The radical water fix: New regulator, compulsory meters and higher bills

ITV News

21-07-2025

Sir Jon Cunliffe's final report proposes a 'reset' of the water industry - much like you might try to revive a glitch-riddled computer.
He argues that the current system has lost the trust of consumers, companies, and the investors we rely on to fund the response to more extreme weather, population growth, and the pollution of rivers and waterways.
The 88 recommendations in his report are designed to restore that trust - albeit over a longer timescale than it takes to reboot a laptop.
Cunliffe's main recommendation is the creation of a single, integrated water regulator.
In England, Ofwat and the Drinking Water Inspectorate would be replaced by a new body, which would also take on the water and environment-related functions of the Environment Agency and Natural England. In Wales, a similar body would be established.
Regulation of the water companies would become 'supervisory' - similar to the way financial regulators oversee banks (Cunliffe is a former deputy governor of the Bank of England).
Eight new regional water system planning authorities would be created across England and Wales to ensure that the reservoirs and treatment centres the UK needs actually get built.
A new water ombudsman would give 'stronger protection to customers and a clearer route to resolving complaints.'
The existing water network is in such a state of decrepitude that vast sums of money will be needed just to upgrade and maintain it.
Water bills will rise significantly.
Cunliffe recommends the introduction of a National Social Tariff to protect vulnerable households.
The current voluntary system is inadequate, capping the annual bill for a single parent on a low income at £91 in Portsmouth, but £364 in Bradford.
He also backs compulsory water metering - a change likely to prove unpopular with larger families or those living in big homes in rural areas.
The new regulator is intended to be more effective than Ofwat, with greater powers to keep water companies on the straight and narrow.
The report recommends giving it 'the power to block material changes in control' and 'to direct parent companies and ultimate controllers.'
These recommendations seem written with one eye on Thames Water, which remains debt-laden and on the cusp of nationalisation.
Cunliffe says he 'understands' the public anger over bonuses paid to water company executives, but believes the backlash has gone too far.
In his view, bonuses can be a legitimate reward for strong performance, but they should 'drive the right culture.' He supports holding senior executives personally accountable for failure but thinks the current regime should be 'streamlined.'
Fixing the UK's water industry will take time and money.
Water companies plan to spend £104 billion improving and maintaining their networks over the next five years — but they'll need to be able to borrow that money first.
Cunliffe argues that Ofwat's approach to permitted 'return on investment' has been too stingy, setting it at a level that 'may have further deterred investors.'
Cunliffe was appointed by the UK and Welsh governments to propose reforms to an industry in a state of dysfunction.
He was free to recommend whatever solutions he judged necessary - apart from nationalisation, which the government ruled out.
Cunliffe says he wouldn't have recommended state control anyway.
While acknowledging well-publicised and unacceptable failures, he believes the privatisation of the water industry in 1989 has also delivered real achievements — too easily forgotten, he says.
He reminds us that the UK was once dubbed the 'dirty man of Europe.' No longer.
In his view, the best way to deliver improvement is not to replace the current system, but to radically overhaul it.