Lords scorn water regulation and governance failures and demand change

The House of Lords Industry and Regulators Committee last week issued a no-holds barred critique of the governance and regulation of the water industry, marking the conclusion of its inquiry into the work of Ofwat.

Peers found government strategy to be insufficient and inadequately coordinated; Ofwat to have failed to ensure enough investment, preferring to keep bills low; and water companies to be “overly focused on maximising financial returns at the expense of the environment, operational performance and financial sustainability”.

The committee called for a National Water Strategy which sets “clear expectations in relation to the quality of the water environment and the resilience of water supplies, giving regulators clear benchmarks to work towards”.

It told government to advise Ofwat how to “handle the trade-off between balancing the financial needs of customers during a cost-of-living crisis with the urgent need for infrastructure and environmental investment”. This must be matched by a single social tariff, it said, introduced in time for 2025, to protect vulnerable customers from bill increases and to provide a baseline of support consistently across the country.

Elsewhere, the Committee said the Environment Agency needed adequate funding to inspect and enforce pollutions; that Ofwat should be empowered to prevent directors of serious polluter water firms from working in the sector; that metering should be compulsory; the planning process for reservoirs speeded up; and for Outcome-Based Environmental Regulation to be introduced.

Chair, Lord Hollick, said: “There is an overall feeling of dismay, anguish and anger from respondents, about the state of our waterways and the apparent failure to get to grips with the problem. We are calling on regulators and the government to consider our report’s findings and recommendations and act fast before we are all left up sewage creek.”