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Powerful New Regulator Proposed to "Reset" UK Water Sector Plagued by Scandals
21 Jul
Summary
- Major review recommends replacing Ofwat with a new, "powerful" water regulator
- Review finds Ofwat has "failed" due to lack of powers and "light touch" regulation
- Report calls for an ombudsman to compensate consumers failed by water companies
A major review commissioned by the UK government has recommended radical changes to the regulation of the water industry in England and Wales. The review, led by former Bank of England deputy governor Sir Jon Cunliffe, found that the current regulator Ofwat has "failed" to effectively oversee the sector due to a lack of regulatory powers.
The review suggests replacing Ofwat, the Drinking Water Inspectorate, and the Environment Agency with a new, "powerful" water regulator that would have the ability to "direct" or take control of failing water companies. This comes as the country's largest water company, Thames Water, struggles with £20 billion in debt and the risk of financial collapse.
The report also recommends creating an ombudsman with legal powers to compensate consumers who are failed by water companies, such as through sewage spills or taps running dry. Additionally, the review found that the Drinking Water Inspectorate is understaffed and may not be able to meet future challenges, and that the country is not adequately protected from emerging pollutants like "forever chemicals" and microplastics.
The UK government is expected to adopt the review's recommendations, which aim to "reset" a water sector that has been tarnished by scandals and financial mismanagement since its privatization in 1989.
