Ministers to pledge ‘root and branch reform' of water industry
He will promise that 'hardworking British families will never again face huge shock hikes to their bills like we saw last year', according to a report in The Times.
Water bills rose by an average of 26% in April, with the cost of repairing long-neglected infrastructure said to be a significant factor.
It is understood that Mr Reed's promised reforms, along with greater investment in the crumbling sewerage network, are expected to make further significant increases unnecessary.
Monday's reforms have also been widely reported to include the abolition of water regulator Ofwat.
The beleaguered regulator has faced widespread criticism in recent years for failing to curb sewage discharges into rivers while allowing increasingly debt-ridden water companies to continue paying large dividends to their shareholders.
On Friday, Downing Street did not deny that it was preparing to abolish Ofwat, and a spokesman said the Government would wait for a report from Sir Jon Cunliffe, who has been conducting a major review of the industry.
In his interim report, Sir Jon criticised the division of water regulation between economic regulator Ofwat, the Environment Agency and the Drinking Water Inspectorate.
The former Bank of England deputy governor is due to publish his final report on Monday, which is likely to recommend replacing Ofwat with a single regulator for the whole water industry.
On Friday, a report by the Environment Agency found serious pollution incidents caused by water firms across England rose by 60% in 2024.
The watchdog disclosed consistently poor performance from all nine water and sewerage firms in the country, despite its expectations for pollution incidents to decrease.
Every year it records the number of times pollution, including untreated sewage, is released into waterways from water company infrastructure such as pumping stations, pipes and treatment works.
The figures, released on Friday, show companies recorded a total of 2,801 incidents, a 29% increase on the 2,174 recorded in 2023.
But the number of so-called category one and category two incidents, the most serious, rose by 60% from 47 to 75.
Three water firms were responsible for 81% of these serious incidents – Thames Water with 33, Southern Water with 15, and Yorkshire Water with 13.
Meanwhile, just two companies, Northumbrian Water and Wessex Water, had no serious incidents last year, meeting the Environment Agency's expectations to see a trend to zero serious pollution incidents by 2025.
Mr Reed called the figures 'disgraceful' and a 'stark reminder' of how underinvestment and weak regulation have led to sewage polluting England's waterways.
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ITV News
28 minutes ago
- ITV News
Overhaul of water regulation in Wales needed, landmark review says
The system for regulating water companies should be overhauled and Natural Resources Wales should be given more responsibilities, according to a landmark review of the sector. A wide-ranging review into the water industry has said NRW should absorb some of the responsibilities currently held by the Water Services Regulation Authority, or Ofwat, which regulates the water sector in Wales and England. Ofwat is a non-ministerial government department, which was established in 1989 when the water and sewerage industry in Wales and England was privatised, while NRW is the largest Welsh Government-sponsored body, focused on tackling the climate, nature and pollution emergencies. The final report from the Independent Water Commission, chaired by former Bank of England deputy governor Sir Jon Cunliffe, makes 88 recommendations aimed at improving the sector, urging both the Welsh and UK governments to act on growing concern over pollution, water quality and long-term investment. UK Government water minister Emma Hardy told broadcasters on Monday that the system is 'broken', but did not commit to how many of the 88 suggestions would be accepted by Whitehall. The report, published on Monday, 21 July, recommended far-reaching changes to the way the water system is regulated as it called the current landscape 'fragmented and overlapping'. For Wales, one of the key proposals includes abolishing Ofwat's role, with the regulator currently overseeing how much companies can charge for water and wastewater services, and transferring those powers to NRW. The review also recommends abolishing the Drinking Water Inspectorate, which monitors the safety of drinking water supplies. The Welsh Government backed the commission's findings, saying in a statement: "We welcome the publication of the report. This is a once in a generation opportunity to reset how Wales manages water. 'Many of the recommendations will need careful consideration and engagement to make sure we take action that is right for the people of Wales and aligns with the Well-being of Future Generations Act.' For England, the report advises removing the regulatory roles of the Environment Agency and Natural England, which monitor the sector's impact on nature, like companies illegally dumping sewage into waterways. Instead, a 'joined-up' and 'powerful' single integrated water regulator in England should be established, according to the recommendations. Ms Hardy told BBC Breakfast that UK ministers would be taking 'a proper look' at the paper 'all the way through the summer'. Asked if all the recommendations would be made law, she told the programme: 'What we'll do is we'll have a proper look at it all the way through the summer and the intention is that we're going to introduce a White Paper to spell out exactly what we're going to do on water reform.' Ms Hardy said that the UK Government would 'introduce a Water Bill next year, which will change the law', but added: 'Exactly how many out of the 88 we're going to do or not going to do, then we'll work that out in the next few months.' The current system 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. Author Sir Jon said the review has 'tried to attack the problem from all sides' but warned that bills are going to rise by 30% over the next five years. 'There are some inescapable facts here,' he said. 'The cost of producing water and dealing with our wastewater is going up.' Sir Jon later told Times Radio that regulators have failed to work together to make the sector deliver and blamed the Government for not giving clear direction. 'It's the failure of the government to balance out all the different pressures on water,' he said, adding that firms 'need to perform better' and 'be funded to invest'. The UK Government also supported the report, with Ms Hardy saying consumers have been 'failed time and time again'. Speaking on Times Radio, she said 'root-and-branch reform' is needed to fix the crisis and told listeners the government is considering a piece of primary legislation to deliver many of the proposed changes. Ms Hardy also described trust in the water industry as at 'the lowest ever level' and criticised executives for handing out pay rises and bonuses. 'Everyone knows the system is broken,' she said. 'And they give themselves huge pay rises.' However, the minister also ruled out supporting government intervention to cap pay in the private sector. Ms Hardy said: 'I don't think as government we should say what private companies should pay. But I will say – read the room. Look how angry and furious people are."
