The Independent Water Commission: Final Report

Some initial thoughts

While some hints have already been made, such as that Ofwat will be replaced, we do not currently know how many of the Cunliffe Report’s recommendations will in fact be adopted. This note assumes that Sir Jon’s recommendations will indeed be adopted.

In England, Ofwat, the Environment Agency, Natural England and the Drinking Water Inspectorate (DWI) are to be incorporated into a single body. The effective performance of the DWI (in contrast to the other three) is acknowledged. This change will ease Ofwat’s dominance of the sector’s regulation, thus placing greater emphasis on environmental performance and security of supplies. In addition, the Environment Agency will receive the funding it needs to be able to effectively monitor inland and coastal waters and to carry out the necessary level of company and farm inspections.   

The Consumers’ Council for Water will be replaced by an ombudsman, which will be armed with mandatory powers.

Devolution in Wales began in 1999, a decade after water’s privatisation. The setting up of Glas Cymru in 2001 involved a formal agreement with the Senedd. Environmental regulation was subsequently devolved to Natural Resources Wales. In recognition of the current settlement, economic regulation will also be devolved to Wales. The DWI will continue to serve England and Wales, as will the enhanced management of consumer interests. Because of Wales’s comparative dependence on surface water, measures including making domestic smart water metering compulsory would be adopted.

Industrial tariffs need to be reconsidered to encourage the more efficient use of bulk water and lower overall abstraction levels.

Water resilience is to be emphasised in a 25-year plan covering all of England. This includes a greater emphasis on rainwater harvesting and water reuse. Rainwater harvesting would also help to ease loadings in urban combined sewer networks. Compulsory water metering should be extended to all areas rather than those currently designated as water scarce.

There needs to be an explicit emphasis on asset maintenance. Under Ofwat, regulation has focused on developing new assets, while the comparative amount of funding on asset operation and maintenance has decreased. 

The regulator will have powers to block predatory purchasers of water companies. This was arguably one of Ofwat’s most serious lapses, when it allowed private companies to take over Thames, Southern, Anglian and Yorkshire and subsequently allowed their debt levels to be ratcheted up.

Perhaps one of the most pleasant surprises is the recommendation that the Regional Water Authorities (RWA) should be reinstated. The RWAs were originally established as part of the sector’s consolidation in 1974. They provided for a degree of decision-making at the regional level. The new RWAs aim to include all relevant stakeholders, including local councils, farmers, River Trusts and public participation. This is especially important, as it creates a framework for developing and delivering catchment-based management of the river basins within each region.