The UK and Welsh governments launch an independent commission today (October 23, 2024) to review the water sector and its regulation. The commission aims to attract investment for infrastructure improvements and environmental restoration.
It is expected to be the largest review of the industry since privatisation and will be the next stage in the government’s long-term approach to ensuring a robust and stable regulatory framework to attract the investment needed to clean up waterways, speed up infrastructure delivery, and restore public confidence in the sector. The Commission has no limits on its potential recommendations, which could include a wholesale reform of Ofwat including its replacement.
Launched by the UK and Welsh governments, the Commission will report back next year with recommendations to the government on how to tackle inherited systemic issues in the water sector to restore our rivers, lakes and seas to good health, meet the challenges of the future and drive economic growth.
These recommendations will form the basis of further legislation to attract long-term investment – injecting billions of pounds into the economy, speeding up delivery on infrastructure to support house building and addressing water scarcity, given the country needs to source an additional 5 billion litres of water a day by 2050.
Former Deputy Governor of the Bank of England, Jon Cunliffe, will chair the Commission and will draw upon a panel of experts from across the regulatory, environmental, health, engineering, customer, investor and economic sectors. It forms part of the government’s reset of the water sector by establishing a new partnership between government, water companies, customers, investors, and all those who enjoy our waters and work to protect our environment.
Launching the review, Secretary of State Steve Reed said:
“Our waterways are polluted and our water system urgently needs fixing.
“That is why today we have launched a Water Commission to attract the investment we need to clean up our waterways and rebuild our broken water infrastructure.
“The Commission’s findings will help shape new legislation to reform the water sector so it properly serves the interests of customers and the environment.”
A set of recommendations will be delivered to the Defra Secretary of State, Deputy First Minister, and Cabinet Secretary for Climate Change and Rural Affairs next year. The UK and Welsh Governments will then respond with the proposals they intend to take forward.
The objectives of the Commission are to recommend measures to ensure the regulatory system delivers:
- Clear Vision: Establishing clear outcomes for the future and a long-term vision for delivering environmental, public health, customer, and economic outcomes.
- Strategic Planning: Adopting a collaborative, strategic, catchment approach to managing water, tackling pollution and restoring nature.
- Better Regulation: Rationalising and clarifying requirements for companies to secure better customer and environmental outcomes.
- Empowered Regulators: Ensuring regulators are effective in holding water companies accountable, for example for illegal pollution.
- Improved Delivery: Enhancing the sector’s ability to meet obligations, including clean rivers, lakes, and seas, while driving innovation.
- Stable Framework: Ensuring a regulatory environment that attracts investment and supports financial resilience for water companies.
- Consumer Protection: Safeguarding consumer interests and affordability through transparent and fair governance.
- Resilient Infrastructure: Delivering and maintaining robust infrastructure on time, anticipating future needs and climate challenges.
The independent commission is the third stage of the government’s water strategy. In his first week in office, the Secretary of State secured an agreement from water companies and Ofwat to ringfence money for vital infrastructure upgrades so it cannot be diverted to shareholder payouts and bonus payments.
The government has also introduced the Water (Special Measures) Bill, which sets out tough new measures to crack down on water companies failing their customers.
BMA members can read our analysis of the review here.