Latest news with #SirJonCunliffe
Times
4 days ago
- Business
- Times
Water review will not recommend changes to ownership structure
The head of the Independent Water Commission will not recommend that the government change the ownership structure of water companies in his review of the sector. Sir Jon Cunliffe, a former deputy governor of the Bank of England, has served as the chairman of the commission since it was established in October 2024, after Labour came to power, to make recommendations on reforms to the water sector. Speaking to MPs on the Commons environment, food and rural affairs committee, Cunliffe suggested that questions about the ownership structure of water companies were outside the commission's terms of reference. Challenged on how he could assure MPs he would look at other models of ownership given the sector's failings, he said the commission could do so only in certain circumstances. 'What we won't do is say 'We need to move the whole sector to a different model', for two reasons. If the question is, will we recommend a wholesale move to another [ownership] model?' He added: 'I don't think looking at the models, the evidence we have, it's not a big data set, but I don't think the conclusive evidence is there to make a big change like that.' Cunliffe's commission published an interim report this month, and a final version is expected in July. In the interim version, it said that there were 'deep-rooted, systemic' problems in the water industry in England and Wales. However, the report added that there was 'no simple, single change, no matter how radical, that will deliver the fundamental reset that is needed for the water sector'. • Feargal Sharkey: Cunliffe report won't make one atom of the UK's water any cleaner The former civil servant has suggested his final report could include recommending better water planning across river basins and new laws on the health of wild swimmers. Cunliffe also told MPs that his commission had not looked at the security aspects of foreign ownership, and that, due to time limits, his report was less exhaustive than it could have been. 'Without sounding like a Treasury official, there's a trade-off here between how fast we do this and how detailed we are, and how much we leave with a direction for other people to do after us,' Cunliffe said. 'We're probably about eight months in total for a report this size. You could argue that you could take two or three years dealing in detail with everything that is here.'
The Independent
4 days ago
- Business
- The Independent
Independent water commission chair denies probe into reforms is ‘tinkering'
The chair of the Independent Water Commission has defended his ongoing probe into the water sector reforms. Sir Jon Cunliffe addressed recent criticism that he has been 'tinkering' with the industry's deep-rooted issues as he was quizzed by MPs on Tuesday. The Independent Water Commission was tasked by the UK and Welsh governments to carry out the largest review of the sector since privatisation in the face of widespread public anger over pollution, bills and bosses' bonuses although ministers ruled out nationalising water companies. The final report is expected in mid-July but earlier this month, the commission published an interim report which said the industry needs a 'fundamental reset'. But this initial paper was criticised for not going far enough to deliver recommendations that would engender a complete industry overhaul. The Government outlined the scope of the probe to focus on what changes could be made within the current privatised regulated ownership model rather than considering a wholesale shift to other models such as not-for-profit or nationalisation. Giles Bristow, chief executive of Surfers Against Sewage, said the interim report was tinkering around the edges and he called for the commission's final recommendations to 'end pollution for profit' as well as 'reshape the water industry to put public health and environment first'. Asked by MPs if the review is 'tinkering' given the broken culture found across the sector, Sir Jon said: 'No I don't accept it at all. I just don't, I'm sorry. 'First of all, you wouldn't expect me to think, to accept, that this was a report that was tinkering. 'But just moving past that… I do not think the problems you see in the culture of the water companies that you've identified, and the problems we've seen in performance, are the inevitable consequence of the ownership model that we have.' Sir Jon continued to say the commission will look at other ownership models, such as not-for-profit, and make recommendations where companies are feasibly able to make a transition without public spending. Challenged on how he can assure MPs he will look at other models of ownership given the current failures, he said the commission could do so only in certain circumstances. 'But what we won't do is say: 'We need to move the whole sector to a different model' for two reasons,' he said. Sir Jon outlined that he is not sure how the sector can do this without large public spending to buy the assets but also that he has not found a 'strong correlation' between models and outcomes. 'It's not tinkering, it's trying to be evidence-based,' he said. His comments come after the Environment, Food and Rural Affairs Committee released its own report into the sector on Tuesday morning, which concluded the industry is 'failing' while water firms are 'deaf to the crisis' it is facing. The MPs also argued the Government 'should feel able to use its temporary nationalisation powers' when needed. Sir Jon was also questioned about criticism that the review is not truly independent from the Government due to Environment Department staff helping to carry out the work. In response, he said: 'I'd like to put this on the record, if I can chair. 'I've been given a secretariat of high-quality Defra officials. 'I have not felt in any way that I am being channelled down any particular route outside of my terms of reference and I'd also say that they are incredibly hard-working, and they are in seeker after truth mode.' He added that while the commission has had to draw on some departmental expertise, the recommendations 'will be my own'.
