The Watered Down Commission.
- Ash
- May 24
- 13 min read
An 'Independent' Water Commission - really?
Hyped by some as a ‘once-in-a-generation opportunity’ to contribute evidence to an inquiry aiming to transform the water sector.
But isn't it just another opportunity to be taken for a ride by a government desperate to keep privatised water interests happy, despite what they are doing to the country and customers?
Fixed before it starts?
This is a commission being run by one of the organisations responsible for the sewage scandal - the Department for the Environment, Food and Rural Affairs (Defra) - which is also the key advisor to the Environment Secretary, Steve Reed, and the Water Minister, Emma Hardy.
That is how influential and compromised Defra is, and why it should never have been given the role.
What is the Commission?
'The 'Independent' (how can it be?) Water Commission was established to review the water sector in England and Wales and ‘deliver recommendations to government on reforms to the water sector’ - writes Defra, but the commission is strictly limited..
As Defra controls the Environment Agency and is responsible for its policies, funding, appointment of its leaders, and even its media and communications, making it the secretariat for the commission, destined the 'independent' idea for the bin, before it even started.
It has been suggested that the commission was set up in response to pressure from the public and NGOs, but that pressure had been going on for ages, and the timeline of events indicates otherwise...
It certainly wasn't, as has been claimed, a response to the protest march that many of us went to in London; that happened in early November, and the commission was already established on 23 October.
It was mentioned as early as 5 September, after a speech at Henley, when the Environment Secretary told journalists; the Government will launch a review and consultation on how the entire sector works, which will ultimately shape future legislation and establish the long-term framework for reforms, including pollution targets and plans for attracting private investment. (The Independent)
Then came a well-publicised meeting on 10th September between the Environment Secretary and a group of highly influential Sovereign, Pension and Private Equity funds whose reps basically told him they would not invest in the water industry because they didn’t like the way it is regulated.
6 weeks later, the commission was launched. It was clearly focused on addressing the fund managers' concerns and morphed from the promised review of the entire sector into a tightly directed review of regulation, with the emphasis on making it attractive to those financiers.
As a master stroke by Defra, it would effectively run the show as the secretariat. Clever and cynical. Let's guess how deeply it will look at Defra's failings.
Defra is at the heart of the problem. It may even be the root of the problem, because it had the power to fix regulation when it was clear it was going wrong, but it didn't; it broke regulation. It made the decisions to ignore the law and to lie to the public, a habit it still has not quit.
So why are government ministers allowing it to play such a pivotal role? Have they also been duped, because Defra is their key advisor in this respect? Victims or villains?
It is easy to see why Defra has been the key organisation for the water industry to lobby and capture, and why it should be closely monitored and protected from interference, but that doesn't happen.
When we tried to access the declaration of conflicts of interest for the Defra ministerial team and staff working on water, under the Freedom of Information Act, we were refused and told that it was a manifestly unreasonable request that was too expensive to answer. Naively, we had thought it might be standard practice to ensure the people running the regulation of one of the most predatory utility sectors were not being compromised, manipulated or corrupted. Apparently not.
What is wrong with the Commission?
Firstly, now we know it is not what it says on the tin. It is not independent, and it has been designed to reach a predetermined outcome.
Secondly, it has been expressly and irrationally instructed not to address the key issue that is directly linked to scandalous activities and the exploitation of captive customers,
privatisation.
And the justification for this omission is demonstrably false.
How is it being controlled?
The outcome is being engineered through three key tactics:
Carefully constructed and restrictive terms of reference (TOR).
A selected Chair, Sir Jon Cunliffe, a former Deputy Governor of the Bank of England, from whom Defra is borrowing demonstrable integrity and financial credibility, and a group of advisors (without implying any ill intention on their parts) chosen for the niche terms of reference with token, historically compliant, NGO engagement.
Administrative control - The secretariat for the Commission is provided by Defra - the department at the heart of the regulatory scandal.
It is not new for governments to design commissions and inquiries to achieve outcomes that they want and need, and this one follows the recipe of some shocking examples: the Grenfell Tower Inquiry, the Infected Blood Inquiry, and the Post Office Horizon IT inquiry. Some of these were improved after public and parliamentary pressure, which, so far, the Cunliffe Inquiry has avoided, possibly by luring enough significant NGOs to become dazzled and complicit, even claiming responsibility for it.
Defra has reported its TOR reasonably accurately and has not had to mislead the public about the lack of ambition and scope because key NGOs have done that for it, perhaps by failing to read the print and writing about what they were told it would be and want it to be - but it's not.
Directing the outcome.
This is how it is done. Point the commission to known facts, prevent them from looking at anything inconvenient that may steer them from the desired results, and sit back and wait for the obvious conclusions and recommendations. As a final safety net - simply ignore any recommendations that don't fit the bill. Tried and tested politics.
This is why the current process is sturdily designed to shield privatisation from scrutiny, to ensure that it remains unchallenged by damning evidence and stays profitable; possibly even more so, as irritating regulation may be altered to suit potential new company owners, who like the current ones, won't actually invest, just spend customers' money from rising bills. The gravy train remains on track.
If you think we have slipped into a fantasy world, let's take a reality check with a look through the controlling document - the Commission's Terms Of Reference (TOR)
Here we can see how Sir Jon and his advisory team are being steered towards a predetermined outcome with the Defra Secretariat helpfully ticking off the waypoints.
You don’t have to wade through the TOR; we have done that for you, but here is the link if you want to check our work.
The route and waypoints.
The 'Vision' for the Commission is very explicit about what it is expected to deliver. It forcefully sets aside the glaring evidence that privatised water is exploiting both the customer and the environment, and that the profit-driven model makes proper regulation almost impossible. Instead, it replaces this reality with a false narrative: that privatised water is inevitable, beneficial, and essential to 'bring in' investment - the enduring insidious myth.
Here are some quotes from the 'vision' for the Commission and its recommendations:
"..will require transformative change and involve trade-offs, such as the need to ensure affordability whilst securing the investment needed to achieve better customer outcomes and deliver clean rivers, lakes and seas."
"..and ability to attract investment"
"..It should create the conditions needed in the private regulated model to attract the investment required to improve environmental performance.."
Experienced communicators will know, if you repeat a message three times, it should become embedded in the reader's mind. In this case, that message is based on a lie.
What attracts investment? Making lots of money from captive billpayers with weak regulation that will not dent cash extraction. If improvement is needed, bills will go up to pay for it and fines will be paid by the customer. This is the conundrum the commission is tasked with. How to make that look nice to the public and NGOs.
Professor of Economics, David Hall has written extensively about water company investment myth, how all funding has come from billpayers, and how loans were not needed.
Spinning the 'we need investors' narrative.
Recent social media output from Defra and the Secretary of State made many and various claims implying private money was coming in to water; on 10 March “with over £100 Bn of private sector money to be invested into the water sector” and on 13 April “ £104 Bn on private sector investment will upgrade our crumbling water infrastructure”,
But correspondence between Save Windermere and Ofwat confirmed that to be customers' money. So why does Defra want to fake the contribution of privatised water?
We can't say, but the instructions to the commission are clear:
Do not do anything that will put off shareholders and creditors.
It is the regulators, not the water companies, that are the target of the Commission. It is right there in the title: “Independent Commission on the Water Sector Regulatory System” - It is not a commission to investigate the water companies that captured and outmanoeuvred them and it is not aimed at a radical reform of the water sector - it is not allowed to go there - or anywhere else.
Consider these quotes from the TOR:
"The regulatory framework for water has emerged in a piecemeal way since privatisation, resulting in a fragmented system."
