Abolishing Ofwat and compulsory water meters – key recommendations from landmark report into ‘broken’ water industry
The system for regulating water companies in England and Wales should be overhauled and replaced with one single body in England and another in Wales, a once-in-a-generation review of the sector has advised.
The report, which includes 88 recommendations, suggests a new single integrated regulator to replace existing water watchdogs, mandatory water metering, and a social tariff for vulnerable customers.
The ability to block companies being taken over and the creation of eight new regional water authorities, with another for all of Wales to deliver local priorities, has also been suggested.
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The review, the largest into the water industry since privatisation in the 1980s, was undertaken by Sir Jon Cunliffe, a career civil servant and former deputy governor of the Bank of England who oversaw the biggest clean-up of Britain’s banking system in the wake of the financial crash.
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He was coaxed out of retirement by Environment Secretary Steve Reed to lead the Independent Water Commission.
Final recommendations of the commission have been published on Monday morning to clean up the sector and improve public confidence, as bills rise 36% over the next five years. Here are its nine key recommendations:
• Single integrated water regulators – a single water regulator in England and a single water regulator in Wales. In England, this would replace Ofwat, the Drinking Water Inspectorate and water-environment related functions from the Environment Agency and Natural England. In Wales, Ofwat’s economic responsibilities would be integrated into Natural Resources Wales.
It’s hoped this will solve the “fragmented and overlapping” regulation, and more stable regulation will improve investor confidence. Communications regulator Ofcom was given as an example of how combining five existing regulators into one worked.
• Eight new regional water system planning authorities in England and one national authority in Wales to be responsible for water investment plans reflecting local priorities and streamlining the planning processes.
The new authorities would be independent, made up of representatives from local councils, public health officials, environmental advocates, agricultural voices and consumers. The aim is they could direct funding and ensure accountability from all sectors impacting water.
• Greater consumer protection – this includes upgrading the consumer body Consumer Council for Water, into an Ombudsman for Water to give stronger protection to customers and a clearer route to resolving complaints. Advocacy duties are to be transferred to Citizens Advice.
• Stronger environmental regulation, including compulsory water meters. Also proposed by Sir Jon are changes to wholesale tariffs for industrial users and greater water reuse and rainwater harvesting schemes. A new long-term, legally binding target for the water environment was suggested.
• Oversight of companies via the ability to block changes in ownership of water businesses when they are not seen to be prioritising the long-term interests of the company and its customers, and the addition of “public benefit” clauses in water company licences.
To boost company financial resilience, as the UK’s biggest provider, Thames Water struggles to remain in private ownership, the commission has recommended minimum financial requirements, like banks are subject to. This could mean utilities hold a certain amount of cash. It’s hoped this will, in turn, make companies more appealing to potential investors.
• The public health element of water has been recognised, and senior public health representation has been recommended for regional water planning authorities, as have new laws to address pollutants like forever chemicals and microplastics.
• Fundamental reset of economic regulation – including changes to ensure companies are investing in and maintaining assets to help attract long-term, low-risk investment. A “supervisory” approach has been recommended to intervene before things like pollution occur, rather than penalising the businesses after the event.
• Clear strategic direction – a long-term, 25-year national water strategy should be published by the UK and Welsh governments, with ministerial priorities given to water firms every five years.
• Infrastructure and asset health reforms – companies should also be required to map and assess their assets and resilience.
Nationalisation of the water industry was not in the Independent Water Commission’s terms of reference and so was not considered.
How has the report been received?
In a speech responding to Sir Jon’s report, Mr Reed is set to describe the water industry as “broken” and welcome the commission’s recommendations to ensure “the failures of the past can never happen again”.
The water industry lobby group Water UK said “fundamental change has been long overdue”.
“These recommendations should establish the foundations to secure our water supplies, support economic growth and end sewage entering our rivers and seas,” a spokesperson said.
“The Independent Water Commission has written a comprehensive, detailed review of the whole sector, with many wide-ranging and ambitious recommendations.
“Crucially, it is now up to government to decide which recommendations it will adopt, and in what way, but the commission’s work marks a significant step forward.”
Campaign group Surfers Against Sewage said the report “utterly fails to prioritise public benefit over private profit”.
“This is not transformational reform, this is putting lipstick on a pig - and you can bet the champagne is flowing in water company boardrooms across the land,” said its chief executive, Giles Bristow.
