Shares in water companies on the FTSE 350 rose on Thursday as bosses from the industry assembled to hear a friendlier than expected speech from new environment minister Steve Reed.
Leaked headlines overnight revealed the government is proposing new laws to combat pollution that could see directors banned from receiving bonuses and even sent to prison.
Reed told media that bonuses would be withheld for bosses who are "overseeing failure" and they would be personally criminally liable if their companies failed to comply with investigations.
But in his speech at the Thames Rowing Club in London, Reed was more conciliatory than some in the industry and investors may have feared.
While he said the standards in the water industry had declined due to "14 years of Conservative neglect" and said "water companies need to take responsibility", he offered some olive branches.
Reed ruled out nationalisation, as he has before, and said the industry "needs a new partnership with government to deliver the vast quantities investment".
He announced a "full review" of the industry, which will seek to gather expert opinion and consult the public to set the future course for water industry with the aim of setting out the conditions to rebuild the "broken water sector".
Pennon Group PLC (LSE:PNN, OTC:PEGRY) shares rose 4.8%, United Utilities Group PLC 3.2% and Severn Trent PLC 3%.