ADVEReadNOWISEMENT
The UK on Monday announced plans to create a new regulator for its water industry, following a key recommendation in an official report amid a string of scandals over record levels of sewage in rivers and lakes, as well as financial mismanagement.
As part of the overhaul, Britain’s Labour government declared that it would abolish Ofwat, the government department previously responsible for the economic regulation of the privatised water and sewerage industry in England and Wales.
A single regulator would take its place, Environment Secretary Steve Reed said, merging four regulators into one body.
The move would “prevent the abuses of the past,” Reed said, and end the “tangle of ineffective regulation.”
The privatised water industry in England and Wales has sparked public fury after a scandal revealed record levels of sewage had been pumped into rivers and lakes.
Thames Water, the country’s largest water supplier, symbolised the failure of the sector after it teetered on the brink of nationalisation with £17 billion (€19.6 billion) in debt. The company has warned it cannot pay the sewage fines it owes.
The overhaul follows the key recommendation of an independent report commissioned from Sir Jon Cunliffe, a former deputy governor of the Bank of England.
Alongside abolishing Ofwat, Cunliffe recommended that a formal turnaround regime be established to allow struggling companies space to recover under “regulatory forbearance.”
The recommendations in the report, adopted by the government, aim to improve investor confidence in the industry, protect consumers and the environment and establish nine regional water planning authorities.
Cunliffe called for ministers to transfer planning responsibilities from existing regulators to regional authorities, which he said would not merely be “advisory bodies or talking shops”.
Under the plans, the current consumer watchdog, the Consumer Council for Water, will be upgraded to an “Ombudsman for Water” and given stronger powers.
In a speech delivered on Monday, Cunliffe warned that the costs of producing water and waste services — and subsequent bills — are likely to increase as ageing systems are replaced and upgraded.
The government should safeguard those most vulnerable to water poverty through bills or social security, Cunliffe said.
Although Cunliffe called his proposals “significant”, environmental campaigners argued they did not go far enough to protect the environment from sewage dumping.
Giles Bristow, CEO of the campaign group Surfers Against Sewage, said the report’s recommendations amounted to “putting lipstick on a pig.”
“Abolishing Ofwat and replacing it with a shinier regulator won’t stop sewage dumping or profiteering if the finance and ownership structures stay the same,” Bristow argued. The group blame water companies for prioritising profits over environmental damage, and has pushed for nationalisation.
Water UK, an industry lobby group, welcomed the changes, saying: “Everyone agrees the system has not been working. Today is a major moment and this fundamental change has been long overdue.”