Genuine Reform of the Water Industry
July 2026.
This Briefing explains how Marinet believes the Water Industry and its ownership should be reformed in order to secure an industry that reliably delivers full treatment of all sewage under all weather conditions, except very exceptional storms. Reform is to be implemented with immediate effect, and its proposed changes and improvements within ten years.
Marinet is asking people to lobby Parliament and Government for genuine reform of the industry. Genuine reform is defined as action that addresses the ownership of the industry and the accountability of the owners. In law, any economic model of ownership should make the owners responsible for the ongoing development and performance of the assets, i.e. the water companies. At the present time, this is not the case in the water industry. Therefore, genuine reform is action which addresses this economic principle and ensures that it rules.
Marinet is also asking national Policy Institutes to address the subject of genuine reform of the water industry because a sound industry, delivering full sewage treatment and a dependable supply of drinking water under all weather conditions, is an essential need of society. A water industry that meets this imperative need of society does not exist at present in the United Kingdom. Therefore, Marinet requests that national Policy Institutes and leading members of society to take on the responsibility of addressing the matter of genuine reform.
We believe that reform will have the following key features:
1. Does not require public ownership and nationalisation,
2. Does not rely unreasonably on a regulator for enforcement, and instead:
3. Uses the public shareholder model, insisting that the owners provide all the new investment capital to upgrade their companies, and
4. Requires the owners to guarantee that they will strictly observe environmental laws and agreements.
As Parliament will not agree to return the industry to public ownership, Marinet is outlining an initiative to ensure that the public limited company model does the job it was originally designed to do. In other words, the owners meet their responsibility to solve the industry’s problems.
We outline below our thinking on the reformed public shareholder model, showing how to bring about a solution that compels the owners to provide the substantial amount of new finance that will be required. Thus, responsibility falls upon the owners’ shoulders, rather than on the public and Government.
We ask you, therefore, to consider this proposal as the need for change is urgent, and our sole objective is to find the practical solution that will deliver genuine change.
Summary of the essential features and the stage by stage delivery the the reform proposal.
Parliament sees public ownership as unrealistic. Consequently, the way forward must be to re-invigorate the industry’s shareholder ownership model, and secure its refinancing. Therefore, the solution relies on the following key principles:
1. The companies must be governed by responsible owners.
2. The performance of the companies must be primarily governed by market forces, rather than regulators.
3. There must be strong judicial enforcement of environmental standards.
With these three factors working in tandem, the industry’s problems will be solved. The following bullet point summary explains the stage by stage delivery of this solution:
Step 1: All water companies are required to re-list on the London Stock Exchange (only three out of nine do at present). This requirement ensures that their shares are traded publicly (not privately), and the value of the shares are determined by the market.
Step 2: With Step 1 in place, market forces now determine the value of the industry, and are the ultimate judge of each company’s performance. Thus, the owners are now primarily accountable to the market, with their performance (value of their shareholding) determined by the market. Also, owners will have to present regular six and twelve monthly financial reports to the market. Thus, financial discipline and accountability is re-instated.
Step 3: With Step 2 in place, the reformed regulator (established by the forthcoming Clean Water Bill, King’s Speech to Parliament, May 2026) assesses the legal compliance of all aspects of each water company. Compliance is assessed against the Water Act 1991 (duty to provide a satisfactory public service) and against the Environmental Permitting Regulations 2016 and Defra’s 2018 Guidance which governs legally enforceable environmental standards.
Central to legal compliance is the legal requirement that all sewage treatment works should have sufficient capacity to fully treat all sewage, except in exceptional weather (storms). Sufficient capacity is defined in the Defra’s 2018 Guidance on the 2016 Regulations as three times the daily ‘dry weather flow’ (3 DWF) that enters the sewage works. Sufficient capacity is achieved, therefore, by having adequately sized storage tanks to accommodate sewage entering on wet days so that it may be treated when the rain abates. At present, this law (Regulation) is not being enforced. Nearly every sewage works in England operates with capacity between 1DWF and 1.5DWF. In other words, they are massively undersized, and constantly overflow and discharge raw sewage.
At present, the owners have not been made to invest in expanded sewage works, and are being allowed to operate illegally, whilst still paying themselves dividends.
Step 4: With Step 3 complete and the regulator’s catalogue of each water company’s illegality assembled, i.e. breaches of legal obligations under the 1991 Act and 2016/2018 Regulations, the regulator goes to the High Court to enforce the law. Importantly, the charges are not brought against the company, but against the owners because it is the owners (shareholders) who are responsible for the conduct of the company. [Note: if new powers are needed to make the owners liable, Parliament passes the necessary law].
Step 5: The High Court rules on the charges of illegality filed during Step 4, and if the verdict is guilty the High Court imposes its judgement on the owners. The Court will rule as follows: It asks the regulator to provide the Court with a statement of the financial cost that the company must spend (invest) in order to bring the company into compliance with the law, i.e. how much to upgrade all sewage works to 3DWF, and the Court asks for the regulator’s assessment of the timeframe required to bring the company into compliance with the law, e.g. five years, ten years, or as needed.
