Building on the Committee’s two hearings on Thames Water’s
finances, the EFRA Chair, Sir , has today written to Ofwat Chief
Executive to respond to the publication
of its Forward Programme 2024-2025.
The Committee commends the Government’s recent steps to tackle
serious examples of mismanagement in the sector, but also
acknowledges that Ofwat is in a challenging position with regard
to enforcing regulations and issuing fines to water
companies.
The letter recognises that Ofwat using the full extent of its
powers could result in the financial failure of a business, with
a consequent impact ‘on the stability of the sector and the
public purse’.
The Committee recommends that any forward programme ‘must clearly
set out how Ofwat will balance its need to regulate with
protecting the financial viability of the water companies.’
Stating that many Ofwat investigations into malpractice in the
water sector take several years to complete, undermining public
trust in the sector and the regulation in the process, the letter
urges Ofwat to give details as to how it will complete
investigations in a more timely manner.
With regard to domestic water bills, the letter emphasises the
importance of the effects on consumers of proposals to raise
water bills in order to finance the essential investment in new
infrastructure. The Committee notes that this investment has for
many years been ‘neglected in favour of profit and dividends to
shareholders.’
The letter states that ‘an increase in bills will produce a
justifiable perception of unfairness from consumers who are being
asked to shoulder the burden of improvements by companies who
have consistently and publicly failed on delivering their core
obligations.’
The Committee’s letter raises the issue that corporate structures
have until now ‘shielded the ultimate owners of our public
utilities from scrutiny’ and presses the need for greater
transparency in this area.
ENDS
Notes to editors
- The letter to Ofwat is attached to this email and can also be
found here.
