The long-awaited review of the England and Wales water sector, an area facing considerable challenges, has been officially published.
The 465-page report is comprehensive, but here’s a summary of the key takeaways.
The independent Water Commission, spearheaded by Sir Jon Cunliffe, former Deputy Governor of the Bank of England, was formed to address escalating public concerns regarding sewage spills and increasing water bills.
Sir Jon emphasizes that responsibility for the sector’s current state is widespread.
“The fundamental issue is that the management of this sector has been inadequate, and no single entity emerges with distinction – this includes the government, water companies, and regulators,” he stated in an interview with BBC Breakfast.
Notably, the role of regulatory bodies is subject to substantial scrutiny.
Effective regulation is crucial for ensuring water companies fulfill their obligations to both consumers and the environment.
Currently, regulatory responsibilities are divided among Ofwat (economic regulator), the Environment Agency, Natural Resources Wales, and the Drinking Water Inspectorate.
One of the most prominent recommendations among the 88 presented is the proposal to consolidate regulatory oversight into a single water regulator for England and another for Wales, eliminating the division based on economic versus environmental objectives.
This would entail disbanding Ofwat, a decision the government has confirmed it will implement, signaling a significant restructuring of water company accountability.
The public outcry over sewage spills is partly attributable to enhanced monitoring capabilities.
We now possess far more comprehensive data on the frequency of sewage discharges into rivers and seas, information that was not routinely collected even a decade ago.
The Water Commission advocates for reforms to “operator self-monitoring,” wherein water companies are responsible for monitoring and reporting pollution and sewage incidents to regulators.
Critics argue that this system effectively allows water companies to self-assess their performance.
While the review acknowledges the high costs associated with shifting monitoring responsibilities entirely to regulators, it emphasizes the need for regulators to adopt a more robust approach, including increased automation, third-party verification, and “intelligence-led inspections.”
The review asserts that reforming self-monitoring “should mark a clear departure from the past and presents an opportunity to re-build trust.”
Sir Jon suggests leveraging advanced technologies, such as artificial intelligence, to better assess the full impact of sewage spills, beyond merely their timing.
The review expresses “concerns about the value for money and effectiveness” of existing electronic spill monitors.
It also calls for improved monitoring of other pollution sources, including agriculture, microplastics, and forever chemicals.
Furthermore, the regulator should have greater influence over water company ownership and implement a “new regime to make senior executives directly accountable,” according to the review.
The sector also requires new measures to attract long-term investors and enhance oversight of company finances.
However, some campaigners are critical of the review’s exclusion of the fundamental question of private versus public ownership.
In establishing the Water Commission, the government explicitly ruled out nationalization, citing concerns about cost and potential lack of improvement.
The campaign group Surfers Against Sewage described the report as “putting lipstick on a pig.”
Chief Executive Giles Bristow stated that the review “utterly fails to prioritize public benefit over private profit.”
In Wales, the water industry operates under a private, not-for-profit model.
Sir Jon noted on BBC Radio 4’s Today program that the existing privatized system could function effectively with proper regulation.
He recalled that prior to privatization, the UK was considered the “dirty man of Europe.”
Public dissatisfaction arises when “the pay is there, and the performance is not,” necessitating regulatory intervention, he added.
The Water Commission found that governmental and regulatory pressures to maintain low bills existed between 2009 and 2024.
While this may have benefited consumers in the short term, the review suggests that this “can now be seen as underinvestment.”
The consequences are now becoming apparent, exacerbated by climate change and population growth.
Last year, regulators approved average bill increases of 26% between 2024/25 and 2025/26.
“The issue arises when a prolonged period of underinvestment is followed by a sudden surge in investment to catch up,” Sir Jon explained on BBC Breakfast.
“This is the primary driver behind the substantial bill increases we are witnessing,” he added.
“Over time, the cost of water production is inevitably going to increase.”
However, the review emphasizes the need to avoid dramatic bill increases that could disproportionately affect vulnerable populations.
Sir Jon proposes a consultation on the implementation of a “national social tariff” in England to alleviate the burden on low-income households, while also suggesting a review of existing social tariffs in Wales.
He also recommends the mandatory installation of smart meters to reduce water demand.
Environment Secretary Steve Reed stated that the review represents “our opportunity to clean up our water once and for all.”
However, any expectations of immediate improvements in river conditions or reduced water bills are likely to be unmet.
“There is no single, straightforward solution, regardless of its radical nature, that will fundamentally transform the water sector and restore lost trust,” Sir Jon wrote in the report’s foreword.
He further commented on BBC Breakfast: “Change will take time; building new infrastructure takes years.”
“Improvements… may take a long time to materialize.”
It is important to remember that these are merely recommendations and lack legal enforceability.
Ultimately, the government will decide which changes to implement.
It has confirmed the abolishment of Ofwat and has stated its immediate acceptance of four additional recommendations in parliament later this week.
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