Expert analysis of the UK water sector
Excerpts from the latest edition of The UK Water Report.
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Expert Forum | Policy
Onwards and upwards?
The Cunliffe Commission has put forward a robust reform plan, but will the sector rise to the challenge?
By Karma Loveday
Perfect, no, but pretty solid. That is The Water Report Expert Forum’s overall assessment of the recommendations from Sir Jon Cunliffe and team on reforming how water is planned, managed and regulated. What is far less certain is what will happen now. Opinion is divided on how holistically government will adopt the recommendations, and how enthusiastically the sector will get behind a new era of public service.
The Expert Forum – The UK Water Report’s senior level research panel – commented on:
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Are the recommendations revolutionary or evolutionary?
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Sector sentiment: the highs, the lows, the gaps
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Expectations of implementation
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Where does the sector go from here?
Many felt very positive that Cunliffe has provided the opportunity for a real reset. Variations of ‘onwards and upwards’ were common responses. "A great opportunity to stop the squabbling and sniping and get on with things - let’s see if we can do that,” was how one put it; another urged the industry to “not let the momentum dwindle…to use the positivity from the report to create a new narrative. There are signs that this is already happening.”
At the opposite end of the scale, there were low expectations. One observed: “I still don't see the inspirational leadership from the sector which we need. This is partly a function of our partisan structure.” Another that: “I think the vase has been smashed in the UK and won't be put together anytime soon…you remain in deep trouble.” Another shared: “I hope for a commitment to delivery and maintenance of water infrastructure. I fear a continuation of the deflection of blame and lack of transparency that has characterised the last decade.”
"I hope for a commitment to delivery and maintenance of water infrastructure. I fear a continuation of the deflection of blame and lack of transparency that has characterised the last decade."
Policy | In-depth Analysis
Reflections on the Independent Water Commission’s final report
David Lloyd Owen digests the Cunliffe recommendations
By Karma Loveday
This article provides some initial thoughts on the final report and recommendations of the Independent Water Commission. It follows the chapter structure of the report itself. It assumes the recommendations will be adopted, albeit this is for government yet to decide beyond the key areas which have already been endorsed. These are: a single regulator in England and devolved regulation in Wales; a return to catchment based water planning; a new statutory water ombudsman with legal powers to resolve customer complaints; and the end to operator self-monitoring.
Despite the inevitable complaints that Sir Jon Cunliffe’s remit did not extend to the ownership of the utilities themselves, it is immediately evident that the final report is far from a consensual cop-out. Indeed, it proposes a much-changed landscape with a great deal of change for the better.
"The final report is far from a consensual cop-out. Indeed, it proposes a much-changed landscape with a great deal of change for the better."
Industry Comment | Policy
Two to tango
Cunliffe’s water reset will reverberate around the privatised water world. Gustavo Saltiel extracts global governance lessons from the experiences of England and Buenos Aires.
By Gustavo Saltiel, former global lead for water supply and sanitation at the World Bank
The governance of water and sanitation services is at a critical inflection point. The privatisation models of the late 20th century, once seen as blueprints for reform, are now facing unprecedented scrutiny. Nowhere is this more apparent than in England and Wales, where the pioneering 1989 privatisation has, after three decades, culminated in a systemic crisis of environmental pollution and infrastructure failure, prompting a fundamental reassessment by the Independent Water Commission.
In this context, it is particularly interesting to compare the privatisation in England and Wales with the privatisation path pursued by Buenos Aires in 1993. By examining these historical cases through the modern lens of governance, resilience and digitalisation, we can extract globally relevant lessons for designing the next generation of effective and sustainable water services governance frameworks.
By examining these historical cases through the modern lens of governance, resilience and digitalisation, we can extract globally relevant lessons for designing the next generation of effective and sustainable water services governance frameworks.
Industry Comment | Governance
From compliance to contribution
Water company boards must now evolve with purpose.
