Monday 21, July – LONDON
Today’s publication of the Water Commission’s final report marks the culmination of nine months of vital work to take stock of the challenges facing the UK water sector and to set out a clear path for reform.
We welcome the Commission’s clear-eyed diagnosis of the sector’s root problems. It rightly highlights how a breakdown in the regulatory framework, combined with inconsistent or absent guidance from successive governments, has left the sector facing significant challenges that must now be addressed.
Crucially, the Commission recognises that maintaining the UK water sector’s ‘investability’ is essential if we are to unlock the £100 billion of capital needed over the next five years. That means reducing risk, not adding to it. We strongly support the Commission’s call for government to act urgently to restore investor confidence by tackling regulatory uncertainty, which has contributed to the erosion of the sector’s credit ratings, raised the cost of capital and, ultimately, increased costs for customers.
We also welcome the recommendation for deeper structural reform to ensure better coordination across the three main regulators, which is long overdue. Equally important is the Commission’s challenge to government to be honest with the public about the real trade-offs that meaningful reform will require. The Commission has also rightly dispelled the myth that ownership model alone determines company performance, as the evidence simply does not support that claim.
As we look ahead, investors will be watching closely for a clear and timely government response. The Commission has provided a roadmap, but ministers must now flesh out the detail needed to put it into action.
We urge government to swiftly set out a timeline and transition plan to implement new regulatory arrangements.
Finally, a stable, long-term framework for environmental performance is essential. For too long, companies have faced moving goalposts and short-term targets, making it harder to demonstrate progress and build trust. That must now change.
Investors are ready to play their part in delivering the long-term capital the UK’s water sector urgently needs. This depends on the right policy and regulatory environment being put in place. We stand ready to work with government and regulators to make it happen.
Jon Phillips, chief executive of the Global Infrastructure Investor Association said: “The Water Commission’s final report rightly recognises that restoring investor confidence is essential if we’re to unlock the £100 billion needed for the UK’s water sector over the next five years.
“We hope today’s announcement to put in place new regulatory arrangements will provide a joined-up, long-term framework so the sector can get on with delivering the improvements needed for customers and the environment.”
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Listen to GIIA’s latest Talking Global Infrastructure podcast episode on the UK water sector below: