Ofwat’s enforcement capacity bolstered with £11m funding increase from HM Treasury

Ofwat’s enforcement capacity is set to be trebled, following the approval of an £11.3m funding budget increase from HM Treasury.

The additional funding will see the water regulator’s budget increase to enable it to drive change in water companies and hold them to account for falling short.

It will also enable Ofwat to oversee the next price review (PR24) which will require greater investment by water companies to improve their environmental performance and the resilience of the sector.

The new funding will be focused on building Ofwat capability to help drive transformation in company performance, enabling long term infrastructure delivery, making progress towards PR24, as well and delivering a significant boost to the regulator’s enforcement capacity.

Ofwat is currently conducting its largest ever investigation, with live enforcement cases underway into six companies looking at their management of sewage treatment works.

Following the HM Treasury approval, Ofwat will be able to gain the additional funding by increasing the licence fee charged to water companies.

David Black, Ofwat CEO, said:

“We welcome this significant uplift in funding, which will see our capacity to take tough enforcement action almost trebled, while also enabling us to push for a step up in investment for the sector. This comes at an important time for the water sector as consumers in England and Wales rightly call for better performance from their water providers, and Ofwat continues to push for the changes we want to see in the sector.

“This announcement will send out a strong signal; that the time is now for water companies to deliver for customers and the environment. Should they fail in those commitments, Ofwat has never been better resourced or more determined to take robust, effective action.”

Water Minister Rebecca Pow, said:

“When we set out our priorities for Ofwat last year, we asked them to challenge water companies to show how they will be more ambitious in protecting the environment, whilst also getting the basics right.

“Combined with the commitments in our Plan for Water to bolster tougher enforcement action, this funding will give them a greater capacity to hold water companies to account and protect our waters.”

Gareth Davies, Exchequer Secretary to the Treasury, said:

“We are committed to ensuring a sustainable water environment for England and Wales, and this funding increase will support Ofwat’s vital role in holding companies to account for their performance.

“With these additional resources, Ofwat will be well-equipped to take decisive action against underperformance and foster a culture of responsibility and excellence within the water industry.”