Ofwat chief says companies still failing to ‘get the basics right’

Water companies are still failing to “get the basics rights” when comes to customer service, according to Ofwat chief executive David Black.

Speaking at the regulator’s annual non-executive director conference, Black warned that if things stay as they are, they will not be trusted to tackle other major issues like improving water quality in rivers and reducing consumption to prevent shortages.

Recounting tales from a recent customer focus group held with CCW, which included people who had experienced sewer flooding, Black described it “a story of basic failure of customer service”. He said he was appalled by descriptions of companies’ responses that were “poor coordinated, slow or just didn’t happen”.

Along with their efforts address to issues such as water quality in rivers and the cost of living crisis, Black said customers’ direct experiences with water companies will define how they are seen by the public: “If companies do not get the basics right, they are not going to be trusted to deliver against wider challenges.”

Ofwat and rating agencies have expressed concern about financial resilience in the sector as credit ratings have dropped to bottom end of investment grade, something Black said there is “no good reason for”. But instead of bolstering their financial resilience, some companies are simply “kicking the can down the road” to the detriment of billpayers.

Given the myriad challenges and uncertain future they face, Black said companies will need to undergo a transformation encompassing: digitalisation; green infrastructure; long-term and adaptive planning; collaboration and partnerships; developing and using markets for carbon credits; phosphate and ammonia reductions; and, critically, influencing consumer behaviour.

Regaining trust through improvements to customer service will be key to last point, Black said, as persuading people to change their behaviour “is likely to be challenging while trust remains low.”

He urged the board members in attendance to prioritise customer and wider public interest in every decision: “You will be influencing, supporting, and challenging decision making that will shape and decide how companies meet these future challenges. It’s vital that these decisions are driven by the customer and wider public interest and that they are made for the long term.”

At the same event, Jonson Cox reflected on his decade as chair of Ofwat as he prepares to step down in June, when Iain Coucher will take over the role.

Cox said for all its brilliant people and strengths, the water sector can still be “too slow, too insular, and at times too complacent to claim its rightful place as a responsible business and trusted sector”. He told the gathered board members that the industry needs to get ahead of public opinion.