The system for regulating water companies in England and Wales should be overhauled and replaced with one single body in the UK and another in Wales, a major review of the sector has advised.
The report, which includes 88 recommendations, suggests a new single integrated regulator to replace existing water watchdogs, mandatory water metering, and a social tariff for vulnerable customers.
The ability to block companies being taken over and the creation of eight new regional water authorities, with another for all of Wales to deliver local priorities, has also been suggested.
The review, the largest into the water industry since privatisation in the 1980s, was undertaken by Sir Jon Cunliffe, a career civil servant and former deputy governor of the Bank of England who oversaw the biggest clean-up of Britain’s banking system in the wake of the financial crash.
He was coaxed out of retirement by Environment Secretary Steve Reed to lead the Independent Water Commission.
Final recommendations of the commission have been published on Monday morning to clean up the sector and improve public confidence. Here are its nine key recommendations:
• Single integrated water regulators – a single water regulator in England and a single water regulator in Wales. In England, this would replace Ofwat, the Drinking Water Inspectorate and water-environment related functions from the Environment Agency and Natural England.
• Eight new regional water system planning authorities in England and one national authority in Wales.
• Greater consumer protection – this includes upgrading the consumer body Consumer Council for Water, into an Ombudsman for Water to give stronger protection to customers and a clearer route to resolving complaints. Advocacy duties are to be transferred to Citizens Advice.
• Stronger environmental regulation, including compulsory water meters. Also proposed by Sir Jon are changes to wholesale tariffs for industrial users and greater water reuse and rainwater harvesting schemes.
• Oversight of companies via the ability to block changes in ownership of water businesses and the addition of “public benefit” clauses in water company licences. To boost company financial resilience, as the UK’s biggest provider, Thames Water struggles to remain in private ownership, the commission has recommended minimum financial requirements, like banks are subject to. This could mean utilities hold a certain amount of cash. It’s hoped this will, in turn, make companies more appealing to potential investors.
• The public health element of water has been recognised, and senior public health representation has been recommended for regional water planning authorities, as have new laws to address pollutants like forever chemicals and microplastics.
• Fundamental reset of economic regulation – including changes to ensure companies are investing in and maintaining assets
• Clear strategic direction – a new long-term National Water Strategy should be published by both the UK and Welsh governments with a “minimum horizon of 25 years”
• Infrastructure and asset health reforms – including new requirements for companies to map and assess their assets and new resilience standards
In a speech responding to Sir Jon’s report, Mr Reed is set to describe the water industry as “broken” and welcome the commission’s recommendations to ensure “the failures of the past can never happen again”.
A “supervisory” approach has been recommended to intervene before things like pollution occur, rather than penalising the businesses after the event.
A long-term, 25-year national water strategy should be published by the UK and Welsh governments, with ministerial priorities given to water firms every five years.
Companies should also be required to map and assess their assets and resilience
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