Latest news with #JonCunliffe
Economist
a day ago
- Politics
- Economist
Manchester's Town Hall renovation will be late, costly and worth it
To see the future of social care, come to England's Black Country Concerns over a case involving the burning of a Koran Sir Jon Cunliffe wants to regulate water companies like banks At 'Elvis Evolution', the king of rock 'n' roll ain't dead Britain's governing party spends its political capital for little return We are offering 12-month internships in London to work in the digital section of our editorial department
Economist
a day ago
- Business
- Economist
Can Britain untangle the mess in its water industry?
Bowing to the Byzantine financial complexity of privatised water in Britain, the government made an unusual choice for its 'once-in-a-generation' review into the troubled sector: putting a central banker in charge. Sir Jon Cunliffe, until recently of the Bank of England, released his interim findings on June 3rd. That same morning the industry laggard, Thames Water, announced that rescue plans had collapsed. After ten weeks of due diligence KKR, a private-equity giant, decided not to inject fresh cash into the struggling and over-indebted utility.
Epoch Times
2 days ago
- Business
- Epoch Times
Water Sector Suffering From ‘Deep-Rooted' Failures, Review Warns
The water sector is beset with 'deep-rooted, systemic' failures, and needs fundamental reform of laws, regulation, and infrastructure, a review has warned. 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. Its interim report has been published as Britain's biggest water company Thames Water is again facing the spectre of temporary nationalisation after private equity firm KKR pulled out of plans for a £3 billion bailout. Another of England's private water firms, South West Water, reported widening financial losses after an outbreak of a parasite in water supplies cost it millions. And water supplies are under pressure after the driest spring in decades has left farmers struggling and millions of households facing the possibility of hosepipe bans, while ministers have warned climate change, a rising population and crumbling infrastructure is putting future supplies at risk. In the interim report published on Tuesday, the commission said multiple issues need to be tackled to rebuild public trust in the ailing sector. Related Stories 6/3/2025 5/28/2025 It called for regulator Ofwat's role to be strengthened and for the watchdog to adopt a more 'supervisory' approach to oversight of water firms. Former Bank of England Deputy Governor Sir Jon Cunliffe, who led the review into the water sector in England and Wales, told the BBC that more effective regulation was a huge part of solving the problem, with a regulator that could step in early before things got worse. He said, 'Because when they get worse, as you can see, they are very difficult to sort out, and we need an environmental regulator with the capability to monitor and enforce.' He also said that having regulators with different remits and responsibilities for different parts of the process had made the water system 'expensive and incoherent.' People take a selfie on the dry cracked earth at Baitings Reservoir in Ripponden, West Yorkshire, on Aug. 12, 2022. Danny Lawson/PA The interim review urges the government to provide clearer long-term direction on what is needed from the water system, and warns key elements of current legislation are 'badly in need of review and rationalisation.' It proposes greater regional decision-making around local water systems, and emphasises the need for a greater focus on long-term, responsible investment and ownership within the industry. It is also considering new standards for the water sector's crumbling infrastructure, warning there is insufficient understanding of the health of assets such as pipes and water treatment plants. Companies should plan for long-term resilience of 'critical assets,' not simply fix things when they fail, it warned. Cunliffe said: 'There is no simple, single change, no matter how radical, that will deliver the fundamental reset that is needed for the water sector. 'We have heard of deep-rooted, systemic and interlocking failures over the years—failure in government's strategy and planning for the future, failure in regulation to protect both the billpayer and the environment, and failure by some water companies and their owners to act in the public, as well as their private, interest. 'My view is that all of these issues need to be tackled to rebuild public trust and make the system fit for the future. We anticipate that this will require new legislation.' Anger has been growing over the polluted state of rivers, lakes, and coastal waters, leaks and sewage spills at the same time as significant shareholder payouts and bosses' bonuses, and bills which were hiked in April to pay for investment to fix creaking infrastructure. On Tuesday, Thames Water announced private equity giant KKR has pulled out of plans to invest in the company, in the latest blow to the struggling and heavily indebted utility. Thames Water—which supplies 16 million customers—had hoped KKR would invest more than £3 billion of new equity amid fears the supplier was running out of cash, and its withdrawal from the deal raises the spectre of a temporary government nationalisation once more. And South West Water's owner Pennon has reported widening losses after a parasite outbreak in Brixham, South Devon, cost it around £21 million. The outbreak put some people in hospital and left thousands of homes without safe drinking water, some for weeks. A Surfers Against Sewage activist holds a board reading "End sewage pollution" during a protest in Brighton, southern England, on May 20, 2023. Ben Stansall/AFP via Getty Images Though the interim review points to the need for better regulation of water companies, it does not recommend the wholesale scrapping of watchdog Ofwat which some have urged, and nationalisation—which some campaigners have called for—was excluded from its terms of reference. Environment Secretary Steve Reed said he had commissioned the water commission to outline recommendations for a 'once in a generation' opportunity to transform the water industry and delivered for the public. 'The government will respond to the commission in full in due course and outline next steps to benefit customers, attract investment, and clean up our waterways for good,' he said. Environmental campaigners called for the final report, expected later in the summer, to reshape the water sector to put public health and the environment first, and for the government to implement ambitious reforms. Richard Benwell, chief executive of the Wildlife and Countryside Link, a coalition of 89 nature organisations, demanded, 'Politicians must stop equivocating and set clear strategic direction for environmental recovery.' A spokesperson for industry body Water UK said: 'Everyone agrees that the water industry is not working. 'We hope this report will be a starting point for the fundamental reforms the sector needs. 'We need a less complicated system which allows investment to get quickly to where it needs to go,' they said, adding the sector was spending £104 billion in the next five years to secure water supplies, cut sewage, and support economic growth.
