The UK government has announced plans to abolish Ofwat and replace it with a single, powerful regulator in a sweeping reform of the water industry in England and Wales. The move follows a review by Sir Jon Cunliffe, a former deputy governor of the Bank of England, which was published on Monday.
Environment Secretary Steve Reed said the government would adopt the review's recommendations, merging the powers of Ofwat, the Drinking Water Inspectorate, the Environment Agency, and Natural England into one body. This is intended to end a culture of underinvestment and financial mismanagement that has led to widespread sewage spills and the near-collapse of Thames Water, which is burdened with £20bn in debt.
The new regulator will have the power to 'direct' failing water companies, effectively taking control of them. Cunliffe warned that England and Wales face a new 'Great Stink moment', referencing the 1858 crisis that led to the construction of London's sewer system. He criticised the current regulatory system as 'too adversarial' and overly reliant on desk-based analysis.
The government will also create an ombudsman with legal powers to compensate consumers affected by issues such as dry taps and sewage leaks. The review found that only 58 staff are responsible for protecting drinking water safety, raising concerns about future challenges, including pollutants like PFAS and microplastics.
To avoid sharp bill increases, the new regulator will prioritise consistent infrastructure investment. The review recommends compulsory smart metering for homes and businesses, with higher charges for heavy water users, and a nationwide social tariff to help those struggling with bills. The government plans to introduce a water bill next year to implement many of the 88 recommendations, with five fast-tracked immediately.
