Water Bill to enable public ownership and grant more powers to mayors

(by Karma Loveday)

Environment secretary Angela Eagle will bring forward a strengthened Water Bill, the centrepiece of which will be the removal of the current limits set out in the Water Act 1989 on government ownership of shares in the major water and sewerage companies in England. The exact limits vary by company but are below 3% in each case.

In his leader’s speech to the Labour Party conference in Liverpool, prime minister Andy Burnham detailed that: “Where private companies serve the public interest, we will support them. But the consequences will be clear for those who do not, including taking back control or public ownership.”

Defra subsequently confirmed: “The Government recognises that securing the long-term future of England’s water sector relies on continued private sector investment. Removing the cap does not change that. We will continue to work with investors, regulators and companies to secure the best outcomes for consumers and the environment.

“This announcement gives the Government flexibility to consider a wide range of possible future interventions, including on ownership models, and provide support where it is needed. We are committed to delivering these reforms within the fiscal rules – which the chancellor and prime minister have been clear will be met at Budget, with a buffer against uncertainty.”

The Environment, Food and Rural Affairs Committee is understood to be planning a session on ownership models this month.

In addition, Burnham said new powers for local leaders will be developed as part of government reforms: “Mayors will have new powers to hold water companies to account, with tougher consequences for those which repeatedly fail. It will close the loopholes used to pay excessive bonuses.”

The Government promised it will publish a ten-year plan for Britain later this year, which will include further details on the approach for water. The plan will also set out a wider strategy for a greater role for the state, including in energy, housing and transport. But Burnham had particularly cutting words about the sector: “Water is a symbol of what has gone wrong with Britain. A service where the shareholders never lose and the public never win. From which some have syphoned out easy money while the public picked up the bill for the sewage in our seas. It stinks. I will not allow it to continue like this.”