The Government says it recognises that securing the long-term future of England’s water sector relies on continued private sector investment – despite the announcement by Andy Burnham yesterday of plans to remove the current cap on Government ownership of shares in water companies.

Following yesterday’s speech by the Prime Minister at the TUC conference, the Department for Environment, Food & Rural Affair has explained that the strengthened Water Bill will remove the current limits on government ownership of shares in the major water and sewerage companies in England.

Current limits set out in the Water Act 1989 on government ownership of shares in the major water and sewerage companies, and the associated restriction on government acquiring shares in those companies, will be removed. These limits vary between 1-3%, the exact limit varies by company and is below 3% in each case.

The change will remove a historic restriction on Government share ownership, which does not exist in other sectors, so the Government can act where water companies let down customers and the environment.

The change will apply in England.

The Prime Minister also said that mayors and strategic authorities currently have far too little influence over companies’ priorities or mechanisms to hold them to account. New powers for local leaders will be developed as part of the Government’s reforms of the water sector.

A statement issued by the Department for Environment, Food & Rural Affairs, the Rt Hon Andy Burnham MP and the Rt Hon Dame Angela Eagle DBE MP said:

“Public interest should be at the heart of how our critical services operate. The Government intends to increase public control to deliver cleaner waters, fairer bills, stronger accountability and better outcomes for customers and the environment.

“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.”

The statement said the Prime Minister’s 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. The Government is committed to delivering reforms within the fiscal rules – which both the Chancellor and Prime Minister have been clear will be met at Budget, with a buffer against uncertainty.

Further details on the Government’s approach to the water industry will be set out in the 10-year plan for Britain, to be published later this year. This will set out plans for stronger public control over essentials like water, making them work for people and places again and will underpin the reform the Government will take forward through a strengthened Water Bill.

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