The government has announced plans to abolish Ofwat and replace it with a single water regulator, in a major overhaul of the sector following scandals over sewage spills and financial mismanagement. Environment Secretary Steve Reed said the move, which also subsumes the powers of the Drinking Water Inspectorate, the Environment Agency and Natural England in England, would create a 'single, powerful regulator' to prevent past abuses.
The recommendation comes from a review commissioned from Sir Jon Cunliffe, a former deputy governor of the Bank of England, which was published on Monday. Cunliffe said the regulatory system had become 'too adversarial on both sides' and that Ofwat had overused 'econometric tools and industry wide benchmarks'. He called for a 'less desk-based approach' to regulation.
The review also proposes a new ombudsman with legal powers to compensate consumers, compulsory smart metering across England and Wales, and a nationwide social tariff to help households struggling with bills. It warns that the Drinking Water Inspectorate may not meet future challenges, with only 58 staff protecting drinking water quality due to civil service headcount rules.
Water bills have already risen sharply, and the review recommends against dramatic future increases, instead prioritising consistent investment in infrastructure. The government will spend the summer considering which of the 88 recommendations to adopt, with a water bill expected next year to enshrine many in law. Five recommendations will be fast-tracked and announced in parliament later on Monday.
