Cunliffe's Prudent Reforms for the Water Sector Should Have Happened About 20 Years Ago

Farewell, Ofwat, soon to disappear down the regulatory U-bend. Its leadership has been up against some serious corporate miscreants and boardroom financial engineers over the years, but abolition is the right decision.

- Nils Pratley

The original sin – overseen by New Labour – was to allow the leveraged takeover boom of the mid-2000s, which was the point at which regulatory control over the sector started to be lost. The past decade has been about trying to undo the damage, which has only exposed yawning gaps in regulatory knowledge, such as the storm overflow scandal that broke in 2021. A "reset" moment is overdue by about 20 years.

Sir Jon Cunliffe's review goes to the heart of one main problem: the fragmented, overlapping and inflexible nature of a regulatory system that takes in not just Ofwat and the Environment Agency (a regulator that lost its way as severely) but also the Drinking Water Inspectorate and Natural England and Natural Resources Wales. That structure is simply confused. A super-regulator in England (and equivalent in Wales) should, in theory, solve the problem of duplication and lack of coordination. Simpler is better.