Experienced former senior civil servant Sir Jon Cunliffe has been appointed to lead a review into the the crisis-hit water sector and its regulation.
The UK and Welsh governments have today set up an Independent Commission into the water sector, to conduct what they described as “the largest review” of the sector since its privatisation in 1989.
The commission will be asked to come up with recommendations to fix issues the sector is facing such as record levels of sewage spills, fears Thames Water – Britain’s biggest water company – could collapse, a lack of funding to meet clean water targets, and growing water shortages across the country.
While some areas are already experiencing shortages, environment secretary Steve Reed warned today that the UK is facing a shortage of water within a decade and a half “if we don't act now”.
The Labour government has ruled out nationalising water companies, with Reed saying this would “cost tens of billions of pounds and take years”. Reed said he instead wants to reform the current system to attract investment “ to clean up our waterways and rebuild our broken water infrastructure”.
The commission has been asked to recommend measures to ensure the regulatory system delivers: a clear vision; strategic planning; better regulation; empowered regulators’ improved delivery; a stable framework; consumer protection; and resilient infrastructure.
Reed said the commission’s findings “will help shape new legislation to reform the water sector so it properly serves the interests of customers and the environment”.
Reports from the Yorkshire Post and FT suggest the review will consider if water regulator Ofwat should be scrapped or reformed.
In September, Reed said his “instinct” was that it would be better to give the regulator the powers they need to do their job, "because it’s quicker”, but that he would “wait to see what comes through the review”. He said yesterday that he does not have “a fixed view” on scrapping Ofwat.
Cunliffe, who was a deputy governor of the Bank of England from 2013 until last year, said he is "honoured" to be appointed to chair the commission.
His 30-year-plus spell in the civil service included ten years at the Department of the Environment and Transport in the 1980s, five years as a second perm sec at HM Treasury, and a four-year stint where he was the prime minister’s advisor on Europe and global issues, the UK sherpa for the G8 and G20, and the Cabinet Office permanent secretary with responsibility for EU coordination.
“Working over many years in the public sector, in environment, transport and the Treasury, and the Bank of England, I have seen how the regulation of private firms can be fundamental to incentivising performance and innovation, securing resilience and delivering public policy objectives,” Cunliffe said.
“I am looking forward to working with experts from across the water sector, from environment and customer groups and investors, to help deliver a water sector that works successfully for both customers, investors and our natural environment.”
The commission will deliver its recommendations to the UK government environment secretary, and the Welsh Government’s cabinet secretary for climate change and rural affairs. The UK and Welsh governments will then respond with the proposals they intend to take forward.
Huw Irranca Davies, Wales’ deputy first minister with responsibility for climate change and rural affairs, commended the “fresh approach of our two governments working together on an issue which affects us all”.
He said the two governments “have clear priorities for reform and a shared sense of the work needed across both countries’ policy and regulatory regimes to make this change happen”.