Welsh Government welcomes recommendations of landmark water industry review

The Welsh Government has welcomed the recommendations of a landmark review of the water industry.

The much-anticipated final report from the Independent Water Commission called for the regulation of water companies to be overhauled and replaced with one body for England and one body for Wales.

The report led by former Bank of England deputy governor Sir Jon Cunliffe outlined 88 recommendations to the UK and Welsh governments to turn around the ailing industry.

For England, this would see Ofwat and the Drinking Water Inspectorate abolished, and the removal of the environmental regulation functions for the Environment Agency and Natural England.

Instead, a “joined-up” and “powerful” single integrated water regulator would be established.

Ofwat

In Wales, Ofwat’s economic responsibilities would be integrated into Natural Resources Wales, the review said.

Eight new regional water system planning authorities in England and one national authority in Wales should then be set up, the review says.

This would involve devolving current planning responsibilities and transferring resources from the regulators to these new authorities, which would be responsible for developing water investment plans that reflect local priorities and voices.

The commission recommended measures such as expanding the role of the voluntary Consumer Council for Water into an ombudsman to give stronger protection to customers and a clearer route to resolving complaints.

It also proposes the introduction of a national social tariff to provide consistent support for low-income customers who need help to pay their bills and to transfer responsibility for consumer advocacy to Citizens Advice.

Dry

The report proposed stronger regulation on abstraction, sludge, drinking water standards and water supply as well as improvements to the process where companies collect and analyse wastewater discharges they make into waterways by introducing more digitalisation, automation, third-party assurance and inspections.

After one of the driest springs on record, it recommended compulsory water metering, changes to wholesale tariffs for industrial users andgreater water reuse and rainwater harvesting schemes.

It also suggests new “public benefit” clauses in water company licences and recommends the regulator set “minimum capital” requirements so that companies are less reliant on debt and more financially resilient.

The report covered legislative reforms to better manage public health risks in water, recognising the many people who swim, surf and enjoy other water-based activities.

These include public health objectives in water quality legislation, senior public health representation on regional water planning authorities and legislative changes to address emerging pollutants such as PFAs, also known as forever chemicals, micropollutants andmicroplastics.

The commission said both the UK and Welsh governments should publish a new long-term National Water Strategy with a minimum horizon of 25 years and interim milestones.

It also says a set of ministerial priorities specifically for the water industry should be issued to regulators every five years, replacing thecurrent strategic policy statement.

The UK Government has so far backed the review and is considering a piece of primary legislation to deliver many of the proposed changes.

Overhaul

On Monday, (July 21) Environment Secretary Steve Reed confirmed that Ofwat will be abolished as part of the overhaul.

Deputy First Minister and Cabinet Secretary for Climate Change and Rural Affairs, Huw Irranca-Davies, said he intended to progress the Commission’s recommendation for a separate, independent economic regulator for Wales.

He said: “I will want to engage widely on this proposition and draw in expertise to build arrangements which provide a clear, certain regulatory environment which provides value to the public, confidence for investors and sees our environment thrive.

“I look forward to progressing this alongside the UK Government progressing the recommendation for England to establish a new, integrated regulator.

“This is a once in a generation opportunity to reset arrangements created before devolution and is about more that institutional change.

“There is a golden thread about clarity and direction through the recommendations.

“With a new National Water Strategy for Wales providing a clear articulation of the policy priorities, more effective planning at system level, stronger environmental regulation and a greater focus on delivering balanced solutions at catchment level.”

Reforms

The Welsh Government says it will now review the Commission’s findings in full before working with the UK Government on the water reforms.

The UK Government have today indicated they will publish a White Paper in the autumn.

Welsh ministers will work collaboratively with the UK ministers as the Paper progresses.