-Secretary of State at the Department for Environment, Food and Rural Affairs (Defra), for details of the calculation she has used to decide that water nationalisation “would cost billions of pounds”. In August she replies that this cost was "calculated in a report published by the Social Market Foundation"; the same report that the water companies funded.
  
  

• On 29 September 2024 The Guardian publishes an article stating that civil servants cite the same report. The letter, sent by Defra to the Rivers Trust, Surfers Against Sewage, River Action UK and Greenpeace states: “The [SMF] 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.”

• On Monday 21 July, Steve Reed says in an interview with Krishnan Guru-Murthy on C4 that he couldn’t nationalise water because of the supposed £100bn price tag. He claims that this £100bn is a figure that "I had my officials in the Department of the Environment go and certify".

• On the same day, Steve Reed is challenged in the House of Commons by Clive Lewis on his failure to consider publicly owned water. Reed once again gives his £100bn figure, saying that it was "provided by officials in my department under the influence of nobody externally."

• The only source we’ve seen the government using to justify their £100bn estimation is the water companies’ inflated, inaccurate and self-serving SMF report. If not there, where is Steve getting his information from?

• And...if Steve Reed says the figure comes from his department officials, but both his officials at Defra and his representative in the House of Lords say it came from the discredited SMF report, then who is telling the truth?

• Update: on 23 July the People's Commission on the Water Sector send Steve Reed an open letter challenging his £100bn figure and the underlying calculations.

Time for Steve to come clean.