The British way in water

This paper describes, and seeks to assess the effectiveness of, the institutional arrangements adopted in 1989 to permit the privatisation of water and waste water services in England and Wales by way of complete disposal of the operating assets of the former regional water authorities. It refers to the different arrangements in Scotland and Northern Ireland. It concentrates in particular, however, on the safety, environmental and economic regulatory arrangements in England and Wales and argues that they have been key factors in ensuring that profit-making operation of strong natural monopolies delivers long-term benefits for consumers and the environment. It concludes with an assessment of incentive economic regulation and a discussion of the controversial aspects of the performance of the system, including the merits of the RPI±X% regulation in the case of water.