A stronger regulator for Scotland’s water future

Every job in Scotland depends on water. From distilleries, care homes, cafés and data centres, water services are essential to our economy. When they work well, most people never think about them.

Scottish Water, a publicly owned company, delivers these services. The Water Industry Commission for Scotland (WICS) is the independent economic regulator. Our job is to ensure that customers pay no more than necessary and that the system is funded to remain resilient over the long term. We also hold Scottish Water to account for delivering the outcomes it has promised to customers.

When essential services work, they sit quietly in the background. The same is true of economic regulation. Most people would not have heard of WICS until December 2022, when a report from the Auditor General raised concerns about how public money was being spent.

Strengthening foundations

The WICS Board appointed me as interim Chief Executive to lead financial, governance and cultural change. Working with colleagues, we overhauled financial controls, clarified leadership roles and restructured the executive team. These changes have reduced our ongoing costs by around £350,000 a year, allowing us to redeploy resource into the front line of regulation.

We supported an independent Scottish Government review and scrutiny by the Scottish Parliament’s Public Audit Committee, and have implemented every recommendation. We also returned to the principles in our founding legislation and re-established the WICS Board as a full Commission, reinforcing collective responsibility and the separation between non-executive challenge and executive delivery.

Staff feedback has been encouraging. In a recent survey, 84% reported positive wellbeing, and 95% felt WICS supported them in looking after their wellbeing. We are creating an environment of constructive challenge and continuous improvement in both our regulatory role and how we operate as an organisation, and the feedback we are receiving supports this.

This December, we will lay before the Scottish Parliament a clean set of accounts for 2024–25, with an unqualified audit opinion and no further Section 22 report. The weaknesses identified in 2022 have been addressed, and WICS is operating with stronger governance and assurance.

Looking ahead

We are under no illusion about the challenges facing the water sector. Ageing assets, climate change and the transition to net zero will increase the investment needed to keep services safe and resilient. That will be reflected in the bills households and businesses pay. The scrutiny and challenge we provide protects customers from unnecessary increases and ensures that any changes are clearly explained.

Before asking more from customers, we must be confident that every pound is spent well. That applies both to how Scottish Water plans and delivers its investment, and to how WICS carries out its own work. Our role is to provide independent challenge so that decisions about price, risk and service are transparent and fairly balanced between current and future customers. The discipline we expect of others must be visible in our own spending and priorities.

The wider regulatory landscape is changing. The recent Cunliffe review of the water industry in England and Wales highlighted strengths of Scotland’s model, particularly the focus on long-term resilience and clearer understanding of asset replacement needs. Our aim is to build on that, keep learning, and play our part in ensuring the water sector supports a flourishing Scotland for decades to come.

The last two years have been challenging, but they have also been clarifying. We have been reminded that good regulation starts with our own behaviour, and that structure, culture and governance matter as much as technical expertise. Above all, trust must be earned and re-earned through what we do and how we do it. The changes we have made are the basis for the contribution we need to make in the years ahead: clear, independent regulation that helps Scottish Water and Scottish Ministers make decisions that protect the interests of customers.

If we do this well, most people will never think about WICS, other than to know and to trust that customer interests are safeguarded. They will simply enjoy safe, reliable water and wastewater services at a fair price, trusting that someone is looking carefully at the plans, the risks and the money. That is the kind of quiet success I want us to aim for.

This article is sponsored by the Water Industry Commission for Scotland.

www.wics.scot