England’s water industry set for major overhaul under new plans

The UK government has unveiled plans for a major reform of the water management industry, including appointing a new chief engineer to oversee the technical and repair aspects of regulating the sector as part of a replacement of existing body Ofwat.

The white paper (pdf, 52pages/3.2mb) sets out new targets for environmental protection and an overhaul of the water industry regulatory system, and comes after last year’s report by Sir John Cunliffe highlighting significant issues facing the industry that needed urgent reform.

But Gordon McCreath, water industry expert with Pinsent Masons, said the paper still left questions about the sector’s future challenges.

“The Cunliffe Review delivered a comprehensive piece of work under intense time pressure,” he said.

“While the white paper takes many of these issues in the right direction – indeed it commits to many of the Cunliffe recommendations - there is still uncertainty as to precisely how they will be implemented and ultimately whether they will deliver the system-wide response the sector needs.”

The white paper spells out the end of Ofwat with relevant water system functions from the existing regulators - Ofwat, the DWI, EA, and Natural England – being combined into one new regulatory body, which will be required to provide individually tailored monitoring of water companies, with supervisory teams for each company and increased inspection regimes.

Water company infrastructure will also face regular health checks to reduce water wastage and shortages, with a new water industry ombudsman to rule on customer complaints, along with increased scrutiny of bonuses for water industry bosses.

Robbie Owen, an infrastructure planning expert with Pinsent Masons, said the publication marked a significant milestone for the water industry in the wake of the Cunliffe Review.

But he added: “For the reforms to be a success and meet the government’s ambitions to deliver a resilient water supply and sewerage system that meets the needs of future generations as well as our own, water companies must be supported by adequate funding, aligned regulatory frameworks, further planning reform and the right climate for the timely delivery of numerous infrastructure projects after decades of underinvestment.”

Among the other proposed changes are plans for appliances such as dishwashers and washing machines to carry mandatory water efficiency labels, and smart meter rollouts which the government claims will save £125 million on water and energy bills over the next decade.

Industry body Water UK said that with the white paper’s publication, focus for improvement must now be on delivery.

“Our country will not have the environment it wants or the economic growth it needs until a new water regulator is established. Interim leadership should be appointed as soon as possible,” it said in a statement. “We cannot afford for any more long-term decisions to be taken by a system everyone knows has failed.”