This could just as easily be presented as a positive attribute ( 'a multi-faceted approach has evolved') because comparisons with successful water industries overseas show that multiple regulatory bodies can and do work well together. Such structures are often a safeguard against corruption. Yet, without offering any clear evidence, only vague references, and with no attempt to understand why failures occurred, this framework is presented as a system in need of overhaul, ignoring the root causes and who is responsible for the failure, and more importantly, whether they are still in positions of influence. But it doesn't stop there:
"We want to deliver an ambitious, long-term approach to resetting the water sector..."
"A reset of the water sector must consider the regulatory framework, the regulators and the incentives that govern the water industry model and strategic water planning."
But not to look into the biggest incentive, privatised water and profit at any cost.
It is all about the money.
"Our waterways cross borders, and water is a complex and highly sensitive aspect of the devolution settlement in Wales, which will need to be considered when developing future arrangements. The UK Government and Welsh Government are committed to working closely together to tackle shared problems." This is a massive hint about merging the regulators, isn't it?.
And in case there is any remaining doubt about what the commission is expected to deliver:
"The Secretary of State for the Environment, Food and Rural Affairs, the Deputy First Minister for Wales, and the Cabinet Secretary for Climate Change and Rural Affairs have asked the department to work with the Chair of a new Independent Commission, Jon Cunliffe, to come up with a set of recommendations to reform the water sector regulatory system to deliver the necessary reset of the water sector in England and Wales."
Four 'steers' towards the desired recommendations.
The Objectives
There are 8 objectives set out by the Commission. They are so biased toward water companies that they could have been written by Water UK (Water Companies trade organisation), and maybe they were. There is certainly a very close relationship between some water company bosses and Defra.
The objectives ignore the outrageous financial engineering, cash extracting, non-investing, criminally compensating shambles that the water industry has become. They direct the Commission toward blaming and changing the regulators to be more friendly to water industry shareholders. Yes, the people who took the money that should have gone toward investment and have caused this crisis.
This is the intro to the 8 objectives.
"The Commission should make recommendations to the UK Government and Welsh Government to ensure that the water sector regulatory framework delivers the following outcomes:" Clear enough?
And here are a few examples from the guidance that follows:
"Ensure the water industry regulatory framework delivers long-term stability and enables the privatised water industry to attract investment, maintain resilient finances and contribute to economic growth."
"Rationalise and clarify requirements on water companies to achieve better environmental, customer, economic and financial outcomes."
Has that been the problem? That it wasn't clear enough that companies should not have built getting away with illegal pollution to cover up underinvestment into their business models?
"...with a ‘firm but fair’ approach and earned autonomy for companies that perform well. It should consider transparency, predictability and accountability of regulatory decisions and performance."
Wow! That one has Water UK's fingerprints all over it. Reward companies that hide failure with freedom to go unchecked - Discredited operator self-monitoring is making a comeback before its promised abolition. Clever lobbying.
"Improve the industry’s delivery capacity, including the supply chain and consideration of how to drive innovation."
"Ensure water companies are operationally, as well as financially, resilient and that they can deliver resilient and secure infrastructure within agreed timeframes and maintain it for the long term. This should include anticipating and investing to provide for future changes such as planned development and climate change."
Could these two provide a hint towards ushering in the next generation PFI scam, Direct Procurement for Customers (DPC)? A new version of private equity funders, overcharging for providing assets and renting or selling them to the water companies (meaning their customers). Is this the reason why private equity experts BlackRock bought Lanes Group - 'providing utilities and infrastructure solutions'? Did they know this was coming?
But the killer statement that disarms the entire inquiry and provides reassurance to the water industry and shareholders is this one:
"The commission will focus on reforms that improve the privatised regulated model. The UK government has already confirmed that nationalisation of the water sector will not be in scope, due to the high costs associated with this option, the lack of evidence that it would lead to improvements, and the delays it would cause in achieving better outcomes for consumers and the environment."
That statement contains three pieces of misinformation.
