Expert analysis of the UK water sector
Excerpts from the latest edition of The UK Water Report.
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A sneak peak at this month's top stories
Interview | Charley Maher, CEO South Staffordshire PLC
People power
From colleagues to customers, Charley Maher believes people hold the key to successful AMP8 delivery and a meaningful sector reset.
By Karma Loveday
Charley Maher is two years into heading up the 14-company, 3,000-employee portfolio that is South Staffordshire PLC. Along with two regulated water businesses – South Staffs Water and Cambridge Water, which are run as one operation under a single managing director and generate around two-fifths of group income – there is an interesting mix of non-regulated interests, united by a common theme. “Mostly it's essential infrastructure. So we build essential infrastructure, or we operate and maintain it, or we service it and audit it and check it,” Maher explains.
Over the past two years, South Staffs has had a busy delivery schedule – closing out one water AMP and entering another, as well as undergoing similar regulatory processes in other sectors where its non-regulated businesses operate. But that has all taken place against the backdrop of a corporate transformation programme. Maher explains: “I came in at a time when the business was ready for its next stage of transformation. One of the things I've been able to bring in the last two years is my ability to transform and simplify. So our structure is one of the things we've looked at, and building our values and our mission and our vision, so that everybody in the group understands what their own business is set to achieve, but also how they play a part in the greater group and how we come together.”
Another key strand of transformation, and one that is close to Maher’s heart, is building a culture where everyone belongs, feels safe and is valued. “I have always prided myself on being a people-first leader,” she says. “We want to be an employer of choice offering career pathways, professional development and a values-led culture – as a service business, our people are key to our success, and therefore our culture and people transformation programmes are crucial.”
So, how is all this panning out for real in AMP8? “We’re confident we have the right plan and can deliver,” she says, despite the expansion of investment.
Alongside delivering its business plan, South Staffs will – like all other sector stakeholders – need to engage with the post-Cunliffe water reform process in parallel. Maher is enthused by the possibilities. She welcomes the reset, commenting: “Standing still won’t support the transformation and innovation required across the next AMP and beyond for customers and the environment.”
“Standing still won’t support the transformation and innovation required across the next AMP and beyond for customers and the environment.” Standing still won’t support the transformation and innovation required across the next AMP and beyond for customers and the environment.”
Regulation | Industry Comment
A look at supervisory regulation
How might a supervisory approach in water work in practice?
By Annabelle ONG, Frontier Economics
In addition to the creation of a new super regulator, the Cunliffe review has introduced a supervisory approach, which is a fundamental shift in the approach to regulating the water sector.
While the supervisory approach presents an exciting opportunity to improve regulation of the sector to the benefit of all stakeholders, there is a risk in adopting an approach that was designed for financial regulation without adapting it appropriately to the water sector.
We provide initial thoughts and ideas on a series of questions that need to be considered in detail to design a supervisory approach for the water sector:
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What are the benefits that the supervisory approach needs to deliver to be successful? What are the key risks?
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How can the approach work in practice?
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What are the design choices?
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What is different in water compared to financial services?
“While the supervisory approach presents an exciting opportunity to improve regulation of the sector to the benefit of all stakeholders, there is a risk in adopting an approach that was designed for financial regulation without adapting it appropriately to the water sector.”
Feature | Finance
Steadying support
HARP is the latest water project to benefit from government de-risking.
By Verity Mitchell
The risk and financing cost of the privately financed Haweswater Aqueduct Resilience Programme (HARP) have been significantly reduced through an offer of support from the UK Government’s National Wealth Fund (NWF).
On 21 August, United Utilities reached financial close with Cascade Infrastructure – a consortium of Equitix, GLIL and Strabag – to deliver the project, which involves upgrading a 110-kilometre water aqueduct in North West England by replacing six tunnel sections totalling 50km.
The estimated construction cost has risen from around £1.75bn in 2022 to £3bn today, and the involvement of the NWF – which is providing a £300m credit enhancement guarantee – will significantly improve the project’s risk profile, thereby reducing the cost of finance. NWF guarantees are backed by the Sovereign Infrastructure Guarantee, an agreement between the NWF and HM Treasury.