Times
6 days ago
- Business
- Times
Water industry is ‘deaf' to crisis facing sector, warn MPs
The culture of the water industry is 'deaf to the crisis the sector is facing', MPs have warned. The environment, food and rural affairs committee said the water sector had 'completely lost sight of its purpose' and urged a government review to recommend a bold overhaul. A report by the committee said that special administration for debt-laden firms such as Thames Water should remain a last resort. But it was unclear if it was better to let a 'failing company' keep piling up more debt or to assume temporary national control more quickly, it said. The prospect of the collapse of Thames Water, Britain's biggest water firm, increased after a US private equity firm withdrew its rescue plan this month. The wide-ranging report by the committee, published on Monday, painted a damning picture of the state of the water industry and regulation. 'The water sector is failing. During the course of our inquiry, we have heard too many examples of corporate failure and unacceptable pollution incidents,' the MPs said. They said 'root-and-branch reform' of the sector's culture was now needed. Their verdict follows an interim report by the Independent Water Commission, which was appointed after Labour came to power. Sir Jon Cunliffe, chair of the commission, suggested his final report — expected in July — could recommend rationalising decades of legislation, better water planning across river basins and new laws on the health of wild swimmers. Campaigners fear it won't go far enough. • Thames Water's future in doubt after KKR abandons rescue Cunliffe should be 'open-minded' about alternative ownership models for water firms, the MPs said, though the government has ordered him to rule out full nationalisation. The committee's report said alternatives such as not-for-profit enterprises, community interest companies and co-operatives should 'be on the table'. 'The control of seven out of ten water and sewerage companies by private equity investors (serving over 60 per cent of the population) and approximately 70 per cent foreign ownership may not be fostering the necessary culture for the sector,' the MPs said. The report said companies had been allowed to rack up too much debt in the past, which must not be allowed to rise again. Despite poor performance, there had been 'egregious examples of dividend and bonus payments', it added. Six water company leaders recently had their bonuses banned this year for failing to meet standards, after a new law was passed in February. With water bills rising by 36 per cent on average by 2030, the MPs urged Cunliffe to consider establishing a single social tariff rather than the current arrangements for lower-income households, which vary from company to company. Citizen's Advice, the consumer group, welcomed the idea, which would end a 'postcode lottery for support'. However, the environment committee said it feared government limitations on Cunliffe could mean his final recommendations disappoint. 'A lot of onus has been placed on the commission to deliver, but the limitations of its scope may mean its proposals fall far short of what is needed to reform the sector.' • I've driven 4,858 miles around the UK coast. Our seas are in a bad way A spokesman for industry group Water UK said: 'Everyone agrees that the water system is not working, and we have been calling for fundamental reforms which allow investment to get quickly to where it needs to go.' The Times' Clean It Up campaign is calling for better regulation, effective investment and greater transparency to improve the country's waterways
The Guardian
09-06-2025
- Business
- The Guardian
Thames Water's creditors are being too greedy
If you would kindly rip up the regulatory system, move the goalposts on sewage and spills and promise not to fine us too much, we'd be delighted to rescue Thames Water. If these requests cause you political difficulty, dear secretary of state, consider how much worse it could be if you end up controlling this failing company yourself. Do you really wish to be responsible for every burst water main in London and every drop of effluent in Didcot? That seems to be the pitch from the 100-plus group of lenders to Thames Water who are now the only game in town in terms of a 'market-led' recapitalisation, the alternative to special administration, AKA temporary nationalisation. It is expressed in the bland language of 'regulatory support', but the meaning isn't hard to translate. A 'rebased' performance target is a lower one. A 'pragmatic approach to historic and future legal and regulatory compliance' means letting Thames off substantial financial penalties – maybe a billion or two over the next five to 10 years – that would otherwise come its way. If the proposal sounds outrageous (it does), in one sense you can't blame the creditors for giving it a go. Sir Jon Cunliffe's Independent Water Commission, in its interim report last week, nodded to the general idea that failing water companies will need a helping hand from regulators to haul themselves off the floor. 'The commission is of the view that a more formal framework for supporting companies to turnaround performance may be needed, to avoid a future 'doom loop',' the report said. The use of the loaded 'doom loop' phrase will have delighted the creditors. It is exactly how they describe Thames's predicament of fines out to the horizon. If you want to improve the assets, goes their argument, something has to give – and would have to give even under a nationalised setup. There are, though, at least two enormous difficulties to the creditors' plan. Most obviously, how could Steve Reed, the environment secretary, possibly sanction legal immunity for serious environmental crimes for private sector owners of Thames? Remember Reed's refrain every time he bashes a bonus: 'With this government, the era of profiting from pollution is over.' It is hard to walk back that statement. Second, even if the Cunliffe commission's thinking provides philosophical support for regulatory 'flexibility', the final report is still a couple of months away, and