Latest news with #SirJonCunliffe
The Independent
3 days ago
- 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.'
Sky News
3 days ago
- Business
- Sky News
Thames crisis underlines scale of water industry turnaround task
As an independent review sets out a vision for cleaning up the water industry, a real-world example of why the sector is in such deep trouble floats into view. The announcement that Thames Water's preferred investor KKR will not after all be injecting £4bn for an equity stake is, first and foremost, a crisis for the debt-laden company, increasing the chances taxpayers will have to throw it a lifeline. Yet it also encapsulates the fundamental challenges Sir Jon Cunliffe's Independent Water Commission is trying to address. A regulated utility that should offer a regular, predictable, low-risk flow of water to customers and returns to investors, is instead sinking under the weight of its own debt and a failing system. Rapacious mismanagement and misguided regulation may have allowed historic investors in Thames to make a killing, but its current shareholders have been wiped out, its creditors are facing substantial losses on £20bn of debt, and now even a private equity giant immortalised as "the barbarians at the gate" of corporate America cannot stomach a stake. Sky News understands one factor in their decision was the political risk of investing in water, given criticism of the sector from ministers, campaigners and the media, and uncertainty over the future of regulation. 4:39 In the short term Thames thinks it can fill the hole left by KKR by turning to its senior creditors, a group including institutional investors BlackRock and Aberdeen and hedge funds Elliott and Silver Point. With control of around £12bn of the £16bn of regulated company debt, they are already the effective owners and have battled through the courts to retain influence in any restructuring, and with it a say in the size of their inevitable losses. The creditors have already added a £3bn emergency loan to Thames' liabilities, which they say will be followed by an equity stake, as well as a write down of the debt they hold as part of a refinancing. That could see a debt-for-equity swap, in which loans are exchanged for a share of the company. Following the KKR announcement,Thames' bonds were trading at less than 70p in the pound. That implies a 30% writedown for creditors, though they may have other ideas. Whatever level is agreed, their business plan will need to convince Ofwat that it is sustainable and a 400-page proposal, including plans to replace Thames' current chairman Sir Adrian Monatgue, is with the regulator. If it floats, a restructuring process could begin as soon as next month. By then Sir Jon will be finalising recommendations intended to ensure that Thames' plight cannot be repeated. His interim findings diagnose the problems with chalk-stream clarity. Weak strategic direction from government, misdirected and muddled regulation, companies that have failed both public and private interest and investors who have lost their appetite. Sir Jon has left the door open to the creation of a 'super-regulator', bringing together the responsibilities of Ofwat and the Environment Agency, to create a regime that delivers for customers, the environment, and long-term investors for whom water used to be a safe bet, but is now a poisoned chalice.
The Guardian
4 days ago
- Business
- The Guardian
UK water industry needs ‘fundamental reset', review finds
The 'deep-rooted, systemic' problems in the UK water industry are the fault of companies, the government and industry regulators, according to a much-anticipated review, which was immediately criticised for failing to recommend bold action by sewage pollution campaigners. An interim review into the water industry written by Sir Jon Cunliffe, a former deputy governor of the Bank of England, and commission by the government found there was 'no simple, single change, no matter how radical, that will deliver the fundamental reset that is needed for the water sector'. Cunliffe, the chair of the Independent Water Commission, said public trust in the water industry had been shaken by 'pollution, financial difficulties, mismanagement [and] infrastructure failures'. Campaigners expressed disappointment that the report failed to recommend clear actions to end the crisis, which was underlined on Tuesday when Thames Water, Britain's biggest water company, said the US private equity group KKR had pulled out of a deal to inject fresh equity, leaving its future in doubt. James Wallace, the 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.' Cunliffe was prevented by the government from considering public ownership of water in his remit. He said there was a need to change the industry and its regulatory framework in order to attract investors prepared to take on a low risk, low return stake, that was stable over time. He said: '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.' The economic regulator Ofwat, and the environmental regulator, the Environment Agency, had lost public trust, and their work overlapped, created tensions and left gaps in regulation, he said. Cunliffe is considering a recommendation that the regulators should be streamlined, which could result in merging them. He is also considering a requirement for economic regulation to become more supervisory, in order to intervene before problems happened. But Tim Farron MP, the Liberal Democrat environment spokesperson, said the commission needed to go further and recommend that Ofwat be scrapped. 'At the heart of the sewage scandal is a regulatory system which has failed,' he said. 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 'It's going to take more than a hose down to clean up the water industry. It's time for Ofwat to go and the commission must now make this plain.' Cunliffe's review was set up by the government amid growing public concern about record sewage spills and rising bills. He said he was considering a requirement for the economic regulator to be given powers to ensure owners of water companies did not act against the public interest. This would include tools to take over the direction of companies and intervene in changes of ownership when needed. But Giles Bristow, the chief executive of Surfers Against Sewage, said the report was a tinkering around the edges, which the public would not stand for. '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,' he said. 'The commission's final recommendations must reshape the water industry to put public health and the environment first.' Richard Benwell, the chief executive of Wildlife and Countryside Link, said the government needed to start work now on vital reforms to cut pollution. 'The findings of failings suggest a clear direction of travel. Politicians must stop equivocating and set clear strategic direction for environmental recovery. Strong, enforceable targets are needed for water quality that can be applied across sectors,' he added.
