The UK government has announced a bold new commission to reform water companies in England, potentially banning them from making a profit. This initiative, led by the Department for Environment, Food and Rural Affairs (Defra), aims to address public frustration over high water bills, pollution, and mismanagement, marking a significant shift in how water utilities are operated.
The commission, chaired by Sir Jon Cunliffe, former Deputy Governor of the Bank of England, is tasked with recommending changes to make water companies more accountable and ensure that their operations prioritize public benefit. Unlike past calls for nationalization, this proposal seeks a not-for-profit model where profits are reinvested rather than distributed to shareholders.
The announcement comes at a time of widespread discontent over the state of England’s water system. Customers have been outraged by rising water bills, frequent reports of sewage spills, and revelations of hefty dividends paid out to shareholders while the infrastructure remains in disrepair. Since water privatization in 1989, companies have accumulated £60 billion in debt and paid £78 billion in dividends, sparking calls for stricter regulation.
Defra’s new commission aims to address these concerns, seeking ways to attract investment while ensuring that water utilities are run responsibly. According to Secretary of State Steve Reed, “Our waterways are polluted, and our water system urgently needs fixing. This commission will help shape new legislation to ensure that the water sector serves the interests of customers and the environment.”
One of the central ideas being explored is a shift towards a non-profit model similar to Welsh Water, which has operated successfully under this structure for over two decades. Since adopting this model, Welsh Water has significantly reduced its debt and reinvested surplus funds to improve services and infrastructure. By running water utilities as non-profits, the UK government hopes to replicate this success, focusing on sustainability and affordability.
“Taking inspiration from our European neighbors, there is a range of approaches from nationalized to non-profit and hybrid models. Effective regulation is key,” said James Wallace, CEO of River Action. Environmental advocates argue that reform must ensure that profit motives do not come at the expense of water quality and environmental health.
The commission’s announcement coincides with ongoing discussions at Ofwat, the water regulator, about allowing companies to raise water bills significantly. Companies have proposed increases of up to 84% over the next five years, further fueling public anger. Thames Water, for instance, has sought approval to raise bills by 53%, making them the highest in the country. The government has emphasized that reforms must include measures to curb rising costs and ensure affordability.
Prime Minister Keir Starmer’s spokesperson stressed the importance of these efforts: “Our priority is to make sure that water companies put customers first. If money isn’t spent properly, it will be returned to customers.”
The independent commission, which brings together experts from regulatory, environmental, economic, and customer sectors, will present its recommendations in 2029. Although water companies themselves will not have seats on the panel, their views will be taken into account during consultations. The commission’s findings are expected to play a pivotal role in shaping new legislation that redefines how water services are managed in the UK.
The initiative marks a significant step in the UK government’s efforts to tackle systemic issues within the water sector, with hopes that this overhaul can bring long-term sustainability and transparency to a critical resource.
The outcome of these proposed reforms will set a precedent for how essential services can be run in the public interest without compromising on efficiency or investment. As Reed emphasized, “We must ensure our water system is resilient, sustainable, and fair, reflecting the values and needs of our communities.”
