An impartial evaluation of the water trade is to advocate sweeping adjustments to the best way the sector is managed, together with the potential substitute of Ofwat with a strengthened physique combining financial and environmental regulation.
Former Financial institution of England governor Sir Jon Cunliffe will publish the findings of the Impartial Water Fee on Monday, with stakeholders throughout the trade anticipating important adjustments to regulation to be at its coronary heart.
The present regulator Ofwat has been underneath fireplace from all sides in recent times amid rising public anger at ranges of air pollution and the monetary administration of water corporations.
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Campaigners and politicians have accused Ofwat of failing to carry water operators to account, whereas the businesses complain that its concentrate on maintaining payments down has prevented applicable funding in infrastructure.
In an interim report, printed in June, Sir Jon recognized the presence of a number of regulators with overlapping tasks as a key problem going through the trade.
Whereas Ofwat is the financial regulator, the Setting Company has duty for setting air pollution requirements, alongside the Ingesting Water Inspectorate.
Sir Jon’s ultimate report is anticipated to incorporate a advice that the federal government contemplate a brand new regulator that mixes Ofwat’s financial regulatory powers with the water-facing tasks presently managed by the EA.
In his interim report, Sir Jon stated choices for reform ranged from “rationalising” current regulation to “basic, structural choices for integrating regulatory remits and features”.
He’s understood to have mentioned the implications of basic reform with senior figures in trade and authorities within the final week as he finalised his report.
Setting Secretary Steve Reed is anticipated to launch a session on the proposals following publication of the fee report.
The fee can also be anticipated to advocate a “main shift” within the mannequin of financial regulation, which presently depends on econometric modelling, to a supervisory strategy that takes extra account of particular person firm circumstances.
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Sir Jon has stated the water trade requires long-term strategic planning and stability in an effort to make it engaging to “low-risk, low-return buyers”.
The water trade has lengthy complained that the present mannequin, by which corporations are benchmarked towards a notional mannequin operator, and penalised for failing to hit monetary and environmental requirements, dangers a “doom loop”.
Thames Water, presently battling to finish an fairness course of to keep away from falling into particular administration, has stated the imposition of giant fines for failing to fulfill air pollution requirements is without doubt one of the causes it’s in monetary misery.
Publication of the Impartial Fee report comes after the Setting Company printed figures displaying that severe air pollution incidents increased by 60% in 2024, and as Thames Water imposes a hosepipe ban on 15m prospects.
Ofwat, Water UK and the Division for the Setting all declined to remark.