UK Environment Ministry Considering Forcing Water Companies Into Not-For-Profit Status

Water companies in England could be banned from making a profit under plans for a complete overhaul of the system. The idea is one of the options being considered by a new commission set up by the Department for Environment, Food and Rural Affairs (Defra) amid public fury over the way firms have prioritised profit over the environment. Sources at the department said they would consider forcing the sale of water companies in England to firms that would run them as not-for-profits. Unlike under nationalisation, the company would not be run by the government but by a private company, run for public benefit.

The nonprofit model, which is widely used in other European countries, allows staff to be paid substantial salaries and bonuses but any profits on top of that are returned to the company. Welsh Water, which runs under this model, has no shareholders and any surplus money is reinvested back into the business or into customer services. Since Welsh Water was bought in 2001 it has reduced its debt substantially; its ratio of debt to equity has dropped from 93% to 58% since not-for-profit Glas Cymru acquired the company with debts of £1.85bn.

Public anger has grown in recent years over the large sums of money made by water bosses in England while water supplies have dwindled and sewage has been spilled into rivers. There has also been anger at the mismanagement of companies such as Thames Water, which have been loaded with debt and paid shareholders billions in dividends. Since privatisation in 1989, the English and Welsh water companies have collectively paid £78bn in dividends and accumulated £60bn in debt.

Reed said he was not considering nationalisation as part of the review, which would cost “tens of billions of pounds”. But the commission, chaired by the former deputy governor of the Bank of England Jon Cunliffe, will consider all other options to ensure infrastructure is built and sewage stops spilling into waterways.

EDIT

https://www.theguardian.com/environment/2024/oct/22/new-commission-may-ban-england-water-companies-from-making-a-profit