3. What plans does the Welsh Government have to commission its own review of the water industry to assess the merits of bringing it into public ownership? OQ62486

We are fully committed to the ongoing independent review of the water sector, commissioned jointly with the UK Government. This review will assess systemic challenges and provide recommendations for the future of Wales. After receiving the final report, the Deputy First Minister will outline the Welsh Government’s next steps.

Over recent years, the main water company in Wales has been behaving more and more like the private sector companies across the border, either by paying huge bonuses or releasing sewage into our rivers, while bills go up year on year. There is evidence from other nations that suggests that a public ownership model can bring better outcomes, but the commission that you've just referred to, First Minister, has shut out that option of nationalisation because of the cost in terms of compensation to shareholders. But in the case of Dŵr Cymru, that doesn't arise, because there are no shareholders. So, would the Welsh Government, alongside the work of the independent commission, be willing to commission independent advice on the model of creating a water authority for Wales that would be accountable not to a board of individuals but to the Welsh Senedd and the Welsh people?

Diolch yn fawr. We all know how sensitive the issue of water is in Wales, and it is important that we treat it as such. We've got a history of seeing things like Tryweryn and we need to make sure that we don't see those kinds of things repeated. This is one of the most extensive independent reviews of the water sector in terms of regulation since privatisation. So, this is a comprehensive review. The focus will be on restoring the health of rivers, lakes and seas, and also in driving economic growth. Nationalisation is not in scope because of the high costs, but also the delays that it would cause in achieving better outcomes for consumers and the environment. I'm sure you'll be pleased to hear that the new UK Water (Special Measures) Act 2025 will provide powers for Ofwat to ban the payment of bonuses to water bosses if they fail to meet high standards in terms of protecting the environment, consumers and their companies' finances.

In the 2023 Natural Resources Wales performance report, Dŵr Cymru was responsible for 107 sewage pollution incidents. There have been improvements to self-reported pollution incidents reported to NRW, but at 70 per cent, it's still falling short of the 80 per cent target. However, Dŵr Cymru is currently accountable to NRW, with Natural Resources Wales issuing the company a stark warning that it needs to turn the tables on its downward performance trend. Dŵr Cymru are also taking steps, though, to invest £780 million in 2025-26 to improve services and to invest for the future. This will amount to around £4 billion over the next five years, and this level of funding will be difficult to replicate if the water industry is brought into public ownership. With this in mind, does the First Minister agree with me that keeping the water industry in Wales in the private ownership of Dŵr Cymru, as long as they show improvements, is the best way forward to see improvements to our water services, and when do you envisage the review being published? 

In Wales, of course, you'll be aware that the main water company is a not-for-profit model, so it is different from what happens in other parts of the United Kingdom. Sir Jon Cunliffe will present his findings in June, so that's the time to look out for. But the other thing that I think probably is worth noting is that water quality in Wales is improving and 40 per cent of our water bodies are now achieving good or better status. There's a long way to go, let's be clear about that, and we want to see that significant investment. We know, however, that there's poor performance when it comes to leakage, per-capita consumption, supply interruptions, drinking water quality, mains repair, pollution incidents and treatment work compliance. So, there's a long way to go and I do hope that this review will help to drive those improvements.

Privatisation, be it electricity, gas, rail or water, has been a complete disaster for most people. Whilst everything was not perfect when these were in public ownership, it's got a lot worse since privatisation. Water used to be run mainly by local authorities, very successfully, but we had the creation first of the national water body and then Welsh Water. What is without doubt is that the cost has increased from being a small part of the local government rates bill to being a substantial water and sewerage bill, and lots of people are contacting me on a weekly basis complaining about it. What does the First Minister think are the disadvantages of a publicly owned Welsh water company?

Thanks very much. I think if you look at the model across the border, which is one of privatisation, you'll see that actually there are some scandalous things that have happened in terms of lack of investment, in terms of people profiteering at the expense of the public. That is not the situation in Wales, where we have a different kind of model, which is a not-for-profit model. But it is true to say that there is a need for further investment, and it's important, I think, for us to listen to the concerns. That independent review is the beginning of a process to ensure that the water sector performs better for Welsh consumers, prioritises sustainability and delivers fair pricing.