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Mayors will get new powers over how water companies are run under new “regional water councils”, the government has announced.
The government has said that mayors have been asked to “submit proposals” on how they want the new water councils to be run within the next two months, with plans then drawing out pressures on regional water systems and investment levels needed to improve performances.
According to the government, local leaders will be able to hold private water operators accountable for failures under changes that could lead to radical reforms at beleaguered companies such as Thames Water, which covers 16m customers in London and parts of the South East.
Prime Minister Andy Burnham said he wanted to tackle sewage and pollution in rivers, lakes and seas, adding that it was “not right” for decisions to be taken by officials in Whitehall.
“For the first time, local people will have a real say over what they need from their water company, whether that is cleaning up polluted rivers, building new reservoirs or protecting homes from floods,” Burnham said.
Burnham’s model is drawn from the existing partnership he oversaw between the private sector and public bodies in Greater Manchester that has interrogated planning, regulation and investment across water companies.
Thames Water’s future in limbo
One of eight councils will cover the Thames region, which covers London. Environment secretary Angela Eagle is writing to all mayors, including Sir Sadiq Khan, to discuss plans for councils, which will be made up of mayors or local authority leaders, farmers, developers and customers.
The government has not said which mayors or local leaders will be a part of councils. Mayor Khan has been approached for comment.
The announcement is Burnham’s first major intervention on dealing with the country’s water companies amid his push for “greater public control”.
Thames Water has been a key focus for the City and Westminster given its huge £20bn debt load, small cash funds and poor performances over the last few years despite past dividends. The water regulator Ofwat, which is set to be abolished, has fined the company well over £120m over rule breaches related to the environment and dividends to shareholders.
Burnham’s administration has cooled on an initial determination to bring the company into public ownership amid concerns about the additional costs of running the businesses.
London & Valley Water, the group of creditors which wishes to keep the utility in private hands, say Thames Water will require at least £10bn of new, committed private capital over the next few years and have submitted plans to recapitalise the business.
The consortium, which includes major investment companies such as Blackrock and Elliott Management, has set out an ambition to return the company to the public markets through a listing on the London Stock Exchange once the turnaround has taken effect.
