A new proposal could allow struggling water companies to avoid financial penalties if the government accepts recommendations from the Independent Water Commission.
Under the plan, companies facing regulatory failures could be given the opportunity to improve without the threat of immediate fines, a move that is likely to spark outrage among customers already frustrated with rising pollution levels.
The Independent Water Commission, led by Sir Jon Cunliffe, has put forward a set of 88 recommendations aimed at overhauling the water sector in England and Wales.
One of the more controversial suggestions is the introduction of a ‘turnaround regime’, which would provide water companies with the chance to address performance issues before penalties are enforced.
While the report acknowledges the need for accountability, it argues that in certain circumstances, particularly where further fines might hinder progress, forbearance should be considered.
The Turnaround Regime: A Shift in Regulatory Approach
The concept of a ‘turnaround regime’ is central to Sir Jon Cunliffe’s report. According to the Commission’s findings, this regime would allow regulators to exercise enhanced powers to guide companies towards improved performance while deferring or waiving fines where it is in the broader public interest.
The idea is to provide companies with more time and flexibility to address their failures without jeopardising their financial stability, especially in cases where infrastructure improvement is needed.
This approach, while well-intentioned in its aim to protect customers from potential disruptions, has raised concerns among critics. Water users, who have been vocal about the rise in pollution incidents and poor service standards, may view this leniency as a further example of a system that fails to hold companies accountable.
The Commission suggests that additional fines could limit companies’ ability to invest in necessary improvements, especially at a time when the water infrastructure across the UK is under strain.
Sir Jon Cunliffe’s Call for Stronger Oversight and Accountability
The report does not only focus on potential leniency for underperforming companies. Sir Jon Cunliffe is also calling for more robust regulatory oversight to address the failures of existing structures.
The Commission is critical of current regulators, including Ofwat and the Environment Agency, suggesting that these bodies lack the resources and capabilities to effectively manage the sector.
Sir Jon stresses the importance of a unified approach to regulation, advocating for the replacement of Ofwat with a stronger, more integrated regulatory body. This would ensure that the entire water sector is subject to a consistent, transparent framework, one that could better respond to public concerns regarding water quality, sewage pollution, and rising costs.
According to Cunliffe, the failure to properly regulate the industry has allowed some companies to prioritise private profits over the public good, contributing to the growing mistrust between water providers and consumers.
