UK water industry review urges improved environmental regulation
A government review of the privatised water industry in England and Wales has set out interim findings for reform of the sector, including a need to improve regulation.
The Independent Water Commission was announced by the UK and Welsh governments in October 2024 and was established to develop plans for reform due to what commission chair Sir Jon Cunliffe called “shaken” public trust in the water sector.
Cunliffe said that trust had been damaged “by pollution, financial difficulties, mismanagement, infrastructure failures, and by a sense that decisions affecting people’s daily lives are made too far from their communities, that local voices are lost. Restoring that public trust is paramount”.
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Plans for industry reform
In the interim report, Cunliffe set out five areas where he believes wide-ranging and fundamental change is needed.
As well as stronger regulation, Cunliffe said that there is a need for clearer direction from government; reforms to bring decisions on water systems closer to local communities; and greater focus on responsible, long-term investors for the sector.
The commission concluded that the government needed to “equip a capable regulator” to rebuild trust in the system.
According to the initial report, the regulator of the water industry, currently the Water Services Regulation Authority (Ofwat), needs three things to succeed: the right technology and skills; a stable and consistent approach to funding; and the flexibility to enable innovative solutions that deliver the greatest environmental benefits.
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New legislation will be needed
Setting out the findings of the first stage of the review, Sir Jon Cunliffe said that there is “no simple, single change, no matter how radical, that will deliver the fundamental reset that is needed for the water sector”.
He added: “We have heard of deep-rooted, systemic and interlocking failures over the years – failure in government’s strategy and planning for the future, failure in regulation to protect both the billpayer and the environment, and failure by some water companies and their owners to act in the public, as well as their private, interest.
“My view is that all of these issues need to be tackled to rebuild public trust and make the system fit for the future. We anticipate that this will require new legislation.”
Following the commission’s interim report, its full conclusions and detailed recommendations, including what it called “several key decisions” on its recommendations, will be published later in the summer.
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