The Court then imposes a fine on the owners for the total sum required to bring all of the company’s activity into compliance with the law, and suspends enforcement of the fine for the period required, e.g. within five to ten years. Importantly, the owners are now legally liable for the upgrading of their water company and, upon the instruction of the Court, the owners must provide the investment capital required, using the capital to ensure compliance with the law within the time period of the suspension of the fine..
Step 6: As a result of Step 5, the owners must now decide whether they want to remain as the owners – in other words, provide the capital for new investment and deliver the improvement works within the time period specified by the Court. They have a choice: either meet their legal responsibility as owners, or sell their shareholding to new owners who will take on the responsibility.
Importantly, as the companies are now re-listed on the Stock Exchange (Step 1), the market will have placed a value (buy/sell value) on the shares of the company and, if the water company is facing ‘suspended enforcement’ of its legal responsibilities as a result of the High Court’s decision, the market may value the shares at a low figure.
Therefore, if the owners decide to quit (sell and pass on the responsibilities of ownership to new shareholders) it is the market, not Government, that has reduced their shareholding to a very low value. As a result, it is market forces, not Government, that are talking the financial truth to the industry’s current investors. Financial reality, rather than politics, are thus back in control of the industry.
Step 7: Having brought about a situation under Step 6 where the present owners have decided whether to remain the owners, it is they, or the new owners, who must decide how to supply the investment capital required to fulfil their legal obligations. This can either be supplied by the existing owners providing the capital in their own right, e.g. in the form of loan stock or by the issue of new shares, or they can issue new shares on the Stock Market to new additional owners. When these new shares are issued, the capital raised from the sale of these shares provides the investment capital to meet the company’s legal obligations. By either of these two ways, the company is re-capitalised, and the new capital is invested in order to meet the legal obligations determined by the High Court (Step 5).
Step 8: When the period of the ‘suspended fine’ is up (Step 5), the owners return to the Court to seek discharge of their suspended fine. In other words, they must prove to the Court that they are now compliant with the law, with the regulator providing objective evidence on this. If compliance is proven, the fine is quashed. If non-compliance is proven, the owners are now liable to pay the fine to the Court, i.e. the suspended fine is enforced. In these circumstances, the owners pay the fine, and the High Court issues a new judgement against the owners and imposes a new time period (five years, or as needed) in order to reach compliance with the law. Once again, the ‘suspended fine’ procedure is employed by the High Court.
Importantly, the owners are now not just being compelled to meet their legal obligations as owners. Their legal obligations are also being enforced by the Court in tandem with the market. Thus, if legal obligations are not being met, the value of the company’s shares will be low and market forces, not Government, will be directly controlling the conduct of the companies.
Therefore, by this process, the industry is upgraded to meet its environmental obligations (clean rivers and seas) and the owners, and not the public or Government, are providing the investment funds.
This shift to placing the obligation of providing capital funds back onto the owners, and not to seek the capital from the public by ever increasing annual water services bills, is important. Presently, Government is making the public pay for this investment (Storm Overflows Discharges Reduction Plan, September 2023, endorsed by Ofwat, see Water UK, 2024). However, by reinstating governance by market forces, backed by judicial enforcement of environmental law, the obligation once more falls upon the owners, and not the public or Government, to recapitalise the company.
Marinet Limited
Note: The current levels of raw and poorly treated sewage discharges are now creating a serious public health risk. To substantiate this, we provide below three contributions recently written by Brian Morgan, Marinet member, published on our website. Additional evidence, in particular the risk being caused by such discharges on the development of antibiotic resistance in pathogenic bacteria, is recorded in Marinet’s book: Environmental solutions are people-powered – the ecological way to save the world. Further details about the Marinet book can be supplied upon request.
Brian Morgan’s articles for Marinet. Please note that the various aspects of the public health risk that are described can be fully solved by installation of full treatment of all sewage at all sewage works.
March 2026, Our polluted rivers : why raw sewage is discharged regularly into our rivers, and what are the consequences:
https:// www.marinet.org.uk/brian-morgan-blog/b-morgan-our-polluted- rivers-why-is-raw-sewage-discharged-regularly-into-our-rivers- and-what-are-the-consequences-mar-2026
November 2025, ESKAPE bacteria : antibiotic resistance and the elephant in the room:
https:// www.marinet.org.uk/brian-morgan-blog/brian-morgan-eskape- bacteria-antibiotic-resistance-and-the-elephant-in-the-room- nov-2025
November 2025, The structural make up of bacteria, and the development of antibiotic resistance:
https:// www.marinet.org.uk/brian-morgan-blog/brian-morgan-the- structural-make-up-of-bacteria-and-the-development-of- antibiotic-resistance-nov-2025
Book Note: Marinet’s book: Environmental solutions are people-powered – the ecological way to save the world. Further details about the Marinet book can be supplied upon request.
