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PROFITEERING water company bosses will be sacked as part of a new nationalised water industry under Labour, shadow chancellor John McDonnell announced today.
In his keynote address, Mr McDonnell condemned the “scandal” of a privatised industry that has paid out £18 billion in dividends while bills rose 40 per cent.
He set out plans for a new system of Regional Water Authorities (RWAs) made up of councillors and worker, consumer and environmental representatives.
All staff would be transferred in their current roles to the new public-sector industry, except for senior executives and directors, Mr McDonnell said.
Bosses’ roles would be re-advertised at rates capped by Labour's planned 20 to one pay ratio between the highest and lowest earning staff in public bodies.
Shareholders in the existing private companies would be compensated with bonds in a way which would be “cost neutral” for the taxpayer.
Labour made clear that payments to shareholders could be slashed if there is evidence of asset-stripping, pension fund deficits or state subsidies since privatisation.
Aides could not rule out compensation being forfeited altogether in such cases.
Mr McDonnell called it “the biggest extension of economic democratic rights this country has ever seen” that will bring “unprecedented openness and transparency” in how the industry will be managed.
“Water companies receive more in tax credits than they pay in tax,” he said.
“Each day enough water to meet the needs of 20 million people is lost due to leakages.
“With figures like that, we can’t afford not to take them back.
“We are ending the profiteering in dividends, vast executive salaries, and excessive interest payments.
“Surpluses will be reinvested in water infrastructure and staff, or used to reduce bills.
“Real investment will allow the highest environmental standards.”
Trade unions welcomed the plans to take back control of Britain’s water industry.
GMB general secretary Tim Roache, whose union organises the water nationalisation campaign Take Back The Tap, welcomed the plans. “The privatisation of our water industry is a failed and unpopular experiment,” he said.
“It’s been bad for workers and bad for bill payers. The only people it hasn’t been bad for are shareholders who are coining it.
"The Tories continue to defend an indefensible racket where the only real winners are the shareholders, spivs and speculators.
“We welcome the shadow chancellor’s commitment to putting water back in public hands at the first possible opportunity and making our water services work for the many and not the few.”
Mr McDonnell also announced plans to bring together institutions such as churches, unions and pension funds in a shareholder campaign to put pressure on companies to stop avoiding taxes.
“We'll be demanding companies sign up to the Fair Tax Mark standards, demonstrating transparently that they pay their fair share of taxes,” said Mr McDonnell.
“So the warning to the tax avoiders – the game is over. Over.”
And he said Labour would force all companies with more than 250 staff to put 10 per cent of their equity into funds for their workers, with employees entitled to company dividends.
Business leaders criticised the plans, with British Chambers of Commerce director general Adam Marshall calling them a “tax grab.”
However, PCS general secretary Mark Serwotka said: “Contrary to the cries of big-business leaders who have exploited their workers for decades, the proposals set out by John McDonnell today are about building a truly equal society where working people can live with dignity.”
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