A damning report draws a line

This week’s report on how Ofwat got its budget wrong by £5.6 million makes for hair-raising reading. The document paints a picture of an organisation so deeply in silos that the finance team barely spoke to the executive; so distracted by firefighting that it forgot about delivery; and so short of skills that the pivotal role of programme director of the price review was filled by a part-time, temporary worker (see p18).

There’s an elephant in the room. No mention is made of Regina Finn, who was running the organisation as these events transpired. One sentence reads: “By April 2013, it was clear that there were serious budget pressures, and by May, the Price Review Project Board and full board had discussed a proposal that a Delivery Partner should be used.” There’s a key event that’s missing from that timeline: Finn’s sudden and unexpected announcement of her departure on 15 May.
With this report, Ofwat has voluntarily donned the hair shirt, ­almost certainly in the hope of escaping censure from Defra, the Public Accounts Committee or the National Audit Office. It has come up with a concrete action plan, and while many of those actions are surprisingly basic, they are at least specific and accountable. What’s missing is any individual accountability for what went wrong. If Finn was still in post, following this report her position would be untenable.
But she isn’t, and in many ways this story has a happy ending. The Section 13 row, the battle lines between the regulator and the industry, and the subsequent multi-million pound mistake now look like a bad dream. Current chair Jonson Cox had only been in post a few months when the budgetary error was revealed. He acted swiftly and decisively upon Finn’s departure to restructure the management team, get the consultants in and get the price review back on track. His replacement chief executive, Cathryn Ross, already had a strong reputation within the industry, which she has quickly consolidated since rejoining the organisation.
There will still be battles to be fought during PR14, but they will not be over the regulator’s competence or fitness to conduct the price review. With the publication of this report, the water sector can, with a shudder, put the past behind it.