The NWF is offering support for an unfunded mezzanine tranche of debt to HARP, which it says can be used to help reduce the risk to senior lenders, and potentially also to raise the project’s overall debt capacity. If credit agencies provide a rating for a project, the NWF would expect the credit enhancement guarantee to improve the resilience of the rating or potentially even to raise it.
The HARP guarantee is the latest form of direct intervention to reduce water project risk by the government, outside of the conventional regulatory process. Previous water uses include the Thames Tideway Tunnel and the Havant Thicket reservoir.
“Involvement of the National Wealth Fund – which is providing a £300m credit enhancement guarantee – will significantly improve the project’s risk profile, thereby reducing the cost of finance.”
Analysis | Environment
Quality time
Away from the heat of political debate, we take a cool look at the evidence on inland water quality.
By David Lloyd Owen
When it comes to changes in inland water quality in England and Wales in recent years, there has been little debate in terms of which once made sense. Rather, it is heated allegations on one side and bland rebuttals on the other.
Enough data is now emerging to start taking a tentative look at how inland water quality has in fact, changed, both in the long and the short term. This needs a cool look at pretty well all of the data we have to hand over as long a time scale as possible.
This is a go at looking where we stand. Four official datasets are now available: inland water quality, fish and freshwater invertebrate abundance, salmon and sea trout status, and nutrient discharges from sewage treatment works.
What we do not want are answers that are simple, swift, and wrong. The massive challenge in AMP8 is to ensure that funds are not directed towards costly quick and simple fixes which in fact fail to deal with the underlying causes of our current shortcomings. Work during AMP8 needs to be concentrated on fixing the undeniable shortcomings in the network while developing the monitoring capabilities needed to ensure that we are fully informed about those less obvious concerns.
“What we do not want are answers that are simple, swift, and wrong.”
Delivery | Industry Comment
Why mega projects keep failing
It’s not what you do, but the way that you do it.
By Peter Luff, Vision Consulting
Across every major sector – from infrastructure to healthcare, technology to clean energy – organisations are pouring billions into capital mega projects. Ambition is high. So are the stakes. But outcomes? Still depressingly familiar.
Projects arrive late. Budgets blow up. Outcomes underwhelm. Trust breaks down. Teams burn out. This isn’t just an inconvenience; it’s a colossal waste, eroded trust and missed opportunities.
The data is clear: over 90% of large projects miss their targets. Some run 80% over budget. Fewer than 1% deliver on time, on budget and to the satisfaction of stakeholders. If these were clinical trials or financial audits, the approach would’ve been overhauled long ago. So why does this keep happening?
Most organisations treat delivery issues as process problems: planning, scheduling, and procurement. But these are just surface symptoms, not the problem.
The real issue runs deeper, and it’s how people coordinate, make promises, respond to surprises, and manage shared effort under pressure. Or more precisely, how they don’t.
Mega projects will always be challenging, but they don’t have to keep failing in the same ways. By shifting from control to coordination, from contracts to commitments, we can turn projects into communities that deliver not just outcomes, but trust and lasting capability.
“Projects arrive late. Budgets blow up. Outcomes underwhelm. Trust breaks down. Teams burn out.”
Resilience | Industry Comment
Bridging sectors, building resilience
How cross-industry thinking can transform delivery in AMP8 and beyond.
By Steve Arthur, CPC Project Services
AMP8 is so much more than a spending spree; it’s a strategic inflexion point for the water sector and an opportunity to be seen as a national infrastructure leader, both enabling other sectors and benefiting from the broader thinking they can bring.
Climate volatility, ageing assets, a rapidly evolving regulatory scene and shifting customer expectations are converging to create a complex landscape. However, amid these challenges lies a powerful opportunity, and even an imperative: to think and act differently, to benefit from the way things are done in other sectors and to bring a view from ‘outside of the water bubble’ that can support the delivery of this unprecedented level of investment.
In my first 100 days heading up the water and environment practice at CPC Project Services, I’ve seen firsthand how the cross-pollination of ideas can directly support a shift in water and wastewater delivery.
I’ve identified three areas where water could both benefit from this wider, cross-sector thinking:
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Innovative Contractor Engagement (ICE) – Key ICE principles include pre-qualification based on innovation capability, a structured 'ideas development' phase, and commercial safeguards like non-disclosure agreements and development fees. This approach fosters genuine collaboration, aligns incentives, and unlocks value early – which is particularly critical where planning consents and complex delivery environments are involved.
