Government consults on a new growth duty for Ofwat

Ofwat could be given a new growth duty under plans being consulted on until 17 August by the Department for Business and Trade (DBT).

The consultation seeks views on whether Ofwat, Ofgem and Ofcom should be added to the scope of the growth duty provided for in the 2015 Deregulation Act. The Act put in place requirements for 40 regulators and regulatory functions to have regard to the desirability of promoting economic growth when carrying out their core functions. Those already under the scope of the Act include the Environment Agency, Civil Aviation Authority, Food Standards Agency and the Health & Safety Executive.

The paper reasoned that the water, energy and communications sectors account for 4% of GDP and 13% of total UK private sector investment.

The consultation forms part of the Smarter Regulation programme of regulatory reform announcements that began in May 2023 with the publication of the Smarter regulation to grow the economy policy paper. The Government plans two further consultations later this year, with the aim of exploring further opportunities for regulators to foster growth: one on reforms to Ofwat, Ofgem and Ofcom; the other on revised statutory guidance to assist regulators in fulfilling their responsibilities under the growth duty. Both consultations will consider the findings from the review of the growth duty led by the government chief scientific adviser Professor Dame Angela McLean, announced in the Budget earlier this year.

In his foreword, minister for regulatory reform The Earl of Minto said: "Through this consultation and further regulatory reform updates, the Government will take action to reduce the burdens on business, reduce the cost of living, deliver choice to consumers, turbocharge science and innovation and drive infrastructure development.”

The DBT added that it welcomed views on potential tensions between the new growth duty and existing duties of the three regulators; how these tensions might be addressed in the supporting guidance; and views on other ways that growth can be incentivised and supported by the regulators in these sectors.