Water Industry Shake-Up: Ofwat Chief Departs Amidst Growing Controversy
In a significant development for the water sector in England and Wales, David Black, the chief executive of Ofwat, has announced his resignation effective at the end of the month. Ofwat, the regulator overseeing the industry, confirmed Black’s decision to step down as he seeks to “pursue new opportunities”. This resignation comes on the heels of a government decision to abolish Ofwat and establish a new regulatory body aimed at addressing critical failings within the water companies, particularly concerning issues like leaking pipes and sewage spills that have reached alarming new records.
Black, who took on the role in April 2022, expressed good wishes for his team as they continue their crucial work amidst ongoing scrutiny of the industry. His departure is particularly noteworthy in light of a recent report that outlined a staggering 88 recommendations for reforming the water sector. Among these recommendations are proposals to sharply increase bills to fund greater investments, mandate smart meters, and redefine the regulatory landscape by replacing Ofwat entirely.
The chair of Ofwat, Iain Coucher, commended Black for his tireless efforts aimed at transforming the water sector during his tenure. However, the timing of the resignation coincides with widespread criticism targeting water companies regarding their operational practices, particularly concerning their handling of pollution incidents. The report, led by Sir Jon Cunliffe, a former deputy governor of the Bank of England, tasked Ofwat with accountability and pointed out the inadequacies in both its oversight and the government’s guidance. The document painted a grim picture of the industry, suggesting that water firms have been able to essentially mark their own homework regarding sewage spills and expressed concerns over their generous dividends to shareholders, which have totaled at least £54 billion since privatization in 1989.
The government faced criticism for limiting the scope of the report, avoiding discussions around the renationalization of water services. During this review, the Environment Secretary, Steve Reed, openly declared the government’s financial incapacity to take such steps, further complicating the future of the water sector. For now, Ofwat is expected to appoint an interim chief executive as it navigates through this transitional phase.