By Michelle Ashford, Indepen
The governance of water companies in England and Wales is under the spotlight. The report from the Independent Water Commission has made clear that better boards — boards that act in the public interest, embrace long-term thinking and are held meaningfully to account — are essential to restoring trust and delivering investment in the water sector. The Commission’s report doesn’t just call for regulatory reform, it places board governance at the heart of the sector’s future, in the form of a “new regime of senior individual accountability” with a clear duty to act in the public interest.
For decades, the boards of water companies have been configured for an era defined by a regulatory regime focused on productive efficiency, compliance, and stable returns sufficient to attract capital investment. But the sector now faces a fundamentally different set of challenges - challenges that require a significant shift in the governance culture, composition and purpose of the boards.
The sector now faces a fundamentally different set of challenges - challenges that require a significant shift in the governance culture, composition and purpose of the boards.
Report | Finance
Getting on with AMP8
Verity Mitchell’s round-up of the full year results season.
By Verity Mitchell
The commentary from water chief executives on full year results from 2024/2025 was more forward-looking than normal, given the challenges ahead. There was some reflection on achievements over the last five years, especially from Severn Trent on its sector-leading £434m of performance rewards. But for all companies, getting on with AMP8 plans is front and centre of the commentary. With £104bn of totex allowed and the reputation of the sector still in tatters, delivering observable improvements must be the priority.
Named storms and heavy rainfall affected metrics such as pollution incidents, combined sewer overflow discharges and sewer flooding in 2024-2025. Perhaps the public will be more forgiving of the temporary use bans in place at present, given the observable lack of rainfall.
New legislation has stymied the payment of performance-related bonuses for six chief executives. Most of these were for serious pollution incidents or actions that led to fish being killed. Even though Scottish Water reported serious pollution incidents, the senior management team is not covered by the new legislation.
With £104bn of totex allowed and the reputation of the sector still in tatters, delivering observable improvements must be the priority.
Report | Innovation
Race for regeneration
Newcastle Racecourse this year hosted a Northumbrian Water Innovation Festival intent on speeding towards a better future.
By Karma Loveday
It’s impossible to do justice to the scale, breath, creativity and atmosphere of a Northumbrian Water Innovation Festival in a few pages of a magazine. Now in its ninth year, the six sprints of year one have exploded to 53 sprints, dashes and hacks involving around 500 organisations from 39 countries – all designed to crack key water challenges for customers, the environment and infrastructure. Newcastle Racecourse plays host, and the work takes place amid music, comedy, an exhibition, innovation demos and inspirational talks. Northumbrian runs a Young Citizens Work Experience Festival alongside.
The sense of everything, everywhere, all at once, was compounded by this year’s theme:
Regeneration – creating a better future for all, from the roots up. Explaining the choice of theme on the opening day, Northumbrian’s chief information officer Nigel Watson said he had been struck by a speaker at a leadership event who illustrated the cost of human progress on the planet and argued “sustainability is not enough”. “Challenge accepted” Watson reported.
"Sustainability is not enough"
Competition Watch
Interview | Sarah McMath, MOSL
Cunliffe congratulated
MOSL’s Sarah McMath sees everything that’s needed to improve the business market in the Independent Water Commission’s recommendations.
By Karma Loveday
The Independent Water Commission’s (IWC) final report doesn’t put a huge amount of focus on the business retail market (BRM) – understandably perhaps, given everything else it had to grapple with. It made two specific BRM recommendations:
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R60: the UK Government should conduct a full post-implementation review of the BRM, considering both its success and strategic objectives. This is general good practice, plus the IWC noted that the strategic context has shifted considerably since the market was opened in 2017. Water scarcity and efficiency have rocketed up the agenda; trust has fallen; and bills have gone up.
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R61: the government and regulator should explore short-term measures to improve the functioning of the BRM. The IWC specifically suggested providing more direction on tariff structures, and improving both the supplier of last resort and price appeal arrangements.
