Ofwat appoints new chief with pledge to improve sector’s poor performance

The water industry regulator for England and Wales has appointed a new chief executive who has pledged to address the sector’s poor performance on sewage pollution at a time of mounting public anger.

David Black, who has served as interim chief executive of Ofwat for the past 12 months, will take the post on a permanent basis, replacing Rachel Fletcher, who left for Octopus Energy in February last year.

In a statement on Thursday Black said that he was looking forward to “push[ing] water companies to go further and faster in delivering for customers and the environment”.

Black will join Iain Coucher, former Network Rail chief executive, who was named this month as the government’s preferred candidate for Ofwat chair, replacing Jonson Cox who had been in the £130,000-a-year, part-time post for a decade.

The new leadership is charged with restoring the reputation of the regulator, which has been periodically accused by MPs and experts of allowing investors and senior executives to enrich themselves while failing to invest in crucial infrastructure.

Total spending on infrastructure, which hit a post-privatisation peak of £5.7bn a year between 1991 and 1999, fell 15 per cent between 2020 and 2021, to £4.8bn, according to research by the Financial Times.

Public concern about the sector’s environmental record has been growing following recent revelations that several water companies have been tipping unknown quantities of raw sewage into the nation’s waterways on a routine basis.

Just 16 per cent of rivers, lakes and coastal waters meet the minimum “good ecological status”, according to the latest data published by the Environment Agency, the environmental regulator.

Last year, Southern Water received a record £90mn fine for deliberately dumping billions of litres of untreated sewage into seas and rivers. Protests against sewage discharges into rivers and seas are planned across the UK this weekend.

Ofwat is responsible for deciding how much water companies in England and Wales can charge their customers and invest in infrastructure, typically over five-year regulatory periods.

In his previous role of chief regulation officer, Black led the most controversial price review in the regulator’s history, leading to four appeals by water companies to the Competition and Markets Authority last autumn.

He will be paid between £145,000 to £163,900 a year, according to Ofwat, in line with civil service terms. By contrast, Steve Mogford, chief executive of United Utilities, the listed water monopoly that supplies the north-west of England and parts of Wales, earned £2.9mn in the financial year 2020-21.

As interim chief executive, Black has raised concerns over the financial sustainability of water companies and urged them to link executive pay to performance on a range of measures including sewage pollution. 

Colm Gibson, managing director at Berkeley Research Group, which advises water companies, said the appointment would “provide a helpful degree of regulatory certainty for companies and customers”.

“This is particularly important given that the process for agreeing the next price settlement is getting under way,” he added.

Water UK, which represents water companies, declined to comment.