In one of the biggest shakeups to England’s water sector in decades, the government has announced that it plans to abolish water regulator Ofwat and replace it with a new agency to oversee the industry.
The primary aim of this new regulatory body will be to reduce water pollution in England’s waterways – lakes, rivers and canals – as well as around the country’s coast.
The government hopes that by replacing the four bodies that currently oversee England’s water system with one powerful regulator, it can rebuild public trust in the sector and improve the health of the country’s waterways.
This announcement from the Department for Environment, Food and Rural Affairs (Defra) comes after the government unveiled a £104 billion investment in replacing the country’s water infrastructure.
In what has been billed as one of the biggest infrastructure projects ever undertaken, the money will support the replacement of pipes that are degrading and falling apart. It will also be used to build new sewage treatment plants.
What is Ofwat?
Ofwat is currently the regulator responsible for the economic side of England’s water industry. Its role is to manage licenses granted to water companies and ensure that those companies are performing their statutory functions, including investing properly in the system.
However, the current government alleges that Ofwat has mismanaged the country’s water companies. This has resulted in consumers being faced with higher bills and water infrastructure that isn’t fit for purpose while huge dividends were paid to shareholders and bonuses went to executives.
Who else manages England’s water industry?
At present, there are three other bodies alongside Ofwat who each take responsibility for a different part of England’s water system. For instance, the Environment Agency is responsible for enforcing environmental regulations on water companies, as well as managing flood risk.
Then Natural England is named as the government’s advisor on the natural environment. This means it provides advice on how to safeguard our natural resources in line with water policy.
Finally, the Drinking Water Inspectorate is responsible for ensuring the quality of the water that comes out of our taps.
All of this has resulted in a complicated web of approvals and regulations. It means that the various regulators have been able to blame one another for many of the failings that have occurred in England’s water industry.
What will replace Ofwat and the other regulators?
Instead, the government is proposing creating a single regulator to oversee England’s water industry. This will mean that there is one source of truth for the whole sector, reducing confusion and preventing different parties blaming one another for failings.
It’s important to note that these proposals are not yet set in stone though. They need to go through consultation as part of the government’s Water Reform Bill which is expected to be released in the autumn.
What does this mean for consumers and businesses?
At this stage, there will be little practical difference for consumers and businesses. The same water companies that already exist across England will continue to supply our water and sewerage services.
The creation of a new regulator also won’t shield businesses and households from rising water bills. When he delivered the report from the Independent Water Commission, which recommended Ofwat’s abolition among many other measures, John Cunliffe said that we can expect to see our water bills rise further.
However, the commission did recommend that a national social tariff for water bills be introduced to support the most vulnerable and those who struggle to pay their water bills. The details of how that will work have yet to be announced.
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