Is the sun setting on Ofwat?

Since privatisation in 1989 water companies have been regulated by Ofwat. The Environment Agency and the Drinking Water Inspectorate followed a few years later. This has been the regulatory structure for For 35 years, meaning that few people in the water industry have ever known anything different. Even though many are dissatisfied with both the performance and operation of the regulators, what might replace them is hugely intriguing.

Regulatory reform in the water industry - the Cunliffe commission

The UK and Welsh governments have announced a review of the water sector in response to public anger over rising bills, sewage spills, and a lack of investment. The review is chaired by Sir Jon Cunliffe, former deputy governor of the Bank of England.

What is the Cunliffe Commission ?

The Cunliffe Commission is an independent review of water industry regulation in England and Wales. DEFRA will work with Jon Cunliffe, the chair of the independent commission, to devise a set of recommendations for reform of the water sector regulatory system. This will deliver a necessary reset of the water sector in England and Wales. This review will take place from November 2024 until June 2025.

What is meant by 'necessary reset of the water sector'?

The Government’s reset of the water sector will establish a new partnership between government, water companies, customers, investors, leisure users of water and people who work to protect our environment. ?

What’s been asked for from the Cunliffe commission ?

Jon Cunliffe has been asked for a root-and-branch review of the entire sector ? including looking at regulation and the regulator.

The output will be a set of recommendations to reform the water sector regulatory system to deliver the necessary reset of the water sector in England and Wales.

The review will focus on the water sector in England and Wales, and its regulation. and will have no limits in the scope of its potential recommendations, including wholesale reform of Ofwat and how it interacts with other watchdogs such as the Environment Agency.

Ofwat could even go altogether.

What is Ofwat?

Ofwat is the non-ministerial government department that regulates the water sector in England and Wales

Could water be nationalised?

Despite calls from some to nationalise wastewater collection and sewage treatment, and a Labour administration, the government has ruled out nationalising the sector, which was privatised in the 1989.

Who asked for the Cunliffe commission?

The Environment Secretary and the Deputy First Minister for Wales and Cabinet Secretary for Climate Change and Rural Affairs have asked DEFRA for the Cunliffe commission. There has been clear vocalisation that the people of England and Wales are unhappy with consequences of the current water company regulation.

Who are?the Environment Secretary and the Deputy First Minister for Wales and Cabinet Secretary for Climate Change and Rural Affairs?

They are Steve Reed and Ifor?Irranca-Davies;

The Rt Hon Steve Reed OBE MP was appointed Secretary of State for?Environment, Food and Rural Affairs?on 5 July 2024. He was elected as the MP for Streatham and Croydon North in July 2024.

Ifor Huw Irranca-Davies (né Davies) is a Welsh Labour and Co-operative politician who has served as Deputy First Minister of Wales since August 2024, and as Cabinet Secretary for Climate Change and Rural Affairs since March 2024.

More about Steve

Steve was born in 1963 at St Albans, Hertfordshire. Between 1974 and 1981 he went to?Verulam School.?This was known as St Albans grammar school for boys in 1974 when he started and became?Verulam School?one year into his time there in 1975, when he was 12. With a November birthday Steve will have been one of the older boys in his year.

Steve joined the labour party aged 16, in 1979, the same year as Margaret Thatcher became prime minister. His family worked at?Odhams?printing factory in?Watford. He left school in 1981, aged 18 and started university two years later in 1983.?This is the same same year as?Odhams closed. Steve's mum said; ‘Thatcher’s taken your dad’s job, but she’s not getting our house’. It’s the sort of thing I can imagine my own mum saying.?

Steve married his?partner of 14 years in July 2022, when he was 58. Steve's ability to marry his husband is one of the reasons he believes in the power and importance of politics.

More about Ifor

Ifor Huw Irranca-Davies is a Welsh Labour and Co-operative politician who has served as Deputy First Minister of Wales since August 2024, and as Cabinet Secretary for Climate Change and Rural Affairs since March 2024. He has been the Member of the Senedd for Ogmore since 2016.

He is Welsh by birth and Welsh-Italian by marriage to his wife Joanna who he met while working in Sports and Theatre after University. His?uncle Ifor, was MP for Gower for many years. He witnessed the devastation in South Wales communities during the long Thatcher years And a big fan of punk rock.

Why have the English and Welsh government asked for a review of water regulation?

Years of under-investment despite captive water bill payers paying ever-increasing water bills amid widely promoted promises of investment, a growing population and extreme weather caused by climate change have led to intense pressure on the Country's ageing water system, causing widespread flooding, supply issues, sewage pollution and leakages.

What will the Cunliffe commission do?

The review will tackle systemic problems of the regulatory framework, which has developed in a piecemeal fashion since privatisation, and secure the infrastructure needed to meet future challenges, drive economic growth and clean up the Country's rivers, lakes and seas,?

Why Jon Cunliffe?

Jon Cunliffe has been chosen to chair the review of water regulation in England and Wales. John has several decades of economic and regulatory experience. He is?Former Deputy Governor of the Bank of England,?Sir Jon Cunliffe was the UK’s Permanent Representative to the EU at UKRep between January 2012 and November 2013.

From July 2007 to December 2011, Jon was the Prime Minister’s Advisor on Europe and Global Issues, the UK Sherpa for the G8 and G20, and the Cabinet Office Permanent Secretary responsible for EU coordination.

More about Jon

Jonathan was born in June 1953 and went to Manchester University. He lectured at the University of Western Ontario?In a Canadian?city called London that even has a river Thames.?Since 2012 the university has been known as Western University to give the school a more international identity.

Jon was appointed a Companion of the Order of the Bath (CB) in 2001 and became a?Knight Bachelor in 2010. He is a Member of the UK Holocaust Memorial Foundation. Here is what Jon Cunliffe has said about chairing the water review;

I’m honoured to be appointed as chair of the government’s new Water Commission. It is vital we deliver a better system to attract stable investment and speed up the building of water infrastructure.

Working over many years in the public sector, in environment, transport and the Treasury, and the Bank of England, I have seen how the regulation of private firms can be fundamental to incentivising performance and innovation, securing resilience and delivering public policy objectives.I am looking forward to working with experts from across the water sector, from environment and customer groups and investors, to help deliver a water sector that works successfully for both customers, investors and our natural environment.

Who will be involved in reviewing water regulation reform as well as Jon Cunliffe ?

The Commission will draw upon a panel of experts from across the regulatory, environment, health, engineering, customer, investor and economic sectors.?

When will the Cunliffe review of water regulation end?

We will know the outcome of the Cunliffe commission and it’s recommendations for water regulation in England and Wales in the second quarter of next year. This should be June 2025 and could run into August 2025.

What will happen after the commission has finished?

The recommendations from the water regulatory review led by Jon Cunliffe will form the basis of further legislation to attract long-term investment and clean up the country’s polluted waterways and coasts.