UK water regulator overhaul proposed to replace Ofwat in major shake-up of water sector
A sweeping overhaul of the UK’s water regulation is on the horizon as the government looks set to back a major recommendation to scrap Ofwat and replace it with a more powerful single regulator.
The move, aimed at cleaning up the industry both literally and financially, follows growing public anger over sewage pollution and mounting company debt.
Sir Jon Cunliffe, former deputy governor of the Bank of England, led the review and didn’t hold back. His findings are damning.
He called for a complete “reset” of how water in England and Wales is managed, including replacing not just Ofwat, but also the Environment Agency and the Drinking Water Inspectorate.
Cunliffe proposed a regulator with real teeth — one that can direct or even take control of water firms that are failing. “To be blunt about it, it was directed by the government to take a light touch to regulation,” he said on BBC Radio 4’s Today programme.
He added bluntly that Ofwat has “failed” because “for many years it didn’t have the powers.”
The review’s timing couldn’t be more critical. Thames Water, Britain’s biggest water firm, is lurching under £20 billion of debt. It teeters on the edge of collapse, and ministers are staring down the barrel of a potential special administration, a stopgap version of nationalisation.
Environment Secretary Steve Reed didn’t waste time. On the same day the report dropped, he threw his support behind the recommendation for a fresh watchdog. He also backed the creation of a water ombudsman.
This role would come with legal authority to force payouts to consumers when things go wrong — like dry taps from burst mains or sewage bubbling up in back gardens.
The report unearthed further worrying truths. Just 58 people are currently tasked with safeguarding drinking water quality across the nation. A startling figure.
Thanks to strict civil service rules on pay and staff limits, the Drinking Water Inspectorate is, as the review says, simply not fit to tackle “challenges of the future”.
There’s also the looming threat of PFAs, the so-called “forever chemicals”, and microplastics in the water system. Current legislation isn’t enough, and Cunliffe is urging reform to get these pollutants out for good.
As for consumers already hit with bill hikes, there’s a silver lining. The report makes it clear: water bills shouldn’t continue spiralling upwards.
Instead, the proposed regulator would focus on steady, long-term investment. No more scrambling to plug gaps after years of neglect. No more reactive price surges.
This isn’t just a bureaucratic reshuffle. It’s a shake-up that could redefine how water — one of life’s essentials — is managed in England and Wales.
A move away from weak oversight and towards accountability, resilience, and cleaner rivers. And if ministers follow through, it could mark the end of a chapter that many say should never have been written in the first place.
