WICS Annual Report: preparing for the future and putting its house in order

(by Verity Mitchell)

The economic regulator of publicly owned Scottish Water, the Water Industry Commission for Scotland (WICS), has published its Annual Report for 2024-2025.

During the year it published its methodology for the Strategic Review of Charges (SRC27), which will determine investment levels and customer charges for water and sewerage services from 2027 to 2033. It published detailed business plan guidance and comprehensive data tables, providing a baseline against which Scottish Water’s future performance can be assessed. This marks, it said, a step change in the quality and depth of regulatory information.

WICS also agreed a Memorandum of Understanding with Scottish Water and Consumer Scotland, formalising the role of customers in shaping regulatory decisions. Additionally, it developed a new Code of Practice, working towards strengthening the non-household retail market.

Organisational change

The year saw a significant organisational transformation at WICS. In response to the Auditor General’s Section 22 report on WICS’ 2022–23 Annual Report and Accounts, WICS said it has strengthened its financial control, governance and management. The Auditor General’s report exposed weaknesses in financial management and governance at the regulator, especially concerning staff expenses and use of public funds. This triggered personnel changes and extensive scrutiny, including by the Scottish Parliament’s Public Audit Committee.

WICS reported that it has created a smaller, more accountable senior management team. This has delivered significant savings and increased capacity across the organisation. It now has a revised organisational structure based on four directorates.

The board's effectiveness has been strengthened by the introduction of a revised governance framework. Meanwhile, shared services have further improved operational efficiency, including the use of Scottish Government procurement frameworks for interim professional services, IT and other support functions.

These reforms are among those that, it is hoped, have made WICS a more effective and efficient organisation and reinforced transparency, accountability, and a commitment to learning from the past.

WICS is also looking at the Independent Water Commission’s review in England and Wales, which has provided opportunities to learn and may strengthen water regulation in Scotland.

Annual work plan

The annual work plan for 2024-25 focused on six key themes: 

1. Building an effective and efficient WICS – strengthening the organisation. 

2. Delivering the Strategic Review of Charges 2027–33 (SRC27) – setting a fair and transparent framework for charges, ensuring customers pay no more than necessary for essential water and wastewater services. 

3. Monitoring and reporting on Scottish Water’s costs and performance – scrutinising investment and confirming that customer charges are spent efficiently to maintain and improve services. 

4. Improving the retail market framework – raising standards for business and public sector customers. 

5. Refocusing engagement – pausing international consulting activity but sharing knowledge with other regulators. 

6. Strengthening cyber resilience and introducing an organisational change programme focused on strengthening the organisation's structure, governance, financial controls and focus on people.

WICS' most pressing challenge in 2024–25 was addressing the Section 22 report and rebuilding trust with key stakeholders and the wider public. This remains an ongoing journey. WICS has make significant structural changes which it hopes will help to restore its reputation as an economic regulator that delivers value.