Water industry: Commission finds five areas where 'fundamental change' is needed
The Independent Water Commission's interim report suggests there will be recommendations ahead on improved regulation, including the possibility of a single body to hold suppliers to account.
Tuesday 3 June 2025 11:39, UK
"Interlocking failures" in the water sector across England and Wales can be fixed through fundamental reform in five key areas, according to a major interim report.
The Independent Water Commission (IWC), established last year and led by a former deputy governor of the Bank of England, was scathing of government and regulatory oversight of the industry - long blighted by criticism over performance, particularly over sewage spills, shareholder payouts and bonuses for bosses.
Money latest: Change to mortgage rules could drive up house prices
Sir Jon Cunliffe said: "There is no simple, single change, no matter how radical, that will deliver the fundamental reset that is needed for the water sector.
"We have heard of deep-rooted, systemic and interlocking failures over the years - failure in government's strategy and planning for the future, failure in regulation to protect both the billpayer and the environment and failure by some water companies and their owners to act in the public, as well as their private, interest.
"My view is that all of these issues need to be tackled to rebuild public trust and make the system fit for the future. We anticipate that this will require new legislation."
The commission, which is due to make its final recommendations later in the summer, failed to rule out the creation of a super regulator to bring oversight into alignment.
Currently, regulation is muddied by a multi-body approach that includes Ofwat and the Environment Agency.
The five areas under scrutiny are:
• Long term direction from government, including through the planning process.
• The creation of a simplified legislative framework, which could include new objectives around public health.
• Regulation but "a fundamental strengthening and rebalancing of Ofwat's regulation is needed", it is argued.
• Transparency and accountability within private water firms.
• The management of water industry assets, including pipework.
Read more:
Thames Water hit with record fine by regulator
Government and Ofwat broke law on sewage spills, watchdog rules
Be the first to get Breaking News
Install the Sky News app for free
Sir Jon added: "I have heard a strong and powerful consensus that the current system is not working for anyone, and that change is needed. I believe that ambitious reforms across these complex and connected set of issues are sorely needed.
"I have been encouraged to see, on all sides of the debate, that people have been prepared to engage constructively with our work; I look forward to that continuing as we enter the final stages."
Environment Secretary Steve Reed said of the report: "Our rivers, lakes and seas are polluted, and our water system is broken.
"That is why I launched the Water Commission to outline recommendations for a once in a generation opportunity to transform our water industry and ensure it delivers the service the public deserves.
"The government will respond to the Commission in full in due course and outline next steps to benefit customers, attract investment, and clean up our waterways for good."
While Ofwat said: "We welcome the recommendations from the IWC interim report as an important milestone in strengthening the regulatory framework within which Ofwat operates.
"Change is essential if we are to deliver our vision of a secure and sustainable water sector that acts in the best interests of customers, communities and the environment."