Daily Mirror
29 minutes ago
- Daily Mirror
Ofwat scrapped as water industry to be overseen by new watchdog
The Government called it the biggest overhaul of the water sector since privatisation but campaigners criticised the plans saying it creates an 'illusion of change' Water regulator Ofwat will be scrapped and replaced to overhaul the "broken" system, Environment Secretary Steve Reed has said. The body is among changes recommended in a long-awaited Independent Water Commission review launched by Jon Cunliffe which also include the abolishment of Ofwat, the industry watchdog for England and Wales. It will be replaced by a regulator with supervisory powers, similar to oversight of banks after the financial crash and experts would be appointed to work inside water companies and ensure they are obeying the law and improving the environment. While the Government called it the biggest overhaul of the water sector since privatisation, campaigners criticised the plans saying it creates an 'illusion of change' and is not the transformation needed. The review was also slammed for leaving out a recommendation of public ownership which some experts say is the only way to stop millions being siphoned off for huge CEO salaries and shareholder dividends and instead to invest into ending sewage dumping and fixing leaks. Co-leader of the Green Party, Adrian Ramsay MP, said: "Expecting a different form of regulation to fix the water industry is, frankly, rearranging the deck chairs on the Titanic. Not only that but the majority of the public are going to be expected to pay more in bills, as we watch the industry continue to sink under the failed model of privatisation.' Scrapping Ofwat will be the biggest overhaul with one regulator established where there has until now been four. Steve Reed says the new body will oversee investment and maintenance for customers so that families are "never again hit by the shocking bill hikes we saw last year". Along with scrapping Ofwat, the government has confirmed it will immediately sign up to four more of the report's recommendations - which leaves another 83 to consider. The new ombudsman, replacing the Consumer Council for Water (CCW), will have strengthened legal powers to help consumers who face problems from water companies, such as sewage floods in their gardens and taps running dry owing to burst pipes. There's much to pick through in the 465-page report - but here are the key points: *OFWAT There are currently four separate regulators responsible for the water industry, a complex, tangled system of confusion. It is a merry-go-round of regulators blaming each other for breaking this country's water system. Sir Jon makes it clear that pretty much all sides are to blame for the state of the sector. "The underlying fact is we have not managed this well, and no one comes out of this with very much glory - not government, not the water companies and not the regulators," he said. But it's the role of the regulators that comes under most scrutiny. Scrapping Ofwat, something the government has now confirmed it will do, and would mark a major shake-up in the way water companies are held to account. *SEWAGE We now have a much better idea of how many times sewage is spilled into our rivers and seas, which were not routinely monitored even a decade ago. But the Water Commission recommends reforming what's called "operator self-monitoring" – where water companies monitor and report pollution and sewage incidents to the regulator. The review doesn't recommend making monitoring entirely the responsibility of the regulator over water companies, citing high costs. But it does say that the regulators should develop a stronger approach to monitoring, including greater automation, third-party checks and "intelligence-led inspections". *OWNERSHIP The review says the regulator should also have more say in who owns water companies and introduce a "new regime to make senior executives directly accountable, The sector also needs new measures to attract long-term investors and better oversight of company finances, it adds. But some campaigners are furious that the review was never allowed to consider what they see as the fundamental problem - that it is in private, not public hands. Sir Jon Cunliffe has repeatedly said that underinvestment for years in our water infrastructure now means that massive funding is required, which could put significant burden on households. To ease this pressure, he makes two recommendations, including the compulsory introduction of smart metering. This would work in a similar way to how energy meters currently work, where people would be charged for the water they use rather than paying a flat fee. More than 60% of households have a meter already. This normally gets read manually once a year, whereas smart meters track water use in real time. Currently only 12% of households have smart meters. As well as reducing costs for users of less water, it could help in driving down demand across the country, Cunliffe says. Increasing demand for water is putting pressure on water supplies and infrastructure. The report reads: "By 2055, it is anticipated there could be an additional 8 million people living in England, and public water supply could experience a shortfall of up to 5 billion litres per day." Water minister Emma Hardy said it's clear that the water system is broken". She said the report is "stage three" in a "revolution" of the water sector, following changes to the law which banned bonuses for water bosses and the introduction of criminal liability for failures. She welcomed the report but refused to confirm exactly how many of its 88 recommendations the government will adopt. Instead, she said ministers plan to study them throughout the summer, before introducing a new water bill next year. In a speech the Secretary of State for the Environment, Steve Reed pledged to strengthen regulation, clean up the country's rivers and protect the public from soaring water bills. He said: 'Our water industry is broken. That is why this Government will fix our broken regulatory system so the failures of the past never happen again. But River Action slammed the report accusing it of failing to propose the bold reform urgently needed to fix the UK's crumbling water system and said it offers 'the illusion of change – not real change.' CEO of River Action James Wallace 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.' Giles Bristow, Chief Executive, Surfers Against Sewage added: 'Look past the glossy veneer of today's Independent Water Commission recommendations and you'll see it utterly fails to prioritise public benefit over private profit. This is not transformational reform, this is putting lipstick on a pig – and you can bet the champagne is flowing in water company boardrooms across the land. Prime Minister, you must abandon the dangerous fantasy that the current privatised water industry can be patched up – it can't, and the public knows it. Your party was elected on a pledge to clean up our rivers and coasts; now deliver on that promise, and go far beyond these half measures.'
