Britain’s privatised water companies are urging the government to expedite the abolition of the regulatory body, Ofwat, citing concerns that its influence over pricing and infrastructure investment will persist for another decade. A recent white paper proposed the establishment of a new super regulator that would combine Ofwat with the Environment Agency and the Drinking Water Inspectorate in England and Wales. However, critiques have arisen regarding the document’s lack of specifics on implementation timelines and operational details.
Government officials contend that these reforms are necessary to improve an industry often criticized for excessive shareholder returns and inadequate infrastructure investment, which has led to issues such as sewage pollution and water outages. Water UK, representing the utilities, argues that the current system is overly complex and slow, expressing frustration that the existing regulatory framework will remain in place until 2035 despite plans to dismantle it first announced over six months ago.
The water companies, which collectively hold £82.7 billion in net debt, are under scrutiny by Ofwat, particularly as some face financial difficulties. Water UK is advocating for the new regulator to operate in a ‘shadow’ capacity to begin offering guidance immediately. The proposed reforms, marking the most significant changes since privatisation, will require revising the Water Industry Act, although no bill is expected to reach Parliament before late 2023 or early 2024.
Opposition from environmentalists and industry stakeholders continues, with calls for greater clarity on the regulatory framework. Critics argue that the government’s plans fail to adequately address the systemic issues stemming from privatisation, suggesting that merely merging regulatory bodies will not solve the fundamental problems in the water sector.
Why this story matters: The debate around the reform of water regulation impacts millions of consumers and the health of the environment.
Key takeaway: The establishment of a new super regulator seeks to address long-standing issues within the water industry but faces significant challenges and opposition.
Opposing viewpoint: Critics assert that the government’s reforms do not go far enough, arguing that privatisation itself is the root of the problem.
