1900-1989 - Water treatment and privatisation

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The standard of drinking water improved between 1910 and 1916 following the introduction of water chlorination and further advances in the treatment and supply of water.

In addition to changes in technology, the companies that supplied water were also changing.

By the early 1900s many privately owned water companies were brought into public ownership and so were able to access public money needed to fund improvements such as new steel water mains, major reservoirs and double filtration.

The ownership of water and wastewater systems was divided between 180 bodies making co-ordination increasingly difficult.

The 1973 Water Act simplified the way that water and wastewater services were provided and regulated, leading to the creation of ten major water authorities in 1974.

 

Water authorities introduced

The new public authorities' service areas were defined geographically, based around river basins and their responsibilities included looking after rivers, water supply, flood control, pollution and sewage treatment.

In addition to the authorities, 28 private, water-only companies continued to exist in parallel.

The largest authority was Thames Water, responsible to the UK Secretary of State for the Environment, as well as the Minister of Agriculture, Fisheries and Food.

The authority was controlled in much the same way as a local authority.

Approvals had to be sought for large projects/investment programmes and income and expenditure had to be balanced.

In addition, the ability to invest funds or carry out work outside of the Thames Water area was constrained.

A Board of 60 members controlled the Thames Water authority.

By the early 1980s, faced with impending European Union environmental legislation, it became apparent to the authority's management that the existing organisation could not facilitate the significant changes in investment levels that the new laws would require.

Water industry privatisation

The UK Government eventually passed the 1989 Water Act, which enabled parts of the UK water industry to be passed to the private sector.

Privatising the water industry raised several issues - such as preventing the use of monopoly power and identifying which functions should be privatised.

These were resolved during a series of negotiations between the Government and the industry, with the support on both sides of advisors from the financial community in the City of London.

The Act was a complex and ambitious piece of legislation, which created the National Rivers Authority (Environment Agency) and ten water companies.

It shared the property, rights and liabilities of the former Water Authorities between the National Rivers Authority and the new companies, and created a regulatory framework to prevent the abuse of monopoly power.

It also provided for the subsequent sale of the water companies through a public offer of shares.

Following privatisation, the newly formed Thames Water plc took responsibility for providing water and wastewater services to London and the Thames Valley.

Thames Water is the largest water company, now serving 14 million customers.

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