The Guardian
29 minutes ago
- The Guardian
Water review in England and Wales: seven key takeways
The biggest review into the water industry in England and Wales since firms were privatised in 1989 has said that the sector is 'broken' and requires fundamental reform. Sir John Cunliffe, the former Bank of England deputy governor who led the Independent Water Commission (IWC) review, has published a 465-page report to attempt to address an industry beset by underinvestment, rising pollution incidents, soaring customers bills and meaty shareholder payouts. The report makes 88 recommendations to government with significant ramifications for the industry and consumers. Here are some of the key takeaways. The report has said that a fundamental 'reset' of the water sector is needed with the proposed scrapping of existing regulators and replacing them with one body for England and one body for Wales. In England, this would lead to Ofwat and the Drinking Water Inspectorate being scrapped, and the removal of the environmental regulation functions for the Environment Agency and Natural England. Under the proposal a new combined, integrated regulator that would be 'less desk-based' would be set up. In Wales, Ofwat's economic responsibilities would be integrated into Natural Resources Wales. The government said on Monday it would adopt the plan. The IWC recommends that meters should be made compulsory for a 'wide range of circumstances', in a drive to force consumers to reduce household water consumption. That includes installing them for households in areas where there is not 'water stress'. It suggests that the water industry could look to the energy sector, where suppliers must install a smart meter if they are replacing a meter or installing a meter for the first time – unless there is a good reason not to. Proponents of smart meters argue they encourage households to use less water. However, larger households with high water usage would be at risk of paying more than a standard flat rate tariff. Water companies could be let off fines if the government accepts a recommendation to allow them 'regulatory forbearance'. The report argues that a regulatory regime should be established to improve the performance of struggling water companies, including tightening oversight of ownership and governance. However, as well as this 'enhanced power of direction' the regime should allow 'regulatory forbearance', which would see companies dodge some financial penalties potentially further enraging campaigners already furious about the rise in pollution incidents. In March, the Guardian revealed that troubled Thames Water – which could collapse into a temporary nationalisation – was asking to be spared billions of pounds of costs and fines over the next five years, claiming that potential investors would be scared off otherwise. The government will also adopt a recommendation to upgrade the existing Consumer Council for Water (CCW) to a fully fledged ombudsman for customers. It currently runs a voluntary ombudsman scheme. The report suggests a nationwide social tariff to help consumers who cannot afford their bills, which the CCW has campaigned for. The change would give customers a clearer route to resolving complaints, such as issues including sewage floods in their gardens and taps running dry because of burst pipes. The report says that the new water regulator would need to be able to offer 'suitable' remuneration, which would mean it would not have to follow 'public sector pay controls'. The argument runs that to be effective the regulator will need to be able to hire and develop 'high-calibre' engineers and staff with financial expertise to provide proper oversight of the infrastructure and funding operations of water companies. 'Attracting skilled staff will require the regulator to offer suitable remuneration, outside public sector pay controls,' the report says. The high pay of water company executives has long been a source of anger among critics of the industry, most recently reignited by Southern Water's chief executive receiving a doubled pay package. However, Cunliffe, said: 'We are not proposing the regulator should set pay scales for the industry. They do need to recruit, and you have to attract the best people. What really makes the public angry is when the pay is there but the performance is not.' The report said that the current metrics Ofwat uses to measure infrastructure resilience, such as sewer collapses, mains repairs and leaky pipes, is short-termist and 'backward-looking'. The report calls for new national resilience standards for infrastructure to help guarantee the maintenance of underground pipes and other water and water waste assets. It also says that the requirements for companies to map their assets should be strengthened. The commission suggests the new regulator should have the power to set minimum capital levels for water companies. That system could mirror the regime in the banking industry, where financial cushions meant to shock-proof the banking system from another 2008-style crash were introduced.
