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The Commission responds to publication of a draft Strategic Policy Statement for Ofwat, the water regulator.

The National Infrastructure Commission has welcomed aspects of the draft Strategic Policy Statement for Ofwat, published today (22 July 2021). The statement sets out the government’s strategic priorities and expectations for Ofwat’s regulation of the water sector in England.

Giles Stevens, Director of Policy at the National Infrastructure Commission, said:

“Strategic policy statements play an important role in providing direction to regulators, though the Commission continues to argue that they could be better supported by complementary updated statutory duties. In the draft SPS for Ofwat, we welcome the focus on long term environmental and climate resilience, which reflects the emphasis we have recommended should be baked into such duties across all sectors.

“The proposed statement builds on recent examples of closer collaboration between regulators to meet the pressures of the future, particularly improving drought resilience by enhancing the capacity of the water supply system as the Commission has recommended. We hope that this strategic and coordinated approach can be replicated for drainage and wastewater to meet the challenge of improving the aquatic environment and believe that the draft statement indicates an important step in this direction.

“We further welcome the continued commitment to increasing competition where feasible, which should also be applied to the provision of strategic infrastructure, recognising the need to protect customers’ interests while meeting growing future challenges.”

Notes

The Commission’s report Preparing for a drier future (2018) set out the need for a twin-track approach to increased water supply alongside demand reduction of at least 4,000 million litres per day, suggesting that much of this additional capacity will be needed by the 2030s.

In a report on economic regulation, Strategic investment and public confidence (2019), the Commission set out various proposals to provide a clearer strategic framework for the long term investment needs of the country, including updating regulators’ statutory duties, and using competition to increase innovation.