Although I’m not sure if I can forgive myself the rather corny title I must admit to feeling ‘grey’ about the Defra-commissioned Gray Review of Ofwat in three ways.

First, things are murkily grey for me in terms of not knowing what is actually happening with the Review. It launched some 10 months ago, back in August 2010, and was due to report around March this year – or at least in time for the new Water White Paper for England, originally due out this Summer. Is it ongoing? Has it concluded? Has it been affected by the White Paper being delayed until December 2011? Who knows…

Second, things are grey for me in a lack of transparency about the Gray Review in-progress, as compared to recent high-profile water-related reviews. There’s no review ‘in progress’ website, no reports from evidence sessions, no summary report of consultation responses and the like. Nothing. Perhaps I set my hopes too high after being quite impressed by the conduct of the Cave Review in 2008/09 and the Walker Review in 2009! (Incidentally, their content is still publicly available, via archived websites – reflected in these new links. The Walker Review has also been followed by a water affordability consultation, which closed just two days ago. It’s also not as if there haven’t been responses to the Gray Review consultation. There are definitely very detailed responses, e.g. this one by Water UK.)

Third, the Gray Review does not seem to be heading towards very bold or breakthrough changes – at least judging by the snippets of information that have leaked out to date, such as this February article in Utility Week based reporting a 25 January meeting of the All Party Parliamentary Water Group, on ‘Regulation in the Water Sector‘.

Looking at the article, and the minutes of the APPWG meeting, David Gray seems to assume: people believe water regulation works well; there’s ‘no pressure‘ to change Ofwat’s main duties (it’s just about how the duties are applied); changing sustainable development from a secondary to a primary duty would rock-the-boat too much; maintaining investor confidence is paramount, whatever changes are made; people are nervous about the possibility of more competition; and some people feel Ofwat needs to consult more and be more transparent.

Further from the minutes, during Q&A, there was mention of the water sector’s R&D culture suffering under regulatory burdens. A response was that Ofgem’s Innovation Funding Incentive is an interesting model. (That’s been the case for many years now, of course, and the water sector remains no nearer to adopting such an approach!) Whether Ofwat should exist at all – and the suitability of the original privatisation settlement – were both questioned, and were answered as being outside the Review’s terms of reference.

All in all, this is quite disappointing. The Review seems to be taking a rather bland and narrow interpretation of its in fact quite broad terms of reference. The ToR allowed it to address the Government’s objectives and guidance to Ofwat, whether Ofwat’s duties and processes are fit-for-purpose, and Ofwat’s contribution to sustainable development. With the right motivation, one could cover a lot of ground indeed from this as a starting point!

Whenever the Gray Review finally does report, it will feed into the forthcoming Water White Paper. Given what we’ve seen so far though, I can’t say I’m very convinced that White Paper is ‘likely to produce the most radical overhaul of the UK water sector since privatization in 1989‘, as some commentators claim. I also can’t agree with the Gray Review being presented by Water UK as a ‘rigorous review‘ that has ‘reflected on the deeper implications of Ofwat’s “hands on approach” and the extent to which it can constrict companies and influence their decision-making‘.

Perhaps when more about the Gray Review is made public, my opinions will change. For the moment, with this seemingly rather grey, Gray Review as an input, I’m not currently crossing my fingers for any breakthroughs from the 2011 Water White Paper.

Update (15/11/2016): Featured image added from this source.

Duncan Thomas

3 comments

  1. I can’t understand why Ofwat are getting rid of nearly 1/3 of its staff even before the Gray review has even been published – they say they have to stay one step ahead of the game whatever that means.

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