The chief executive of Ofwat is to step down at the end of the month, after the government announced the abolition of the under-fire water regulator for England and Wales.
David Black is preparing to leave the role after four years, amid intense scrutiny of water companies and their regulators.
Ofwat said the government will appoint a new interim chief executive before its abolition.
The regulation of the English and Welsh water industry has become a key political issue in recent years, including during last year’s general election, amid a wave of anger over sewage spilling into Britain’s rivers and seas.
Black’s decision comes as the government and the environment secretary, Steve Reed, prepare for what they have billed as the biggest overhaul of water regulation since the industry was privatised in 1989.
Ofwat has become a lightning rod for criticism of the sector, including over decades of underinvestment in infrastructure such as reservoirs and water treatment works while companies paid vast sums in dividends and other fees to their owners.
Last year, the regulator gave a green light for water companies to raise average bills by 36% over the next five years in order to pay for upgrades.
After the decision to abolish the regulator, Black felt he had to go, according to a person familiar with internal discussions at Ofwat. However, the board did not want Black to leave, and tried to persuade him to stay, the person said.
One water company chief executive said they felt he was the wrong figure to take the fall.
Black said: “I have been privileged to be able to lead Ofwat over the last four years, during which time we have achieved a huge amount together as a team for customers and the environment. The 2024 price review backed an investment programme of £104bn, along with a further £50bn investment in major new water resources which will improve service, environmental outcomes and resilience in the years to come. I wish the team every success as they continue their important work.”
Black was appointed interim chief executive in April 2021, and was permanently appointed a year later. He had risen through Ofwat’s ranks after joining as director of economics in 2012.
Iain Coucher, Ofwat’s chair, thanked Black and said: “David has worked tirelessly to bring about transformational change in the water sector. He has sought new regulatory powers and resources to hold companies to account, taken major enforcement action and provided funding and incentive packages that drive continual improvements for customers.”
The decision to replace Ofwat, revealed by the Guardian, was made after a review published last month by Sir Jon Cunliffe, a former deputy governor of the Bank of England, found that the sector was “broken”, and recommended combining powers from four regulators, including Ofwat, into one.
The interim boss of Ofwat will have to immediately tackle several urgent issues. The UK’s biggest water company, Thames Water, has been locked in talks to try to agree leniency on fines from the regulator, which it has said will be necessary for its lenders to inject billions of pounds of new funding as part of an attempted takeover.
The regulator has also faced criticism over pay for water companies deemed by some politicians as excessive, and over the effectiveness of an effort to ban bonuses for the worst polluters. Ofwat was this week directed to scrutinise £1.3m in previously undisclosed pay for Yorkshire Water boss Nicola Shaw, after the Guardian revealed the existence of the payments via Yorkshire’s offshore parent company.
The department for the environment, food and rural affairs was approached for comment.
