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The writer presides over the Independent Water Commission and is a former Vice Governor of the Bank of England
“All happy families are the same; Each unhappy family is unhappy in its own way. “The opening of Anna Karenina de Tolstoy is how the Britain water system could be described.
Four months ago, I was appointed by the governments of the United Kingdom and Welsh to preside over the Independent Water Commission, observing reforms to the system. Each of the interested parties that I have known since then is unhappy in its own way. But there is also a desire for common and powerful change. Today, our commission launches an eight -week call to evidence. In addition to nationalization, that governments have ruled out, everything is on the table.
In the current context, it is easy to forget the achievements of the sector from privatization, but it does matter. He is no longer the “dirty man of Europe”, the environmental standards of the United Kingdom have improved. We are a world leader in the security and purity of our drinking water and sanitation. Water invoices have remained in real terms for many years.
But we face an important task. The public is just angry at the condition of many of our rivers and coasts. Investors consider the sector more and more as high risk. Companies fight with the complexity of the regulatory system. Economic growth is retained because the system lacks capacity. And as the costs of providing safe water and sanitation inevitably increase with climate change, higher environmental standards and the replacement of aging infrastructure, the public, which faces higher invoices, need to know that they will get what they pay.
Regulation is key to balance the different demands in the water system and the commission seeks opinions on how it can be improved. This includes the responsibilities of the regulators (OFWAT, the Environment Agency, Wales of Natural Resources and the Potable Water Inspection) and how they interact. The system has become increasingly a maze as new regulations, planning frameworks and legal requirements have been introduced.
Economic regulation is essential for a natural monopoly like water. But economic regulation (based on the comparative evaluation of the entire industry and price reviews every five years) now has to do much more to offer public policy objectives than is originally expected.
There are also questions about environmental regulation: if, for example, it is flexible enough to allow innovative solutions to improve water quality and how to find ways to strengthen the public confidence that the law will apply.
We are also exploring ways to solve tensions and overlays between regulatory structures. Lessons from other sectors can be learned: the prudential regulation authority and the financial behavior authority, for example, where two regulators work closely. Or where several functions have been combined in a single regulator, such as Ofcom or the Civil Aviation Authority. We are looking for evidence on all options to improve and clarify responsibilities.
The water industry must be invertible to deliver the resistant infrastructure we need for the future. We know that there will be a quadruplication of a new investment from 2025 to 2030 in relation to the previous levels. We need to restore the low risk state of the sector, increase the stability and predictability of investing in water and reconstructing confidence in a fair return of investment.
Investors and the public need to know that the financial problems we see today in some water companies will not be repeated. Therefore, we are analyzing the relationship between property models and the types of investors, as well as between the company’s performance and resilience.
Given historical decisions that have left some Very exposed companiesWe are looking for points of view on how to ensure the financial resilience of water companies, which is in the public and in the private interest.
Finally, we must analyze strategic planning and water management. Our water system has many demands: the water, agriculture, industry and housing industry, to name just a few. We are looking for points of view on what role the government should play in this. And, since our rivers and basins are regional and local, how much should be determined at a more local level.
The commission’s challenge is to look beyond short -term solutions. It is to make recommendations that will equip a system for the future and, what is crucial, will restore over time the confidence that has been lost.