Cliff Notes
- The Independent Water Commission has identified “interlocking failures” in England and Wales’ water sector, necessitating comprehensive reforms in five key areas.
- Fundamental changes are needed in government strategy, regulatory frameworks, and water company accountability to rebuild public trust and ensure environmental protection.
- A potential creation of a super regulator is under consideration to streamline oversight, currently complicated by multiple regulatory bodies.
Water industry: Commission finds five areas where ‘fundamental change’ is needed
“Interlocking failures” in the water sector across England and Wales can be fixed through fundamental reform in five key areas, according to a major interim report.
The Independent Water Commission, established last year and led by a former deputy governor of the Bank of England, was scathing of government and regulatory oversight of the industry – long blighted by criticism over performance, particularly over sewage spills, shareholder payouts and bonuses for bosses.
Sir Jon Cunliffe said: “There is no simple, single change, no matter how radical, that will deliver the fundamental reset that is needed for the water sector.
“We have heard of deep-rooted, systemic and interlocking failures over the years – failure in government’s strategy and planning for the future, failure in regulation to protect both the billpayer and the environment and failure by some water companies and their owners to act in the public, as well as their private, interest.
“My view is that all of these issues need to be tackled to rebuild public trust and make the system fit for the future. We anticipate that this will require new legislation.”
The commission, which is due to make its final recommendations later in the summer, failed to rule out the creation of a super regulator to bring oversight into alignment.
Currently, regulation is muddied by a multi-body approach that includes Ofwat and the Environment Agency.
The five areas under scrutiny:
• Long term direction from government, including through the planning process.
• The creation of a simplified legislative framework, which could include new objectives around public health.
• Regulation but “a fundamental strengthening and rebalancing of Ofwat’s regulation is needed”, it is argued.
• Transparency and accountability within private water firms.
• The management of water industry assets, including pipework.
Sir Jon added: “I have heard a strong and powerful consensus that the current system is not working for anyone, and that change is needed. I believe that ambitious reforms across these complex and connected set of issues are sorely needed.
“I have been encouraged to see, on all sides of the debate, that people have been prepared to engage constructively with our work; I look forward to that continuing as we enter the final stages.”
Environment Secretary Steve Reed said of the report: “Our rivers, lakes and seas are polluted, and our water system is broken.
“That is why I launched the Water Commission to outline recommendations for a once in a generation opportunity to transform our water industry and ensure it delivers the service the public deserves.
“The government will respond to the Commission in full in due course and outline next steps to benefit customers, attract investment, and clean up our waterways for good.”