“Only one path forward remains: a full, systemic transformation that ends the ruthless pursuit of profit and puts the public good at the heart of our water services,” he said.
“We welcome Sir Jon’s calls for a national strategy, enshrining public health objectives in law and regional water planning. But we won’t be taken for fools - abolishing Ofwat and replacing it with a shinier regulator won’t stop sewage dumping or profiteering if the finance and ownership structures stay the same.”
London and the UK’s leading status in the global financial system is “fragile”, the boss of Goldman Sachs has warned, as the government grapples with a tough economy.
Speaking ahead of a meeting with the prime minister, David Solomon – chairman and chief executive of the huge US investment bank – told Sky News presenter Wilfred Frost’s The Master Investor Podcast of several concerns related to tax and regulation.
He urged the government not to push people and business away through poor policy that would damage its primary aim of securing improved economic growth, arguing that European rivals were currently proving more attractive.
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He said: “The financial industry is still driven by talent and capital formation. And those things are much more mobile than they were 25 years ago.
“London continues to be an important financial centre. But because of Brexit, because of the way the world’s evolving, the talent that was more centred here is more mobile.
“We as a firm have many more people on the continent. Policy matters, incentives matter.
“I’m encouraged by some of what the current government is talking about in terms of supporting business and trying to support a more growth oriented agenda.
“But if you don’t set a policy that keeps talent here, that encourages capital formation here, I think over time you risk that.”
He had a stark warning about the recent reversal of the “Non Dom” tax policy, which occurred across both the prior Conservative government and the current Labour government, which has played a part in some senior Goldman partners relocating away from London.
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Chancellor will not be drawn on wealth tax
Richard Gnodde, one of the bank’s vice-chairs, left for Milan earlier this year.
“Incentives matter if you create tax policy or incentives that push people away, you harm your economy,” Mr Solomon continued.
“If you go back, you know, ten years ago, I think we probably had 80 people in Paris. You know, we have 400 people in Paris now… And so in Goldman Sachs today, if you’re in Europe, you can live in London, you can live in Paris, you can live in Germany, in Frankfurt or Munich, you can live in Italy, you can live in Switzerland.
“And we’ve got, you know, real offices. You just have to recognise talent is more mobile.”
Goldman is understood to have about 6,000 employees in the UK.
Rachel Reeves is currently seeking ways to fill a black hole in the public finances and has refused to rule out wealth taxes at the next budget.
Mr Solomon expressed sympathy for her as her tears in parliament earlier this month led to speculation about the pressure of the job.
“I have sympathy, I have empathy not just for the chancellor, but for anyone who’s serving in one of these governments,” he said, referring to the turbulent political landscape globally.
Commenting on the chancellor’s Mansion House speech last week, he added: “The chancellor spoke here about regulation, she’s talking about regulation not just for safety and soundness, but also for growth.
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Takeaways from chancellor’s Mansion House speech
“And now we have to see the action steps that actually follow through and encourage that.”
One area he was particularly keen to see follow through from her Mansion House speech was ringfencing – the post financial crisis regulation that requires banks to separate their retail activities from their investment banking activities.
“It’s a place where the UK is an outlier, and by being an outlier, it prevents capital formation and growth.
“What’s the justification for being an outlier? Why is this so difficult to change? It’s hard to make a substantive policy argument that this is like a great policy for the UK. So why is it so hard to change?”
The Master Investor Podcast with Wilfred Frost is available across multiple podcast platforms
Social media limits for children are being planned by the government to tackle “compulsive” screen time, the technology secretary has told Sky News.
Peter Kyle said he was concerned about “the overall amount of time kids spend on these apps” as well as the content they see.
A two-hour cap per platform is being seriously considered after meetings with current and former employees of tech companies. A night-time or school-time curfew has also been discussed.
Children would be blocked from accessing apps such as TikTok or Snapchat once they have hit the limit, rather than just reminded of how long they have been scrolling, it is understood.
An announcement on screen time is expected this autumn.
Mr Kyle said: “I’ll be making an announcement on these things in the near future. But I am looking very carefully about the overall time kids spend on these apps.
“I think some parents feel a bit disempowered about how to actually make their kids healthier online.
“I think some kids feel that sometimes there is so much compulsive behaviour with interaction with the apps they need some help just to take control of their online lives and those are things I’m looking at really carefully.
