Few people have much good to say about the water industry, and the blame game is fully engaged. But what to do? There are four possible options: continue with minimal reform; implement the recommendations of the recent Independent Commission on Water, led by Sir Jon Cunliffe; nationalise the industry; or adopt a catchment-based regulatory model. The Cunliffe Commission advocates: abolishing Ofwat, merging its functions with the Environment Agency, and introducing a supervision model akin to banking regulation. The former is not thought through, not least its neglect of the EA. The latter adds even more layers of regulation. It will be costly and there is a serious risk of regulatory capture, all the while not addressing the core issues of public distrust and investor reluctance.

 

The right approach is Catchment Regulation Model, using digital mapping and AI-enhanced data to guide environmental interventions. It encourages participation by all the parties, including through competitive bidding for projects (as opposed to financial engineering). It is the one route that can create a sustainable, transparent, and inclusive framework for the next 35 years. However, as the government reflects on the recommendations in the final Cunliffe Commission report, continued superficial reforms, particularly in the case of Thames Water, sadly look more likely, kicking the problems down the road.

Water: what to do after Cunliffe?

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Professor Dieter Helm is Professor of Economic Policy at the University of Oxford.

Water: what to do after Cunliffe?

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