Overhaul water regulators into one single body, landmark review recommends

Independent

2 days ago

The system for regulating water companies should be overhauled and replaced with one body for England and one body for Wales, a landmark review of the sector has advised.
The much-anticipated final report from the Independent Water Commission, led by former Bank of England deputy governor Sir Jon Cunliffe, outlined 88 recommendations to the UK and Welsh governments to turn around the ailing industry.
The government-commissioned review was tasked by the UK and Welsh governments to carry out the largest review of the sector since privatisation in the face of widespread public anger over pollution, bills and bosses' bonuses although ministers ruled out nationalising water companies.
The report, published on Monday morning, recommended abolishing Ofwat, which oversees how much water companies in England and Wales can charge for services, as well as the Drinking Water Inspectorate (DWI), which ensures that public water supplies are safe.
It also advised removing the regulatory roles of the Environment Agency and Natural England, which monitor the sector's impact on nature, such as companies illegally dumping sewage into waterways.
Instead, the review said a single integrated water regulator in England and a single water regulator in Wales should be established.
The current system of regulation has faced intense criticism for overseeing water companies during the years they paid out shareholders and accrued large debts while ageing infrastructure crumbled and sewage spills skyrocketed.
Other recommendations from the commission include stronger consumer advocacy, nine new regional water authorities to deliver on local priorities, significant improvements to environmental regulation and tighter oversight of company ownership and government.
It comes after nearly nine months of the commission analysing, researching and engaging with more than 50,000 responses to its call for evidence.
In the review, it has covered how the system is regulated, how to manage the competing demands on water, how water companies are governed and how critical water infrastructure is kept resilient into the future.
Sir Jon said: 'Restoring trust has been central to our work. Trust that bills are fair, that regulation is effective, that water companies will act in the public interest and that investors can get a fair return.
'Our recommendations to achieve this are significant. They include the management of the whole water system, regulation of the water industry, the governance and financial resilience of water companies and a stronger voice for local communities and water customers.
'In this report I have considered what is best for the long-term future of water.
'This is a complex sector with a highly integrated system, responsible for the second-largest infrastructure programme in the UK.
'Resetting this sector and restoring pride in the future of our waterways matters to us all.
'In countless conversations in the last nine months I have been struck by the urgent need and passion for change.
'Doing this will require hard work, strong leadership and sustained commitment. But it can and must be done.'
The report also shares recommendations on implementation, including which reforms can be delivered in the short-term and which require new primary legislation.
In a speech responding to Sir Jon's report later on Monday, Environment Secretary Steve Reed is set to welcome the commission's recommendations to ensure 'the failures of the past can never happen again'.
He is also widely reported to be preparing to abolish Ofwat but is unlikely to commit to expanding social tariffs that could help households struggling with bills at the cost of higher charges for wealthier families.
The Environment Secretary will also pledge to setting up the creation of a new, legally binding water ombudsman, expanding the role of the voluntary Consumer Council for Water and bringing the sector into line with other utilities.
And prior to Monday's announcement, Mr Reed committed to halving sewage pollution in England's rivers by 2030 thanks to a £104 billion investment from the sector in upgrading infrastructure.
Both the Conservatives and the Liberal Democrats have agreed that water regulation needs to change.
Lib Dem leader Sir Ed Davey called for the creation of a Clean Water Authority that could 'hold these water companies to account' and 'fine them when they fail'.
Tory shadow environment secretary Victoria Atkins urged the Government to be 'transparent' about what would replace Ofwat but also accused Labour of copying the policies of the previous government.