The government has announced a series of measures aimed at addressing the crisis in the water sector. In a statement, Environment Secretary Steve Reed stated that he will be meeting with water company leaders to address issues such as customer performance and sewage leaks, which have been plaguing the industry.
The government’s plans, which were previously reported by Sky News, include four key reforms. These include increasing the amount of compensation that water companies are required to pay out, expanding the circumstances in which compensation will be paid (such as in the case of boil water notices), and consulting on increasing the level of compensation in the event of failures.
For the first time in UK history, customers will also be granted new powers to hold water companies accountable through the creation of “customer panels.” These panels will have the authority to summon board members and hold utility executives accountable for their actions. Additionally, water companies will be required to change their articles of association to prioritize the needs of customers and the environment.
In order to ensure that funding for infrastructure improvements is used solely for the benefit of customers and the environment, Mr. Reed has asked water regulator Ofwat to ringfence this funding. He also stated that if any of these funds are not used as intended, customers should receive refunds and the money should not be used for bonuses, shareholder payments, or salary increases.
The government plans to work closely with the water sector and its investors, including the UK’s largest pension fund, to attract more investment and address issues such as pollution and job creation. This comes in the wake of persistent sewage leaks across the industry, which have caused harm to waterways, bathing areas, and marine life.
Thames Water, the UK’s largest provider, has been facing financial difficulties and recently announced that it would run out of cash by May 2025 without new investment. Similarly, South East Water, which supplies approximately 2.3 million customers, has stated that it requires additional investment to continue operations.
On Thursday, Ofwat will release its assessment of the water industry’s proposed fundraising and spending plans. The government is also expected to announce further measures to reform the sector. Speaking on the issue, Mr. Reed stated that the “unacceptable destruction” caused by the water sector must be addressed and prevented from happening in the future. The Labour Party has also pledged to put failing water companies under government control in order to clean up waterways, as outlined in their manifesto.
