The Government has announced plans to remove long-standing restrictions on public ownership of shares in England’s major water and sewerage companies, marking a significant shift in how ministers could intervene in the sector.
Announced by the Prime Minister, the move will form part of a strengthened Water Bill and is designed to give government greater flexibility to step in when water companies fail customers or damage the environment.
The reforms are intended to place the public interest at the centre of decision-making across the water industry, while supporting the Government's aims of delivering cleaner waterways, fairer customer bills and stronger accountability.
Under the current provisions of the Water Act 1989, government ownership of shares in major water and sewerage companies is tightly restricted. Depending on the company, ministers are prevented from owning more than between 1% and 3% of shares, with every cap set below 3%.
The proposed legislation would remove both the ownership limits and the associated restrictions on acquiring shares in these companies.
According to the Government, these limitations are unique to the water sector and do not apply across other regulated industries.
The reforms are intended to provide ministers with a wider range of options when responding to failures in the water industry.
Ministers believe the changes will allow government to take a more active role where water companies fail to meet expectations on environmental performance or customer service.
The announcement also signals that future interventions could include consideration of alternative ownership structures where necessary.
Despite increasing scope for public involvement, ministers stressed that the reforms do not represent a move away from private sector investment.
Officials acknowledged that securing the long-term future of the water sector will continue to depend heavily on private finance and investor confidence.
Ministers added that they will continue working with investors, regulators and water companies to achieve improved outcomes for both consumers and the environment.
The Government has also reiterated that any reforms will be delivered within existing fiscal rules and budgetary frameworks.
Alongside ownership reforms, the Prime Minister highlighted concerns that local leaders currently have too little influence over water company priorities.
As part of broader reforms, new powers are expected to be developed for mayors and strategic authorities, enabling them to play a greater role in scrutinising and holding water companies to account.
This could strengthen local oversight of issues including sewage discharges, environmental performance, infrastructure investment and customer service standards.
The removal of ownership caps is expected to be one of a series of measures included in the Government's wider reform agenda for the water sector.
Further details will be published in the Government's forthcoming 10-year plan for Britain, which ministers say will set out proposals for stronger public control over essential services, including water.
The plan is expected to underpin further legislation and regulatory reforms designed to improve accountability, environmental performance and consumer outcomes across England's water industry.
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