Ministers consider non-profit water firms

Water companies in England could be banned from making profits under plans for a complete overhaul of the sector.

- Helena Horton

The idea is one of the options to be 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-profit bodies. Unlike under nationalisation, each company would be run not by the government but by the private sector, 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 is run 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 the not-for-profit Glas Cymru acquired the company with debts of £1.85bn.

The environment secretary, Steve Reed, said: "Our waterways are polluted and our water system urgently needs fixing. That is why today we have launched a Water Commission to attract the investment we need to clean up our waterways and rebuild our broken water infrastructure.