In addition, it offered the view that the BRM should remain open to all businesses, in some part because of the cost and disruption of unwinding it. It did not support an extension of competition to households.
The market does not exist in a vacuum, though, and it is important to note implications for the BRM from a number of the Commission’s other 86 recommendations, especially those related to demand management.
MOSL’s chief executive Sarah McMath enthusiastically welcomes all of the BRM and related recommendations, and believes the Commission has provided plenty of scope to improve the market. As far as the BRM is concerned, she says there is nothing specific she would have liked to see that was missing from the final report.
"The business retail market should remain open to all businesses"
Report | Smart Metering
Reading the room
MOSL is preempting CMOS struggling to cope with smart meter data volumes – and trading parties’ need to share reads – by building a central hub to handle it.
By Karma Loveday
Work has begun to create a new smart meter data sharing hub for the business market.
10% of business premises are now smart metered, and the proportion is set to burgeon over the next five years as wholesalers progress their smart rollout programmes. This means hourly data will be pouring in around the clock from each and every meter that is connected.
More smart metering necessitates two things. First, there must be a way for wholesalers, who own smart meters and collect the data they generate, to share consumption data with retailers, who bill and serve customers. This must be done efficiently and consistently.
Second, the flow of consumption data into the Central Market Operating System (CMOS) must be managed. CMOS has already been upgraded to deal with the strain of more business premises being smart metered.
Hourly data will be pouring in around the clock from each and every meter that is connected.
Report | Smart Metering
Starter for ten
10% of English businesses are now smart metered. MOSL’s interactive smart rollout tracker tools will provide a national picture as regional progress continues.
By Karma Loveday
MOSL, at the request of the Strategic Panel, is doing its level best to encourage proactivity, consistency and accountability in the smart water meter rollout. This is not easy because, despite being a national endeavour, the rollout is wholesaler-led. As with so many things in the industry, regional circumstances – paired with company choices and policies – mean variation is the starting point.
MOSL has combined insights from the data it holds in the Central Market Operating System with those from conversations with trading parties, to present a series of free, publicly available interactive tools. These show where we are right now with non-household smart meter implementation and what the industry has planned over the next five years.
By presenting regional information in a national context, MOSL intends to provide useful resources for customers and retailers, to help them plan their metering choices. It is also using the power of comparison to gently nudge wholesalers to execute their smart commitments – and perhaps even stretch their ambitions.
Despite being a national endeavour, the rollout is wholesaler-led
CONTENTS
This month's articles
Expert Forum
Will the sector rise to Cunliffe's challenge?
4
Pg
News Review
Consumer involvement rule
21
Pg
Industry Comment
Board composition must change
26
Pg
Report
Annual reports round-up
30
Pg
News Review
Drought latest
33
Pg
Feature
Preventing predictable failures with AI
36
Pg
Industry Comment
Technological transformation and the water crisis
40
Pg
Report
The 2025 Rivers Summit
44
Pg
Industry Comment
Green incentives to cut developer costs
46
Pg
Analysis
In-depth review of the Cunliffe report
10
Pg
Industry Comment
Governance lessons from Buenos Aires
22
Pg
Report
Water UK Skills Summit and relationship reset
28
Pg
Report
SESRO costs double
32
Pg
Report
Northumbrian Innovation Festival pursues regeneration
34
Pg
News Review
MCHLG pulls Cambridge WWTW relocation funding
39
Pg
Interview
Theo Thomas, London Waterkeeper
42
Pg
News Review
Pollution performance
45
Pg
Competition Watch
Report
REC review pursues water efficiency
Pg 47
Interview
MOSL's Sarah McMath backs Cunliffe on the market
Pg 48
Report
Central smart data hub
Pg 50
Report
Smart rollout tracking tools
Pg 52
News Review
Waterscan inspires stewardship
Pg 55