Ministers have held talks with bosses of water industry investment firms in a bid to attract fresh capital to the scandal-hit sector.
Environment secretary Steve Reed held a roundtable with roughly 30 people representing investors in the sector such as pension funds on Tuesday in the City of London.
Reed said he wants the water industry to “become one of growth and opportunity”, while also saying he hopes to “attract billions in private-sector investment”.
Few further details were given on how they might attract more investment, but ministers also expressed hopes that firms can reduce spills and upgrade England and Wales’ water infrastructure.
It comes amid mounting public and political fury around firms’ polluting of waterways with sewage spills as they continue to hand dividends to shareholders, and bonuses to executives – something which Labour has pledged to clamp down on.
The government has said it wants the sector to reduce spills and even proposed sweeping new laws which could see bosses face up to two years in jail if they obstruct regulators.
The Water (Special Measures) Bill, introduced to Parliament on 4 September, will hand new powers to Ofwat and the Environment Agency to take action on companies damaging the environment and failing customers.
Meanwhile, Ofwat recently published plans to limit proposed hikes to consumer water bills put forward by firms for the next five years while also punishing them for excessive pollution.
Sewage spills into England’s rivers and seas more than doubled in 2023. According to the Environment Agency, there were 3.6m hours of spills last year – equal to about 400 years – compared with 1.75m hours in 2022.
Also at the roundtable was the Global Infrastructure Investor Association (GIIA), a group representing investment firms.
The GIIA recently warned Ofwat’s draft caps would “penalise” water companies for missing targets “without equipping them with means to provide the solution”.
GIIA chief executive Jon Phillips said on Tuesday: “The roundtable was an important opportunity for the government to hear directly from private investors in the UK water industry.
“By working together we can attract the investment that is necessary. We fully support the government’s ambition to put the sector on a stronger footing.”
The meeting comes weeks after Ofwat revealed £168m of proposed fines for three of England’s biggest water companies for failing to manage sewage spills, including a £104m penalty for troubled Thames Water.
The fine for Thames came alongside a planned £47m penalty for Yorkshire Water and £17m for Northumbrian Water after a “catalogue of failure” by the firms, according to Ofwat.
Thames’ hunt for fresh funding is particularly urgent after it said over the summer that it only has enough cash to continue operating until the end of May next year.
Press Association – Alex Daniel