Ofwat paid consultants who additionally labored for water teams

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Water regulator Ofwat employed a number of consultancy corporations concurrently advising water and sewerage firms, elevating battle of curiosity considerations.

5 advisory teams, together with PwC and Deloitte, have been engaged by the England and Wales regulator over the previous six years, whereas additionally offering regulatory or administration recommendation to water firms, based on a research carried out by authorities consultants Tussell.

Ofwat stays caught in negotiations with water firms over the worth will increase they will cost their clients for the following 5 years. He’s additionally ready to listen to whether or not a authorities fee will advocate changing the regulator altogether, following criticism that it was too mild on the businesses it oversees.

Final 12 months, Ofwat employed PA Consulting to assist with the 2024 worth assessment on a 'wants solely' foundation in a contract shared with Grant Thornton and price £1.2 million. kilos sterling, based on publicly obtainable tender paperwork. On the similar time, PA offered consultancy companies to Thames Water, which put strain on Ofwat to point out leniency on fines and elevated buyer payments.

Baringa, one other consultancy, was contracted this 12 months to supply enterprise assist and administration recommendation by Ofwat in contracts price £112,560, based on tender paperwork compiled by Tussell, whereas on the similar time offering regulatory recommendation to Thames.

Ofwat additionally paid PwC greater than £1 million in 2020 and 2021 to assist with regulatory settlement over the following 5 years. On the similar time, PwC suggested Southern Water on its worth negotiations with Ofwat.

In 2018 and 2019, Ofwat employed Baringa, KPMG, Deloitte, PA Consulting and PwC to assist with ultimate worth negotiations. In the meantime, PA Consulting and Deloitte suggested Anglian Water on “enterprise and administration consultancy companies”, together with reporting and governance.

In whole, Ofwat, which regulates 16 water firms in England and Wales, paid £25.9 million to consultancies – together with EY, KPMG, Deloitte, PA Consulting, Baringa, Grant Thornton and PwC – between 2016 and 2024, based on Tussell figures consulted by the Monetary Occasions. The instances present it. A number of the funds have been for auditing companies quite than consulting.

Tim Farron, the Liberal Democrats' surroundings spokesman, stated the revelations demonstrated that “Ofwat was a failed regulator and ought to be changed instantly.”

He added: “How can Ofwat maintain these polluting firms to account once they rent the identical individuals who work for the water firms?

Ofwat stated there are “rigorous battle procedures which require consideration of any mandate which may very well be thought-about to offer rise to an precise or potential battle of curiosity earlier than work begins”.

He pressured that these measures guarantee “that there might be no prejudice or impediment to our regulatory decision-making”.

Relating to the Value Evaluate 2024 contract, Ofwat stated it required “versatile entry to high-quality assets throughout a variety of technical abilities”.

The regulator faces a fragile balancing act between cracking down on water firms' failings amid important public anger, whereas offering them with sufficient funding to allow them to ship the billions of kilos of latest infrastructure wanted and holding payments at a sustainable stage for purchasers.

A number of firms are additionally fighting a collective debt burden of £73 billion, and the regulator should attempt to stop water firms from going bust.

Ofwat has been accused by environmental campaigners of working a light-touch regime that has didn’t crack down on dividends and high government salaries on the expense of funding in infrastructure comparable to wastewater therapy crops and the water community. pipes.

Ministers ordered the creation of a fee to control the water sector, tasked with contemplating the entire abolition of Ofwat, after admitting that “the whole water sector has failed”.

PwC stated it adheres to “all regulatory, skilled, moral and independence requirements.” We have now ongoing procedures in place with Ofwat to make sure transparency with our shoppers and that we resolve any potential or perceived conflicts of curiosity.

Thames Water stated it was the accountability of consultancies to protect towards conflicts of curiosity. “We hope that info from Thames Water will stay confidential always,” the assertion added.

PA Consulting stated it “implements rigorous procedures to make sure that consumer confidentiality is maintained and any potential conflicts of curiosity are handled successfully”.

Baringa stated it had applied “a sequence of sturdy measures, together with sustaining strictly separate undertaking groups, to make sure we adhere to the very best skilled requirements”.

Southern Water, Severn Trent, Anglian Water, Yorkshire Water, KPMG, Deloitte, Grant Thornton and EY declined to remark.