Water sector to wait until 2027 for full details of Burnham’s overhaul

LONDON — Water firms and campaigners are set to wait until next year to see the full details of Andy Burnham’s plans to overhaul the sector in England.

Britain’s new prime minister has promised greater “public control” of the water industry as a centerpiece of his domestic agenda, partly reversing a wave of privatization that began in the 1980s. Ministers are due to unveil more detail in a “10-year plan for Britain” that is currently expected in December.

However, while this 10-year plan will contain a high-level vision, priorities and principles for the industry’s future, much of the granular detail of how future ownership models will work in practice is only expected later, said two people with knowledge of the discussions.

Some of these key details will be laid out in Chancellor John Healey’s multi-year spending review at some point in 2027, added the two people, who were granted anonymity to discuss evolving policy. One said the spending review — a date for which has not been decided — was where the full details would be “nailed down.”

These include any fiscal implications for the Treasury, which could have to find billions of pounds if ministers decided to transfer privately-owned shares to the public purse.

This appears to mirror an approach Burnham has taken to policymaking for decades, first as a Cabinet minister and then mayor of Greater Manchester before he took over 10 Downing Street in July. He is known for setting out a broad direction which his officials can later use to pin down detailed policy, while also seeking buy-in from private industry.

With a general election due by summer 2029, however, any wait will compress the prime minister’s window to enact far-reaching reform before he goes back to the electorate.

‘£40 being added to every single water bill’

England’s privatized water firms also argue that uncertainty over the sector’s future is damaging investor confidence.

The industry trade association Water UK has said the entire industry risks being downgraded by the credit ratings agency Moody’s, which would add £40 to customers’ annual bills.

Water UK Chief Executive David Henderson urged the government to move ahead with reforms suggested last year by former Bank of England Deputy Governor Jon Cunliffe, before ministers decide the overall path of how the sector is owned.

The Cunliffe report “was given to the government 15 months ago and the credit rating agencies are watching,” Henderson told POLITICO. “If the government doesn’t pretty soon decide what it wants to do with that report, then we risk a downgrade, as Moody’s has indicated. And if there’s a downgrade, that would sadly see £40 being added to every single water bill across England and Wales. That’s the last thing anybody wants.”

He added: “We still have no idea how [a proposed] new regulator will look, what status it will have, what its duties will be, which parts of the Environment Agency will stay in the Environment Agency, and which parts will go into the new regulator. That is causing uncertainty … an important consideration for any investor.”

One government official insisted the 10-year plan would contain some finer details of plans to overhaul the water industry, though they accepted that fiscal implications were always dealt with in fiscal events such as the spending review.

Environment Secretary Angela Eagle is also due to bring a water bill to parliament before Christmas with separate policy, such as closing what Burnham has called “loopholes used to pay excessive bonuses” to water company executives. It will also contain scrutiny powers for regional mayors.

Burnham announced last month that the bill would lift a ban on the government owning more than 3% of shares in any English water firm. But he has also long made clear that he would not fully nationalize the industry, a move the government previously estimated would cost £100 billion for England and Wales together.

First Secretary of State Louise Haigh, one of Burnham’s most powerful allies in government, is leading three task forces including one on public control of water alongside housing, energy and transport.

Officials have been working through a “spectrum of options” for how public control in the water sector will look, a second government official said. They added that ministers are due to begin deciding which option — or combination of options — will be taken forward before the 10-year plan.