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IWC Publishes Interim Water Sector Report
The Independent Water Commission (IWC) has published its initial findings into the state of the water sector and what needs to take place in order to drive long-lasting and meaningful change, restore public trust, protect the environment and ensure that the system delivers both what is expected and what is necessary.
A call for evidence was launched by the organisation earlier in the year, with the aim being to further understand the scale of the challenge facing the industry and what opportunities exist to help reform the system.
In all, over 50,000 responses were received from community groups, environmental organisations, investors, economists and industry leaders, with five areas identified as being most in need of attention:
– Strategic direction and planning
– The legislative framework
– Regulatory reform
– Company structures, ownership, governance and management
– Infrastructure and asset health
Strategic direction
The interim report suggested that the government needs to adopt a clearer direction over the long term on what is required from the water system, such as healthy waterways, with improved planning and coordination required at a regional level.
Costs must be taken into account, as well as the different pressures facing water supplies from sources like development, transport, energy, agriculture and the water sector itself.
Moving away from complicated planning processes towards a regional systems planning approach was put forth as an idea, to improve coordination with local authorities and ensure that local communities have a louder voice.
Legislative framework
Water sector legislation is complicated, inconsistent and tricky to navigate, having evolved bit by bit over the years. As such, the IWC believes that now is the time for legislative review to consolidate what’s currently in place, simplify the framework, update standards, broaden objectives and ensure that regulators enjoy greater flexibility.
Regulatory reform
The report suggested strengthening and balancing Ofwat’s regulatory powers and adopting a more supervisory approach, similar to that seen in sectors like financial services.
Currently, companies are benchmarked against each other to justify bills and assess efficiency, but moving away from this model could drive necessary interventions before issues become problematic.
For the environment, it was advised that a more capable regulator be equipped with the appropriate skills and technology, as well as the right level of funding provided consistently and innovative solutions brought in to deliver the greatest benefits for nature.
Furthermore, the IWC is looking at how economic and environmental regulators could be streamlined to address the costs and complexities within the regulatory system.
Company structures
The IWC is now looking into the management, governance and ownership of water companies in England and Wales, including whether more must be done to improve accountability and transparency.
Regarding ownership specifically, the organisation is clear that the sector must attract and retain long-term investors who are looking for low-risk, low-return investments, with the aim being to restore investor confidence in the industry’s regulatory system.
Infrastructure & asset health
According to the IWC, there is currently insufficient understanding of how healthy and resilient the sector’s assets (including water treatment plants, pipes and pumping stations) are. Up till now, infrastructure hasn’t had to be fully mapped out and there are differences in how companies manage and assess asset health.
The IWC is now looking into new national resilience standards for infrastructure, as well as requiring companies to assess asset health and submit reports to regulators and set intervals, ensuring that failures will be resolved and plans put in place to maintain long-term health and resilience.
Chair of the IWC Sir John Cunliffe said: “There is no simple, single change, no matter how radical, that will deliver the fundamental reset that is needed for the water sector.
“We have heard of deep-rooted, systemic and interlocking failures over the years: failure in government’s strategy and planning for the future, failure in regulation to protect both the billpayer and the environment and failure by some water companies and their owners to act in the public, as well as their private, interest.
“My view is that all of these issues need to be tackled to rebuild public trust and make the system fit for the future. We anticipate that this will require new legislation.”
Reducing commercial water costs
While these recommendations by the IWC will, no doubt, prove beneficial if enacted by the government over time, it will still be necessary for businesses across all industries and sectors to review their water usage and consumption to help relieve pressure on resources in the face of climate change, urbanisation, water mismanagement and population growth.
The upside of this, of course, is that you will be able to reduce commercial water costs at the same time as safeguarding supplies for future generations.
If you’d like to find out more about conserving water and saving money, get in touch with the H2o Building Services team today.