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Regulation of water companies and questions around public ownership Last updated March 2026 Since privatisation, water companies across the board have underinvested in new infrastructure. As a result, it takes far less for the system to be over capacity, and therefore for overflow discharges to begin. Alongside this, there has been a lack of regulation and oversight - water companies have been allowed to get away with polluting our waterways without consequence (or at the most a slap on the wrist).
The Water (Special Measures) Act introduced by the Government last year takes pragmatic action on both of these issues. On regulation and enforcement, water company bosses can now face imprisonment for lawbreaking. The water regulator, Ofwat, will be able to ban the payment of bonuses if environmental standards are not met, and there are powers to introduce automatic and severe fines against water companies. Water companies will also have to install real-time monitors at every sewage outlet, and they will be held accountable against a new code of conduct.
Meanwhile, action is being taken to force water companies to invest in infrastructure, preventing money being used for dividends or bonuses. Overall, following Ofwat negotiations, companies will be required to invest £104 billion over the next five years to build and upgrade infrastructure.
I discussed my position on this in greater detail, but I would like to take the opportunity to address the question of whether the industry should be renationalised - as the Government is doing with railways. I have no opposition at all to the principle of public ownership (I believe that privatising the sector in the first place was misguided), however I think there are compelling reasons why isn't a silver bullet, and why we should pursue other options in preference:
The first, and most significant, reason is the cost. The best estimates suggest that renationalising the water sector would cost around £100 billion. That's a lot of money that has to be spent before fixing the years of underinvestment. Surely the pragmatic step in the short term is to restrict bonuses and dividends and instead force companies to reinvest in infrastructure - as they should have being doing for years?
Secondly, bringing water companies back into public ownership now would also force the taxpayer to foot the bill for upgrades in infrastructure, rather than requiring water companies to redress decades of investment being sacrificed in favour of bosses' bonuses and shareholder dividends.
Finally, the Government's reforms to the water sector are still in progress. The Water White Paper, which follows on from the recommendations of the Independent Water Commission's report (including a stronger regulatory framework for the sector), will translate into a new Bill in the next parliamentary session. This will be a good opportunity for me to feed local issues and concerns into the legislative process.
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