The costs quoted by the government have come from a 2019 report commissioned from a think tank called the Social Market Foundation that made the demonstrably false claim that taking companies into public ownership would cost over £90Bn. Its credibility was destroyed by Prof Sir Dieter Helm and Moodys credit agency. Defra now also refers to a figure plucked out of Ofwat' regulatory capital value assessment - one that WASP and others challenge because it is made up using unvalidated figures to suit the industry and regulator. Professor of law Ewan McGaughey has shown how moving failing companies into special administration and public ownership need not cost much at all.
Here is an explainer from Prof McGaughey
There is no 'lack of evidence' that public ownership would lead to improvements; on the contrary, there is plenty, and some of that can be read in academic reports and media articles from the UK, Europe and the rest of the world where we remain an outlier for hanging on to this failed experiment.
The suggestion that taking water into public ownership would delay improvements, when privatised water has demonstrably and deliberately neglected improvements in exchange for profit for 35 years, is nonsense and based on zero evidence. Thames Water, for example, failed to deliver 112 fully funded upgrade schemes in the past 5 years while taking dividends and paying bonuses.
Public ownership on the left, privatised water on the right. Bing image.
Instead, the Commission is directed to look at Welsh Water: "In covering Wales, the commission will review the particular model in Wales where the largest water company operates a not-for-dividend model with no shareholders."
Interesting that Defra recognises its false claim to be not for profit and covers itself while not revealing the truth.
It may call itself not for profit, but that is far from the truth. It has bondholders and you can guess whether they hold those bonds for free. Maybe the commission will establish what it really is. Our campaigning colleagues on the Wye already have, and we won't steal their thunder.
You might think that the current restructuring of the shocking example, Thames Water, would shed valuable light on what really should be avoided at all costs: a company going bust and saving itself by forcing customers to fund a grossly expensive bailout that will result in over £800M of billpayers money being wasted on fees, interest and so forth in the first 6 months. But no, commenting on individual companies is off limits:
"The commission will focus on the strategic framework of the water sector and on the sector as a whole. It will not make recommendations specific to any individual water companies."
Conducting a commission in this way is like asking a mechanic to advise on how to fix your broken car, but restricting them to looking at it, but not under the bonnet under any circumstances.
Seriously, would you really just hope that works out ok?
Sir Jon is doing the work of that fictional mechanic on behalf of the water customers of England and Wales, as we sit and hope that maybe new windscreen wipers, a respray, and a louder horn will somehow make that car work, for the first time ever.
Actually, if we read the commission 'contract', that isn't even the deal; it is to make it a bit better than before, but with no agreement on what that means.
Fellow NGO's; a plea. If you engage with this and tell your supporters this is the best chance they have to make a difference, you are leading them into a trap and signing them up to at least another 5 - 10 years of profitable pollution and exploitation of the customer, possibly worse than we have ever seen, as versions of the Thames Water debacle are replicated as profitable scams of the billpayer.
We await the Commission's interim report, due in about a week, which will present an opportunity for the Government and Sir Jon Cunliffe to test what the public and NGOs will tolerate.
Who will be so invested that they have to look for ways to hail it a 'step forward' even if it isn't?
Summing up?
That's it, the Commission's mission is:
Reform regulation but do not derail the shareholders' gravy train.
In fact, make it run more smoothly and take those regulatory bumps out of the track. Unless customers are going to pay massively (likely) so that cash extraction can continue, but this time dividends and other sneaky tricks are controlled, and assets and infrastructure are genuinely fixed, it is very hard to see how anything will improve for our waters. This review is not going to save us from exploitation.
So, what do we do now?
WASP is writing to Sir Jon Cunliffe to ask him to review his position in the light of what unfolded around him after he accepted the job and the facts he may not have previously known. We are asking him to reset the commission as a genuine one, or to step down on moral and ethical grounds
We call for a full, genuine review of the water scam - anything else is a betrayal of the public. We will invite other campaigners, organisations, NGOs, individuals, families and groups to support us. We hope that you will too.
That letter and a dynamic list of co-signatories is coming soon.
Keep smiling and have a nice day.
