Opinion: Sir Jon Cunliffe’s Review – High stakes, high hopes
From droughts to floods and bills to bonuses, the water industry is facing criticism from many different angles. With lots happening at once, and with PR24 determinations round the corner, it’s easy to get lost in the detail, while the cycle of blame rages on but nothing seems to change.
For an industry plagued by accusations of inefficiency and public mistrust, the Government has made it clear something must change. This is where Sir Jon Cunliffe comes in. His Water Commission review will take a step back and will provide a full picture of the industry – the competing priorities, the regulatory hurdles and the opportunities for economic growth that can be unlocked.
Sir Jon’s recent review of the water sector is not just another bureaucratic exercise; it represents a critical opportunity to reshape the industry, and the catalyst for meaningful change across several key areas.
Regulating for the future
While legislation is already underway with the Water (Special Measures) Bill, the Commission can recommend further changes to regulation that can provide clarity for water companies – and the public – on accountability. For the regulators, this could include a clear definition of priorities to guide their work, supporting them through meting out any new penalties. While the future of Ofwat is often called into question, there is an opportunity to redefine its role in the public eye and let it take credit – rather than blame – for regulation that improves services.
Public trust through partnership
For the public and consumers, it’s not just water companies that are to blame for failings, with many holding regulators and the Government responsible by extension – bad news all round. Sir Jon’s review is set to establish the grounds for how a new partnership approach to resource management can build up trust in the water sector, with consumers feeling they have a stake in the system, without pursuing nationalisation.
Going for growth
Attracting investment will be crucial for modernising our ageing water infrastructure, as well as supporting the Government’s mission for economic growth. The review could set out the case for a robust regulatory framework that can reassure investors of the sector’s stability and potential, with opportunities for new pensions funds to enter a sector with an inevitably long-term future and an enormous consumer base.
Essential infrastructure
The Labour Government has already shown a strong desire to build new homes and infrastructure by overcoming local opposition. The battle for new reservoirs has been going on for some time, and in many parts of the country no new reservoirs have been built since privatisation. As ever, the reasons behind this are numerous, but the Water Commission can draw a line in the sand. New recommendations to build infrastructure, backed up by central government, could finally get new reservoirs built.
For existing infrastructure, Sir Jon will have to look at where the money can come from while not hitting consumers’ pockets. As a key part of the regulatory overhaul, he may choose to open the conversation to the public to ensure that a clear view is formed that is not perceived as echoing the demands of the industry.
Looking ahead
As we move forward, Cunliffe’s review serves as a pivotal moment for the water sector. He has an enormous task on his hands but also an opportunity to throw a lifeline to a sector on which we all rely. The Government needs this review, stewarded by a highly respected public servant, to provide it with clear actions to make the industry more accountable, more transparent, more successful and, ultimately, less of an issue.