parliamentary scrutiny will be needed before the regulatory system for the water industry could be changed fundamentally. The timeframe is beyond the would-be new owners' plan for recapitalising Thames. Thus, if the creditor group has any prospect of getting its proposal to fly, a few of its big numbers will have to look very different from the ones presented in the self-serving outline version. In short, the senior lenders are being far too greedy in imagining they can escape with writedowns on their debt of just 20%, the ratio implied by the proposed £3.2bn hit to total A class debt of £16bn. Come on. The haircut for lenders cannot be that light. The market value of the debt is already implying 30% writedowns. Some of the opportunistic vulture funds are thought to have got in at as low as 60p in the pound; Reed and Ofwat, the water regulator for England and Wales, would look like fools if they approved, in effect, hefty day-one paper profits for them. But it is – just about – possible to imagine a deal in which Thames pays its fines upfront, as it were, in the interest of allowing managers to concentrate on the day job of running the business rather than hiring lawyers to fight Ofwat and the Environment Agency. Add £1.6bn as a settlement of outstanding bad behaviour and in effect you'd get a haircut for senior lenders of 30%. Or maybe the figure would have to be closer to 40% to allow Reed to save face. Sign up to Business Today Get set for the working day – we'll point you to all the business news and analysis you need every morning after newsletter promotion Alternatively, the environment secretary may decide that negotiations are a waste of time, that legal shenanigans don't work, or that regulatory get-outs set a bad precedent, or that Thames is too far gone. It would be a reasonable point of view: if you really want to clear the decks, special administration is the surest route. The next step – deal or no deal – looks to be genuinely in the balance; don't underestimate the government's desire to avoid nationalisation. Haircuts of only 20%, however, just don't work. If the bondholders wish their inflammatory proposal to be taken seriously, they should be told to come back with a proper number, or have one imposed on them.
The Independent
03-06-2025
- Business
- The Independent
Interim water review ‘not the finishing line' to fix failures, campaigners warn
The National Water Commission's interim review of the sector is 'not the finishing line' to fixing the failing system, environmentalists have warned. The independent commission, headed by Sir Jon Cunliffe, said the water sector in England and Wales needs a 'fundamental reset' as it published a report on Tuesday. The panel of experts called for a rebalancing of Ofwat's regulatory role, urged the Government to provide clearer direction, proposed greater regional decision-making around local water systems and a greater focus on long-term responsible investment and ownership in the sector. Reacting to the report, Wildlife And Countryside Link (WCL), a coalition of 89 nature organisations, said ministers must start work now on vital reforms that will cut pollution, restore nature and reform water companies' governance. The groups said the Government must not only follow the advice of the report but go further, highlighting that the review stops short of final recommendations. Richard Benwell, WCL's chief executive, said: 'This interim report is a clear signpost, not a finishing line. 'The public are rightly angry about pollution and regulatory failure, and nature is in crisis. 'Politicians must stop equivocating and set clear strategic direction for environmental recovery. 'Where in the past polluters have got away with profiteering, public interest tests must be built into every layer of operations and governance with consequences for failure.' Mark Lloyd, chief executive of The Rivers Trust, said: 'Water is fundamental for nature's recovery, for the growth of the economy, for the health and security of communities and for life itself. 'We will press the commission over the next month to shoot for the stars rather than the moon in its final report. 'We will then expect to see the Government move swiftly and boldly to realise this high level of ambition.' Ali Morse, water policy manager at The Wildlife Trusts, said: 'The commission's interim report emerges at a time when environmental protections are under threat from proposed planning laws, and budgets for nature look set to be slashed. 'This doesn't look like the actions of a Government that is serious about restoring our chalk streams, or averting the extinction of water vole and Atlantic salmon. 'To convince us otherwise, we need to see Government responding with measures that ensure water companies prioritise the health of rivers and seas, that past harms are made good, that other sectors too play their role, and that environmental regulators are equipped and supported to do their jobs.' Two organisations, River Action and Surfers Against Sewage, went further to say the interim review stops well short of real reform and offers few concrete solutions. They argued that it does not match up with the Government's manifesto commitments and speaks more about attracting investors than cleaning up pollution and serving the public. James Wallace, chief executive of River Action, said: 'This interim report signals some progress on regulation, but it reads more like a sales pitch to international investors and overpaid CEOs than the urgent restructuring of corrupted water companies. 'We ask the commission to learn from other countries how to ensure water companies are owned, financed and operated for public benefit.' Giles Bristow, chief executive of Surfers Against Sewage, said: 'The criminal behaviour, chronic lack of investment and woeful mismanagement which has led to sewage-filled seas is a direct result of our profit-driven system. 'This interim report begins to recognise this, but as yet does not spell out the need to end pollution for profit. 'The commission's final recommendations must reshape the water industry to put public health and the environment first.'
