The final report of the Independent Water Commission (IWC) marked a watershed moment for the water industry. It is an opportunity to reverse the steady decline in public trust we have seen over recent years.
As the IWC’s chair, Sir Jon Cunliffe, said: “The sector requires fundamental reform on all sides – how we manage the demands on water, how the system is regulated, how companies are governed, and how we manage the critical infrastructure on which we all rely.”
Looking forward, there is a pressing need to change the regulatory framework of the water sector. The IWC has comprehensively set out a diagnosis of the problems of the previous regime, and we recognised many of these same issues in our evidence to the Commission.
Ofwat did its best under the previous regulatory structure, but we acknowledge that the previous regulatory approach, including Ofwat’s, did not act fast enough to prevent the failures that have damaged public trust in the water sector.
There is a need to transform wastewater treatment, where poor performance has led to unacceptable levels of pollution and declining public trust. In both England and Wales, we need to invest at an unprecedented rate to secure our water supplies in the face of a growing population and climate change. Given these challenges, while our statutory duties remain the same until the formation of the new regulatory body, our approach has to be different.
Only by working more collaboratively with the sector and key stakeholders can we fully support the IWC’s and governments’ vision for the water sector with the creation of a new regulatory body combining the functions of Ofwat, the Drinking Water Inspectorate, and aspects of both the Environment Agency and Natural England.
Our new leadership structure for Ofwat is designed to help the organisation manage the twin challenges of the coming period – ensuring that water companies improve their performance and preparing for the creation of the new integrated regulator in England and a separate regulator for Wales.
Chris Walters, Interim Chief Executive
My role as interim Chief Executive involves leading Ofwat through this transition period as we support the creation of a new regulatory body. This will involve working with our fellow regulators, the UK government, the Welsh government, the water industry, and consumers and environmental groups to support the creation of the new regulatory body.
I’ll also oversee our enforcement activity. We will continue to use our enforcement powers when companies step out of line, but our approach over the transition period will be as collaborative as possible. Ofwat will continue to direct redress packages, so they address the harm water companies’ actions have caused. Our recent £86m enforcement package for Anglian Water and South West Water, over the companies breaching their legal obligations in operating their wastewater treatment works and networks, saw this money being used to improve the environment.
Greater collaboration will make us more effective as a regulator during this transition period and helps pave the way for the new body. For this reason, I’ll also support the work of the Regulators’ Alliance for Progressing Infrastructure Development (RAPID) as it continues to bring together Ofwat, the Environment Agency and Drinking Water Inspectorate, along with input from Natural England and Natural Resources Wales, to support the delivery of the major projects portfolio and oversee the development of new solutions across England and Wales.
Helen Campbell, Interim Executive Director, Delivery
My role as interim Executive Director, Delivery reflects the importance of delivering the £104bn expenditure agreed by Ofwat for the next five years to help clean up our rivers and seas as well as improve the resilience and security of our water supplies.
It’s vital for the success of the new regulatory body and the water sector as a whole that we work with government and water companies to ensure this much-needed investment is delivered as quickly as possible, so customers can see a difference in the service they receive and a reduction in pollution in their local area.
So to deliver this, as the new interim Executive Director, Delivery, I’m focusing on the following priorities.
- Ensuring water companies spend £104bn set out in PR24 to deliver the performance and outcomes expected.
- Holding companies to account for efficient delivery of their major project programme to secure long term water resources and to enable growth.
- Ensuring companies are organisationally, operationally and financially resilient, through our oversight and development of measures in line with the priorities of the UK and Welsh governments.
This is not new work for Ofwat. But we will be changing how we approach these challenges, stepping up the pace and being more proactive and collaborative, smarter at prioritisation, and more forward-looking. We will also be listening carefully to all our stakeholders across the sector and taking action where we can drive better results.
Customers and the environment deserve a better deal from the water sector, and Ofwat is focused on delivering its duties as required by Parliament, while supporting the governments’ vision for the overhaul of the regulatory framework in the water sector.
