Brtons marching for clean water last year (Image: Getty)
Water regulator Ofwat should be scrapped and replaced with a new body, a major review into the sector has said.
The much-anticipated final report from the Independent Water Commission, led by former Bank of England deputy governor Sir Jon Cunliffe, outlined 88 recommendations to the UK and Welsh governments to turn around the ailing industry.
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The report, published on Monday morning, recommended abolishing Ofwat, which oversees how much water companies in England and Wales can charge for services, as well as the Drinking Water Inspectorate (DWI), which ensures that public water supplies are safe.
When asked if the watchdog had failed, the report author said "yes".
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Mike Keil, chief executive of the Consumer Council for Water (CCW), said: "People want to see meaningful change to the water sector at a time when anger over water companies' environmental performance and wider service failures has drained customer satisfaction and trust. The Commission has set out significant changes to the regulatory system, but water companies have always had the freedom to do what's right by their customers and many have made bad choices.
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"Restoring public confidence in the sector hinges on whether water companies are committed to improving their culture, conduct and performance."
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It also advised removing the regulatory roles of the Environment Agency and Natural England, which monitor the sector’s impact on nature, such as companies illegally dumping sewage into waterways.
Instead, the review said a single integrated water regulator in England and a single water regulator in Wales should be established.
The current system of regulation has faced intense criticism for overseeing water companies during the years they paid out shareholders and accrued large debts while ageing infrastructure crumbled and sewage spills skyrocketed.
Sir Jon said: “Restoring trust has been central to our work. Trust that bills are fair, that regulation is effective, that water companies will act in the public interest and that investors can get a fair return.
“Our recommendations to achieve this are significant. They include the management of the whole water system, regulation of the water industry, the governance and financial resilience of water companies and a stronger voice for local communities and water customers.
“In this report I have considered what is best for the long-term future of water.
“This is a complex sector with a highly integrated system, responsible for the second-largest infrastructure programme in the UK.
“Resetting this sector and restoring pride in the future of our waterways matters to us all.
“In countless conversations in the last nine months I have been struck by the urgent need and passion for change.
“Doing this will require hard work, strong leadership and sustained commitment. But it can and must be done.”
Other recommendations from the commission include stronger consumer advocacy, nine new regional water authorities to deliver on local priorities, significant improvements to environmental regulation and tighter oversight of company ownership and government.
It comes after nearly nine months of the commission analysing, researching and engaging with more than 50,000 responses to its call for evidence.
But campaigners said the commission "falls short" and only gives the “illusion of change”.
James Wallace, CEO of River Action, said, “This was a once-in-a-generation opportunity to reset a broken and corrupted system. Instead, the Commission blinked. After three decades of privatisation, there is no evidence it can work. The report diagnoses symptoms but avoids the cure, appeasing the vulture capital markets and failing to propose alternative public-benefit investment, ownership and governance models that have been proven across Europe.
“We needed a credible plan to rescue Britain’s rivers, lakes, and seas – and a clear pathway to bring failing companies like Thames Water into public control. Instead, we’ve been handed vague policy nudges that leave the current failed privatised water company model intact. When raw sewage is pouring into our waterways and reservoirs run dry, tinkering with regulatory half-measures simply isn't enough to restore public trust.
“The Government must act now with a powerful statement of intent by putting our biggest polluter - Thames Water - into Special Administration to send a warning shot across the stained bows of the Sewage Armada. Anything less will signal the UK is open to yet more corporate takeover. Our water is our life-blood and not for sale.”
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A spokesman for Water UK, which representing water firms, said: “Everyone agrees the system has not been working. Today is a major moment and this fundamental change has been long overdue. These recommendations should establish the foundations to secure our water supplies, support economic growth and end sewage entering our rivers and seas.
“The Independent Water Commission has written a comprehensive, detailed review of the whole sector, with many wide-ranging and ambitious recommendations. We now need some time to consider the detail and understand the implications.
“Crucially, it is now up to Government to decide which recommendations it will adopt, and in what way, but the Commission’s work marks a significant step forward.”
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