Image description: An evening portrait of the Palace of Westminster and Big Ben overlooking the Thames. Photo by Francesco Zivoli on Unsplash

The Prime Minister announced on 29 September that the strengthened Water Bill will remove the current limits on Government ownership of shares in the major water and sewerage companies in England. The caps are set out in the Water Act 1989 and they range from 1% to 3% depending on the company and are below 3% in every case. Defra said removing them would end a historic restriction that does not exist in other sectors and would let Government act where water companies let down customers and the environment. 

What the Bill does 

Defra said the long-term future of England’s water sector relies on continued private sector investment, and that removing the cap does not change that. The department said the announcement “gives the Government flexibility to consider a wide range of possible future interventions, including on ownership models”. Therefore, it makes public ownership possible. It also committed to delivering the reforms within the fiscal rules. Further detail will come in the Government’s 10-year plan for Britain, due later this year, which will sit alongside the strengthened Water Bill. 

Mayors and local accountability 

In his Liverpool conference speech, Burnham confirmed that Environment Secretary Angela Eagle will present the Bill to Parliament. He argued that mayors and strategic authorities have far too little influence over water company priorities and too few ways to hold them to account. The Defra release confirms that new powers for local leaders will be developed as part of the reforms. According to the published text of the speech, Burnham committed to closing the loopholes used to pay “excessive bonuses” and described the Bill as the start of “a 10-year journey to a very different water system”. He said companies that serve the public interest would be supported, but those that do not could face the state taking back control or public ownership. 

Signals for the sector 

Reuters noted that the move will be closely watched by investors in Thames Water, the UK’s largest supplier, while the government and regulators consider whether to approve a creditor-led rescue plan. Reuters also reported that shares in Severn Trent, Pennon and United Utilities fell by between 0.9% and 1.6% after the speech.