The Guardian
3 days ago
- Business
- The Guardian
Hapless Thames Water finally drinking in last chance saloon
This time Thames Water really is drinking in the last chance saloon Call yourself barbarians at the gate? Actually, KKR hates the decades-old description, but the US private equity firm is still meant to have a fearsome reputation for doing its homework, being a cute judge of political risks and going where others fear to tread. All of which makes its eleventh-hour abandonment of its £4bn bid for Thames Water very odd. The suggestion is that the big bosses in New York couldn't stomach the political and reputational risks of owning the UK's largest and most crisis-ridden water company. If that's the reasoning, though, KKR should explain itself. The political risks aren't obviously worse than six months ago – and arguably are lesser now that the government's water commissioner, Sir Jon Cunliffe, is talking aloud about 'how to restore the stability and predictability of the regulatory system' in his interim report published co-incidentally on Tuesday. Thames's reputation is still in the gutter, but that's not fresh news. The government, too, seems to have been as keen as mustard on KKR. But, as the US firm should know, there are still limits on how many soft promises can be made, and how far the regulatory regime can be bent out of shape ahead of Cunliffe's final report. And, if you can't handle the odd political spat over executive bonuses, the UK water industry was probably never the place for you. KKR was not an unproblematic rescuer, as argued here previously, but, in two important ways, it is a shame it has scarpered. First, KKR was a grown-up international name in infrastructure and was imagining a 10-year commitment to Thames before listing it on the stock market, a good end-point. Second, Thames's fall-back plan – a recapitalisation led by the bondholders – is messy. There are 100 financial institutions in the creditor group owed £13bn collectively. They are all, apparently, aligned in support of a version of a debt-for-equity proposal, but the sheer number of firms involved can only add complexity. The exercise may not be quite like herding cats, but at least there was only one KKR. Nor, to put it mildly, do all 100 members of the creditor group fit Cunliffe's description of the preferred type of shareholder for water companies: those who seek 'low risk, low returns', such as pension funds, for the very good reason that treating sewage and supplying drinking water is not meant to be exciting. Silver Point Capital is a US hedge fund that describes itself as 'a leader in global credit investing'. In other words, debt, not equity, is its game. Fellow US hedgie Elliott is a jack of all trades, but note its un-Cunliffe description of its thrill-seeking style when owning equity – 'positions with a high asymmetry of reward to risk' and 'a high degree of optionality.' Others in the creditor group will be debt-only funds that aren't allowed to own equity. Maybe the coalition will hold out of fear that special administration, AKA temporary nationalisation, would mean a worse outcome for all. But plan B is plainly sub-optimal. There were good reasons why KKR was selected as 'preferred bidder'. An open question, though, is why Thames's board, from a field of six, selected only KKR. An obvious alternative would have been CK Infrastructure, which owns 75% of Northumbrian Water. The need for speed and exclusivity apparently trumped everything, but that now looks a poor call. If it really is too late to summon CKI back, it is only the creditor group's proposal that is standing in the way of special administration. It may feel like Thames has been drinking in the last-chance saloon for about two years, but this time it genuinely is. From the government's point of view, a good outcome at this point may be one in which the creditors shuffle the pack among themselves, with cuddlier names such as Aberdeen emerging as core would-be shareholders and the debt opportunists relegated to minor roles. That could be a workable fudge for a while. But the position is now properly unstable. A lot of time has been wasted on KKR's non-bid. Special administration, the outcome the government has desperately been trying to avoid, is a real possibility.
Glasgow Times
3 days ago
- Business
- Glasgow Times
Interim water review ‘not the finishing line' to fix failures, campaigners warn
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.'
