Unveiling a Clear Route to Enhanced Public Oversight of the Water Industry

On 29 September, the Prime Minister announced significant reforms to the Water Bill, which will eliminate existing restrictions on government ownership of shares in major water and sewerage companies in England.

The Government asserts that public interest should be paramount in the operation of essential services. With this legislative change, the aim is to enhance public control, thereby ensuring cleaner water, fairer pricing, greater accountability, and improved outcomes for both consumers and the environment.

Removing Historical Restrictions on Ownership

This amendment will lift a long-standing limitation on government share ownership, a restriction that is not present in other sectors. Removing these limits will empower the Government to intervene effectively when water companies fail to meet the needs of their customers or protect the environment.

The current limits, established under the Water Act of 1989, restrict government ownership of shares in major water and sewerage companies to a range of 1-3%, depending on the specific company. This means that, in each case, government ownership remains below 3%.

The reform will be applicable solely in England.

Maintaining Private Sector Investment

While the Government is committed to increasing public control, it also acknowledges that the long-term sustainability of England’s water sector hinges on ongoing investment from the private sector. The removal of the ownership cap does not alter this principle. The Government will continue to collaborate with investors, regulators, and water companies to secure optimal outcomes for consumers and the environment.

This announcement provides the Government with the flexibility to explore a variety of future interventions, including different ownership models, and to offer support where necessary. The commitment to deliver these reforms will adhere to fiscal rules, which both the Chancellor and the Prime Minister have confirmed will be in place during the forthcoming Budget, with a safeguard against uncertainty.

Empowering Local Authorities

The Prime Minister also highlighted that mayors and strategic authorities currently possess insufficient influence over the priorities of water companies or mechanisms to hold them accountable. As part of the Government’s reforms to the water sector, new powers for local leaders will be developed.

Further details regarding the Government’s strategy for the water industry will be unveiled in a comprehensive 10-year plan for Britain, scheduled for release later this year. This plan will outline initiatives aimed at strengthening public control over essential services such as water, ensuring they serve communities effectively and will lay the groundwork for the reforms to be pursued through the enhanced Water Bill.