Environmental charity River Action has been granted permission by the High Court to proceed with a legal challenge against the water regulator, Ofwat.
River Action want to challenge the approach Ofwat took when it set the price that water companies can charge customers. The charity believes Ofwat’s approach was unlawful and, as a result of regulatory failings, the financial burden of water industry infrastructure neglect has been pushed onto customers – rather than those responsible.
The case is proceeding amid intensified calls for an overhaul of Ofwat, with growing scrutiny from the Independent Water Commission, led by Sir Jon Cunliffe, into whether the regulator is fit for purpose. River Action is calling for a reform of the regulator and, in particular, for Ofwat to stop water companies passing the costs of failures on to the public.
At the heart of the case is Ofwat’s 2024 Price Review (PR24), which approved above-inflation water bill increases. River Action argue that without guaranteeing the money will be spent on new infrastructure, water companies might charge customers twice for the same work.
The legal challenge follows investigations by campaigners Matt Staniek and Windrush Against Sewage Pollution (WASP), which exposed chronic sewage pollution in the Lake Windermere area and regulatory failings around PR24.
Permission has been granted for all of River Action’s three grounds. Represented by law firm Leigh Day, the charity will argue that:
- Ground 1: Ofwat approach to its own “not paying twice” policy was unlawful because it relied on theoretical hydraulic simulation modelling instead of the reality on the ground as seen in evidence provided to Ofwat.
- Ground 2: Ofwat lacks a meaningful clawback mechanism if water companies misuse funds.
- Ground 3: Ofwat failed to conduct legally adequate investigations into whether its approach is adequate.
River Action’s Head of Legal Emma Dearnaley said:
“We are delighted the High Court has said we can take our case to court. This is about the British public not paying twice for the consequences of water companies failing to invest in infrastructure. That is quite obviously fair and right, yet Ofwat’s approach gives rise to serious concerns that its promise has not been kept.
It also raises important and timely questions about whether Ofwat is fit for purpose, something the Independent Water Commission is scrutinising too. We must have robust regulators who are up to the task of holding water companies to account.”
