Industry fears flight of capital as environment secretary moots pollution-related dividend controls

Controls could be put on dividends for water companies who pollute, environment secretary Steve Barclay is understood to have warned industry chief executives at a meeting last week. Sources said the rationale offered was that pollution is a crime and dividends should not be paid at companies found to have committed a crime.

Water sector leaders are deeply concerned that investors would be spooked by the policy – with the consequences of any flight of capital particularly severe given companies have planned to finance an unprecedented £96bn of investment between 2025-30. The industry is understood to be seeking urgent clarification.

Elsewhere at the meeting, Barclay signalled the end to operator self-monitoring of pollutions, which sources said Barclay explained would be matched by a 427% increase in monitoring resources for the Environment Agency. While there is some mixed opinion, ending operator self-monitoring has some support among company leaders, as a means to increase public confidence and reporting consistency across the industry.

The Conservatives are thought to be working up a package of water measures for announcement some time next month, ahead of campaigning starting in earnest for the general election.