The regulation of water services in the UK

Water services in England & Wales were corporatized in 1974 and privatised in 1989. Quality regulators were appointed to ensure good quality of drinking water supplied and waste water discharged. An economic regulator, Ofwat was appointed to secure that water services were properly provided to customers and that they could be financed. The economic regulator was also charged to promote efficiency, enhance competition and protect customers. A similar body in Scotland was appointed in 2005, following corporatisation of water services in 1996 and the formation of Scottish Water as a Public Corporation in 2002.Ian Byatt was appointed the first Director General of Ofwat in 1989 and the first Chairman of the Water Industry Commission for Scotland in 2005. In this article he gives his account of the regulation and draws some lessons from his experience. Regulatory strategy, he argues, not detail, is the key to success. Constant adaptation to changing circumstances is both inevitable and highly desirable. To be successful regulation requires careful explanation both to key decision-makers and to the public.

► Regulation is about people as much as about frameworks.
► Regulators must be constantly aware of political events.
► Governments should set outcomes not delve into implementation.
► Consistency is a virtue, but circumstances change.
► To work well, regulation should be a discovery process.