Ofwat Scrapped in Landmark Review Calling for Overhaul of ‘Broken’ Water Industry
In a bold shake-up of England and Wales water regulation, the watchdog Ofwat is set to be scrapped, as part of a sweeping overhaul proposed by the Independent Water Commission.
The move comes amid growing public anger over rising bills and ongoing pollution scandals plaguing the water industry.
The commission’s report, released Monday, brands the current regulatory system as fragmented and failing. Its solution? Replace it with a single integrated water regulator in England and another in Wales.
This restructuring would absorb the responsibilities of Ofwat, the Drinking Water Inspectorate, and relevant environmental agencies, mirroring the centralised model used by Ofcom.
A total of 88 recommendations have been set out in what’s being called a “once-in-a-generation” review. It’s the most significant rethink of water industry regulation since privatisation in the 1980s.
Sir Jon Cunliffe, the former Deputy Governor of the Bank of England and a key figure in the post-financial crisis banking reforms, led the review.
Brought out of retirement by Environment Secretary Steve Reed, Cunliffe’s mission was clear: fix a system many now see as fundamentally broken.
Some of the most eye-catching changes proposed include:
- Compulsory water meters across all homes.
- A new Ombudsman for Water, giving customers a clear route to resolve complaints.
- Regional water planning authorities – eight for England and one for Wales – made up of local council reps, environmental experts, and public health officials.
- A social tariff to support vulnerable households.
- Stricter rules to block takeovers if they don’t serve the long-term public interest.
- Mandatory financial buffers for water companies, to prevent collapses like the one currently threatening Thames Water.
These regional bodies would manage water investment plans according to local priorities. They’re also set to have teeth – with the power to hold water firms, farmers, and other stakeholders accountable.
Public frustration with water firms has been compounded by examinations into Ofwat’s declining role, prompting demands for stricter, centralised oversight.
The report also recommends tighter environmental regulations. Think more water reuse schemes, rainwater harvesting, and legal targets for improving water environments.
The public health implications of poor water management have been acknowledged too, with calls for senior public health input at regional planning levels.
In response to the findings, Mr Reed is expected to condemn the water industry as “broken” and voice full support for the commission’s bold vision. His goal? Make sure “the failures of the past can never happen again”.
Industry group Water UK appears to agree. “Fundamental change has been long overdue,” the group said in a statement.
“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,” added a spokesperson.
“Crucially, it is now up to the government to decide which recommendations it will adopt, and in what way, but the commission’s work marks a significant step forward.”
Despite the far-reaching nature of the proposals, nationalisation of the water industry was explicitly off the table. The commission’s remit did not include exploring public ownership – a move some campaigners continue to push for.
With water bills expected to jump by 36% over the next five years, the pressure is on. Public trust is low. Investors are nervous. And Thames Water’s troubles loom large.
The UK Government now holds the reins. Which of the commission’s recommendations it chooses to implement could define the future of water in Britain, for better or worse.
