EU Skills Releases Policy Briefing on PR19 Price Review

Energy & Utility Skills Releases Policy Briefing on PR19 Price Review

Energy & Utility Skills has released a comprehensive new guide to Ofwat’s PR19 methodologies.

Energy & Utility Skills Releases Policy Briefing on PR19 Price Review

The guide aims to help regulated companies in the water industry to understand what is expected of them in delivering long-term workforce resilience planning within the 2019 Price Review, the areas to consider and how their business plans are likely to be assessed.

Workforce resilience was initially flagged as important in Ofwat’s ‘Resilience in the Round’ approach for a sustainable water sector, before featuring heavily in the price setting Draft Methodology. It is now a requirement for PR19 business plan submissions under the Final Methodology.

At a time when UK labour markets are at their tightest levels since records began, there is high competition between infrastructure and business sectors for available talent. The utility sector has known skills gaps and diversity challenges, the cost of UK-wide recruitment and retention is increasing and with the implications of a European exit yet to materialise, Ofwat’s strategic approach to ensuring sustainable development and sector resilience, is both visionary and prudent.

The need for a resilient, skilled and sustainable workforce has increasingly been recognised by central and devolved governments, as a key challenge for all of the main UK business sectors in a post European-exit economy. The subject is a central plank of the UK Industrial Strategy and is core to the productivity and efficiency needs of the National Infrastructure Plan. The utility sector is the largest single contributor to the £0.5 trillion infrastructure investment strategy.

Under the PR19 methodology, companies will be assessed on how well they have considered and planned for resilience, foreseen and mitigated risks and considered the holistic picture of resilience throughout their business.

The policy briefing focusses on Ofwat’s key themes of customer engagement – affordability, resilience, innovation and how these will be assessed. It breaks down the PR19 methodology into a guide that will help and direct water companies as the 2019 Price Review approaches. The current price control period is due to end on 31 March 2020 and the 2019 Price Review will set price controls for the period between 2020 and 2025.

The briefing covers four key areas:

  • the context behind the 2019 Price Review
  • resilience aspects of the price control process
  • Ofwat’s expectations of company business plans
  • a timeline of action companies need to take

Nick Ellins, Chief Executive of Energy & Utility Skills,* said: “Ofwat has made an important statement in its Final Methodology, clearly demonstrating its commitment to its sustainable development and resilience duties, whilst standing clear of prescriptive approaches and leaving companies to set out their internal and extraneous workforce challenges.

“It is not just about the directly-employed labour within water companies or the recruitment issues of today, Ofwat is looking for clear demonstrations of company understanding of their whole workforce, including the vital supply chain, for the five- year period but also long-term projections for ten years beyond in a fast changing labour market and in meeting new and evolving consumer demands.

“Without such robust action, core corporate and operational resilience is at risk. We can all talk about achieving resilient infrastructure, but unless you have the people and capabilities to make it resilient, it’s a bit of an arbitrary point. A workforce with the right skills is vital for a resilient water sector. The challenges we now face mean that the sector must pay even more attention to the long-term skills it will need and the ways in which they will differ from the needs of the past.”

The Policy Briefing is available for download here.


British Water will be hosting a networking dinner with Nick Ellins on Tuesday 6 November 2018 at Osteria Dell’Angolo, London. Nick will be sharing his views on UK workforce resilience strategy, supply chain sustainability, regulatory and policy reform, the next steps for ensuring the water industry has the human capital it needs and the work of 28 CEOs across utilities to embed change via the Energy & Utilities Skills Partnership.

To book your place click here.