Fundamental reform needed in water sector, according to assessment
The water industry in the UK needs a major shake-up, according to the Cunliffe review, headed by ex-Bank of England deputy governor, Sir John Cunliffe. This review, the largest since water privatization in the '80s, uncovered deep-seated issues that have left the sector in crisis.
The crisis? A lack of sewage control and inadequate infrastructure, stemming from government strategy failures, regulatory loopholes, and water companies acting against the public interest.
Publishing his preliminary findings, Cunliffe, chair of the Independent Water Commission, pointed out these systemic failures. A final report will delve deeper into these problems.
Meanwhile, Thames Water, the UK's biggest water supplier, recently faced a setback as a rescue deal with KKR fell through. Now, Thames Water teeters on the edge of a special administration process.
Cunliffe suggests legislation to restore public trust, making the water system future-ready. This might involve a consolidated legislative framework to replace the current piecemeal system, and a more supervisory approach to regulation, similar to the banking sector.
The review also recommended more transparency, with water companies regularly reporting on their infrastructure status. Instead of fixing issues only when they break, companies would be encouraged to maintain a proactive stance towards infrastructure management.
The report echoes previous findings, stating there's little understanding of the water industry's infrastructure. It urges extensive reforms across various connected issues, as the current system isn't working for anyone. Change is long overdue, says Cunliffe.
Initial thoughts dismissed nationalization due to costs on taxpayers and uncertainty, but the final report will outline more detailed recommendations. Stay tuned for the full report in summer 2025.
The review's interim report doesn't detail specific changes toOfwat's regulation and infrastructure reporting. However, the emphasis on stronger regulation and improved asset health suggests that these areas will be addressed in the final report. It's all systems go for a complete overhaul of the water industry.
The water industry crisis, as highlighted by the Cunliffe review, demands a shift in regulation reminiscent of the banking sector, incorporating consistency in legislation and improved supervision. This new approach could potentially revolutionize the management of industry infrastructure, similar to the transformation observed in the finance and energy sectors. Moreover, the report suggests increased transparency, urging water companies to regularly divulge information about their infrastructure status, promoting a proactive stance towards repairs and maintenance.