Yahoo
4 days ago
- Business
- Yahoo
Failing water sector needs stronger regulation, review says
The water sector in England and Wales is failing and needs stronger regulation to better protect billpayers and the environment, according to the interim findings of a landmark review. The independent Water Commission, led by former Bank of England deputy governor Sir Jon Cunliffe, said on Tuesday that public trust had been shaken by "pollution, financial difficulties, mismanagement [and] infrastructure failures". The review was set up by the government in October amid growing public concern about sewage spills and rising bills. In launching the review, the government had ruled out nationalising the sector - arguing this would be too expensive and would not necessarily lead to improvements. "There is no simple, single change, no matter how radical, that will deliver the fundamental reset that is needed for the water sector," Sir Jon said. "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." In response to Sir Jon's findings, Environment Secretary Steve Reed described the water system as "broken", adding that the government would respond to the commission in full. At just over 100 pages long, the Water Commission's interim findings are a precursor to the main report, which is expected be published later this summer and give recommendations. It considered more than 50,000 responses submitted across the water sector, from the public, environmental groups, regulators and water companies themselves. "What we heard was clear: the current system is not delivering what people expect and need," Sir Jon said in a forward to the report. The government asked Sir Jon to focus on reforms to the water sector as a whole, rather than individual water companies. Pressure on the water sector is increasing due to climate change, population growth and other factors - but it is also suffering from decades of underinvestment. Increased monitoring has led to greater scrutiny into the amount of sewage being spilled into our rivers, lakes and seas. In total the spills from overflow pipes lasted more than 3.6 million hours in both 2023 and 2024. Releasing raw sewage into rivers and the sea can be legal if spills happen during wet weather, though it can still pose risks to people and the environment. But the BBC has previously uncovered evidence of likely spills during dry days as well. In April, bills rose by an average of 26% in England and Wales, as regulators approved water companies' plans for billions of pounds of investment. This is aimed at both upgrading water supplies and reducing the amount of sewage being spilled. Water firms admit sewage monitoring damaging public trust Drinking water shortage in decade without new reservoirs, minister says The water industry is in crisis. Can it be fixed?
Telegraph
4 days ago
- Business
- Telegraph
Thames Water future in doubt as US backer pulls out of rescue deal
The future of Thames Water has been thrown into doubt after a US private equity giant pulled out of a £4bn deal to buy a stake in the troubled supplier. Thames Water announced on Tuesday that New York headquartered KKR has 'indicated that it will not be in a position to proceed' with the refinancing deal. KKR was previously selected as the company's 'preferred partner' in the fundraising process on March 31 this year. Thames said it now intends to start discussions with water regulator Ofwat and other stakeholders on the best way to proceed. Chairman Sir Adrian Montague said: 'Whilst today's news is disappointing, we continue to believe that a sustainable recapitalisation of the company is in the best interests of all stakeholders and continue to work with our creditors and stakeholders to achieve that goal.' 'The company will therefore progress discussions on the senior creditors' plan with Ofwat and other stakeholders. The board would like to thank the senior creditors for their continuing support.' It comes after a new report said the water industry needed a 'fundamental reset' after being plagued with 'deep-rooted, systemic' failures. In an interim report published on Tuesday, the Independent Water Commission called for a 'fundamental strengthening and rebalancing' of Ofwat's regulatory role, calling for the watchdog to adopt a more supervisory approach to its oversight of water firms. Sir Jon Cunliffe, chairman of the Independent Water Commission, said: '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.'
