The United Kingdom’s water industry is undergoing a tumultuous and critical reorganization, and it is far from over. The end results will reverberate well beyond the UK’s privatized water sector, and inform the broader debate over the role of the state and private sector in providing key public goods and services.
Thames Water, the country’s largest water company, is in default and remains on the brink of a Special Administration Regime (SAR), a form of temporary renationalization. Much of the British media and a decent portion of the public support outright nationalization. There is much finger-pointing and blame circling about, but everyone agrees that the industry has failed and is in need of immediate reform.
The stakes were thus high for the Independent Water Commission led by Sir Jon Cunliffe, which released its final report and recommendations for the industry this summer. The British government’s detailed responses to the recommendations are still forthcoming, but it announced that it would be accepting the most important one: Ofwat, the water industry’s regulator, will be abolished and eventually replaced.
One couldn’t blame the British public for being confused by the recommendation. For years, British media has explained that corporate greed is the primary cause of the water industry’s problems, as if the industry would be financially thriving and preventing storm water overflows but for its dividends and executive bonuses. Given such a media environment, and the public outrage over environmental pollution and water bills, the Cunliffe Report is courageous. It by no means lets the water companies off the hook, but it objectively, and meticulously, diagnoses the political and regulatory morass that has engulfed the UK water industry over the last fifteen years.
The British public should read the Cunliffe Report. Alas, it is not easy for the general public to digest a 464-page deep dive into the UK water industry. Public Works Financing intends to do just that in a series of articles diving into the Commission’s many recommendations and assessments.
