Industry immediately signs up to light touch reforms from Labour

All water companies promptly signed up last week to the new Government’s initial reforms for the industry, which focused on supporting investment and boosting customer focus.

As Ofwat issued its PR24 Draft Determinations, new environment secretary and MP for Streatham and Croydon North, Steve Reed, and new water minister and MP for Hull West and Haltemprice, Emma Hardy, hosted a roundtable for water company chief executives to discuss the changes and set out plans to work in partnership with them and investors to attract investment, secure jobs, and clean up waterways.

There were four initial measures: 

• Telling Ofwat to ringfence funding for infrastructure investment, and ensure any unspent money is clawed back for customers – and “never allowed to be diverted for bonuses, dividends or salary increases”.

• An expectation that companies change their Articles of Association to make the interests of customers and the environment a primary objective (Anglian did this some years ago).

• The creation of new customer panels, to give customers the power to hold executives and board members to account.

• Doubling compensation for customers when key standards are not met, and extending the circumstances when statutory compensation is due, including when boil water notices are issued. 

Reed said: “Today I have announced significant steps to clean up the water industry to cut sewage pollution, protect customers and attract investment to upgrade its crumbling infrastructure. That change will take time. Over the coming weeks and months, this Government will outline further steps to reform the water sector and restore our rivers, lakes and seas to good health.” Defra noted the new measures sit alongside Labour’s manifesto commitment to put failing water firms into special measures, though no further detail was published on exactly what that means.

On behalf of the English water companies, David Henderson, Water UK chief executive, said: “We welcome today’s swift action by the secretary of state. Companies have agreed to his direction that, in addition to turbocharging investment, they put customers and the environment at the core of how they operate. We will work with Government to implement these reforms as quickly as possible and deliver our largest-ever investment plan to secure our water supplies, end sewage in rivers and enable economic growth.”

The King’s Speech takes place on Wednesday.