The government plans to remove legal limits on its ownership of shares in major water and sewerage companies in England, giving ministers greater scope to intervene in the sector.
Prime Minister announced the change on 29 September as part of plans for a strengthened Water Bill. The existing restrictions, set out in the Water Act 1989, limit government ownership and the acquisition of shares in major water companies to between 1% and 3%, depending on the company.
Removing the limits would allow the government to consider a broader range of future interventions and ownership models, as well as providing support where it is needed, ministers said.
Private investment to remain
The government said the reforms are intended to deliver cleaner water, fairer bills, stronger accountability and better outcomes for customers and the environment.
However, the Department for Environment, Food & Rural Affairs said the long-term future of England’s water sector would continue to depend on private-sector investment. It added that removing the ownership limits would not change this position.
The department said the reforms would be delivered within the government’s fiscal rules. Further details are expected in a 10-year plan for Britain due to be published later this year.
A Defra statement said the plan would set out proposals for “stronger public control over essentials like water” and would underpin reforms brought forward through the strengthened Water Bill.
Greater role for mayors
The announcement also includes proposals to increase the role of local leaders in holding water companies to account.
Joan Edwards, director of policy and public affairs at The Wildlife Trusts, welcomed proposed new powers for mayors, tougher consequences for repeat failures and a further crackdown on excessive bonuses.
“Together, these changes – as part of a strengthened Water Bill – pave the way for companies which act more fully in the public interest, however they are owned,” Edwards said.
She added that the system would need powerful and well-resourced regulators, while taking account of pressures including agricultural pollution, urban runoff, historical management practices and climate change.
“Mayoral involvement is a vital route to greater local control of water,” Edwards said. “Their powers need to be extensive to ensure that communities help to shape both the services that customers receive, and the investment in a healthy natural environment which can provide them.”