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Minimum Viable Product (MVP) mindset – MVP thinking enables infrastructure teams to deliver the most value-focused solution by aligning client priorities, stripping out waste and making deliberate trade-offs between cost and benefit, without compromising safety, standards or ambition.
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Delivering at SPEED – Project SPEED (Swift, Pragmatic and Efficient Enhancement Delivery), launched by the UK Department for Transport, is a transformative initiative aimed at accelerating infrastructure delivery while cutting costs and complexity.
“A view from ‘outside of the water bubble’ can support the delivery of this unprecedented level of investment.”
Competition Watch
Review | REC
REC the boat
Stakeholders urge Ofwat to rethink the premise of its Retail Exit Code – and at least to redraw the boundaries of its three customer camps.
By Karma Loveday
Ofwat’s Retail Exit Code (REC), which sets retail price and non-price protections for business customers on default tariffs (those who have not contracted with a supplier), has long been a bone of contention in the market. Ofwat consulted last month on its plans for the next REC period, which will start in April 2027. Retailers and market authorities remain hungry for change, more quickly than the regulator proposes.
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Retailers told Ofwat the current REC retail price caps for business customers are not delivering fair prices and are constraining competition. The UK Water Retailer Council’s response urged the regulator to set out a pathway to a more competitive market – as seen in other sectors where businesses do not benefit from price protections – with transitional steps to achieve this.
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The Strategic Panel called on Ofwat to modernise its approach to setting retail price protections for smaller customers. Its preference was for the form of protection to be rethought. The Panel went on to suggest improvements to the current form of caps, if they are retained.
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MOSL called on Ofwat to consider whether customers at the top of the Group One and Group Two bandings could safely be afforded the opportunities available to those in the groups above, by moving the thresholds down.
“The UK Water Retailer Council’s response urged the regulator to set out a pathway to a more competitive market – as seen in other sectors where businesses do not benefit from price protections – with transitional steps to achieve this.”
Report | Pricing
Falling block tariffs for the chop
Price hikes loom for major users as Ofwat consults on a wholesale charges overhaul to promote water efficiency.
By Karma Loveday
Ofwat has consulted on scrapping falling block tariffs and potentially removing all wholesale charge ‘discounts’ large business customers enjoy, in light of water scarcity.
The consultation cited in explanation the looming 5bn litre a day water shortfall forecast by 2055, and the Government’s growth mission, which depends on addressing water scarcity. In addition, Ofwat cited Recommendation 38 from the Independent Water Commission, which states that "Tariff structures should be changed to incentivise water efficiency. This could involve removing falling block tariffs for non-household consumption.”
The regulator said: “Our current view is that falling block tariffs are no longer appropriate given the water scarcity challenges we face. Charging structures with falling marginal costs for higher consumption send the wrong signal about the value of efficient water usage.”
The consultation pondered whether discounts for large users might be restructured to keep prices down but provide better price signals for water efficiency.
“Charging structures with falling marginal costs for higher consumption send the wrong signal about the value of efficient water usage."
CONTENTS
This month's articles
Interview
Charley Maher, South Staffordshire Group
4
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Report
Southern pursues customer accountability
12
Pg
Feature
National Wealth Fund water support
14
Pg
Industry Comment
Bridging sectors, building resilience
18
Pg
Report
British Water's Water Company Performance Report
23
Pg
Industry Comment
Reflections on Stockholm World Water Week
25
Pg
News Review
Defra to tighten building regs
27
Pg
News Review
Flexibility for risky PCDs
29
Pg
Industry Comment
AMP8 security advice
31
Pg
Report
Is the end coming for large user discounts?
34
Pg
Industry Comment
Frontier Economics on supervisory regulation
8
Pg
Report
IWater considers the post-Cunliffe landscape
13
Pg
Industry Comment
Why do mega projects fail?
17
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Analysis
A cool headed look at water quality
20
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News Review
More drought looms
24
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Industry Comment
Common standards for sponge cities
26
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Industry Comment
Flood and draught: two sides, one coin
28
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News Review
Thames creditors up their game
30
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Report
REC review consultation responses
32
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News Review
Roadmap to a flourishing market, one year on
35
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