“We talk a lot about a healthy childhood offline. We need to do the same online. I think sleep is very important, to be able to focus on studying is very important.”
Charlotte, 17, said she believes there needs to be ‘harsher controls’
He added that he wanted to stop children spending hours viewing content which “isn’t criminal, but it’s unhealthy, the overuse of some of these apps”.
“I think we can incentivise the companies and we can set a slightly different threshold that will just tip the balance in favour of parents not always being the ones who are just ripping phones out of the kids’ hands and having a really awkward, difficult conversation around it,” he added.
Mr Kyle spoke exclusively to Sky News after meeting with a group of pupils from Darlington who have spent a year participating in regular focus groups about smartphones and social media, organised by their Labour MP Lola McEvoy.
The tech secretary is considering limiting screen time to two hours
They took part in a survey of 1,000 children from the town, mostly aged 14 and 15, which found that 40% of them spent at least six hours a day online. One in five spent as long as eight hours scrolling.
Most of the under-16s (55%) had seen inappropriate sexual or violent content – often unprompted. And three-quarters of the under-16s had been contacted online by strangers.
In the session in parliament, in which the children were asked what they were most concerned about, Jacob, 15, said: “A lack of restrictions on screen time I would personally say, which leads to people scrolling for hours on Tiktok.
“People just glue their eyes to their phone and just spent hours on it, instead of seeing the real world.”
Tom, 17, said: “I get the feeling you have to be quite tech savvy to protect your kids online. You have to go into the settings and work out each one. It should be the default. It needs to be straight away, day one.”
Matthew, 15, said: “I think because everybody is online all the time and there’s no real moderation to what people can say or what can be shared, it can really affect people’s lives because it’s always there.
“As soon as I wake up, I check my phone and until I go to bed. The only time I take a break is when I eat or am talking to someone.”
Some of the teenagers had spent 12 or even up to 16 hours a day online.
MP Lola McEvoy has been holding focus groups with teens to find out how severe the issue is
Nathan, 15, said: “When, for example, a 13-year-old is on their phone ’til midnight, you can’t sleep, your body can’t function properly and your mind is all over the place.”
But there was scepticism about what could be done.
Charlotte, 17, said: “If your parents sets a restriction on Instagram and say, ‘right, you’re coming off it now’ – there’s TikTok, there is Pinterest, there is Facebook, there’s Snapchat, there so many different other ones, you can go on, and it just builds up and builds and builds up, and you end up sat there for the entire evening just on social media. I think we need harsher controls.”
Several of the pupils who met Mr Kyle detailed being contacted by adult strangers, either on social media apps or online gaming, in ways which made them feel uncomfortable.
Mr Kyle said: “It is madness, it is total madness, and many of the apps or the companies have taken action to restrict contacts that adults – particularly strangers – have with children, but we need to go further and I accept that.
“At the moment, I think the balance is tipped slightly in the wrong direction. Parents don’t feel they have the skills, the tools or the ability to really have a grip on the childhood experience online, how much time, what they’re seeing, they don’t feel that kids are protected from unhealthy activity or content when they are online.”
The tech secretary is in the process of implementing the 2023 Online Safety Act, passed by the previous government.
From this Friday, all platforms must introduce stronger protections for children online, including a legal requirement for all pornography sites accessed in the UK to have effective age verification in place – such as facial age estimation or ID checks.
Briony and Matthew took part in the group
Mr Kyle added: “I don’t just want the base level set where kids aren’t being criminally exploited and damaged, that shouldn’t be the height of our aspirations. The height of our aspirations should be a healthy experience.”
Labour MP Lola McEvoy, who organised the focus group, said: “I knew things were bad online for children and young people but their testimony revealed the extent of explicit, disturbing and toxic content that is now the norm.
“Their articulation of the changes they wanted to see was excellent and they’ve done our town and their generation proud.”
Tiktok, Pinterest, Meta and Snapchat were contacted for comment, but none provided an on the record statement. The companies have accounts for under-16s with parental controls and some set reminders for screen time.
TikTok has a 60-minute daily screen time limit for under-18s after which they must enter a password to continue, and a reminder to switch off at 10pm. The company say this is to support a healthy relationship with screen time.
Pinterest have supported phone-free policies at schools, in the US and Canada and say they are looking to expand this elsewhere.
The UK will prohibit its public sector, such as its health service and local councils, from paying ransomware in a bid to “smash the cyber criminal business model.”
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