Five key takeaways from the landmark water sector review | UK News

The long-awaited review into England and Wales’ troubled water sector has been released.

There’s much to pick through in the 465-page report – but here are the key points.

The independent Water Commission, led by former Bank of England deputy governor Sir Jon Cunliffe, was set up in response to growing public concern about sewage spills and rising bills.

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 told Breakfast.

But it’s the role of the regulators that comes under most scrutiny.

Regulation might not sound exciting, but it’s essentially the way of keeping water companies in check to make sure they deliver for billpayers and the environment.

Currently, responsibilities are divided between the economic regulator Ofwat, the Environment Agency, Natural Resources Wales and the Drinking Water Inspectorate.

The most-eye catching of the 88 recommendations is the proposal to instead have a single water regulator in England and a single water regulator in Wales, rather than being split by economic and environmental goals.

That would mean 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.

The outcry over sewage spills is, at least in part, down to better monitoring.

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.

Campaigners have argued this effectively amounts to water companies marking their own homework.

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”.

The review adds that reforming self-monitoring “should mark a clear departure from the past and presents an opportunity to re-build trust”.

But it warns there are “concerns about the value for money and effectiveness” of current electronic monitors of sewage spills, advocating more advanced technology such as artificial intelligence.

There needs to be better efforts to monitor other forms of pollution too, including agriculture, microplastics and forever chemicals, it 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 review says.

The sector also needs new measures to attract long-term investors and better oversight of company finances, it adds.

But some campaigners are angry that the review was never allowed to consider what they see as the fundamental problem – that it is in private, not public hands.

In setting up the Water Commission, the government had ruled out nationalisation, arguing that it would be too expensive and wouldn’t necessarily lead to improvements.

The campaign group Surfers Against Sewage accused the report of “putting lipstick on a pig”.

The review “utterly fails to prioritise public benefit over private profit”, said chief executive Giles Bristow.

In Wales the water industry is private, but not-for-profit.

Sir Jon told Radio 4’s Today programme that our current privatised system could work if well regulated.

He said he remembers what the system was like before privatisation when we were the “dirty man of Europe”.

But what annoys the public is when “the pay is there, and the performance is not”, which is when the regulator has to step in, he added.

There was pressure from government and the regulator to keep bills low between 2009 and 2024, the Water Commission found.

That might have been good for our bills in the short-term, but the review says this “can now be seen as underinvestment”.

These consequences are now becoming clear, with additional pressures from climate change and a growing population.

Last year the regulators approved increases of 26% to the average bill between 2024/25 and 2025/26.

“The problem comes when you suddenly suddenly go from not investing for a long long period, to massive investment in order to catch up,” Sir Jon told Breakfast.

“That is really what has driven those huge bill increases that we have have seen,” he added.

“So over time I think we are going to see the cost of producing water rise – that’s inevitable.”

But the review stresses the need to avoid the really sharp increase in bills that can put pressure on the most vulnerable.

Sir Jon suggests a consultation on the introduction of a “national social tariff” in England to help manage the burden for low income households, while in Wales the existing social tariffs should be reviewed.

He also recommends the introduction of compulsory smart meters to drive down water demand.

In setting up the review, Environment Secretary Steve Reed said it marked “our opportunity to clean up our water once and for all”.

But anyone hoping that it will lead to an immediate improvement in the state of our rivers or a drop in bills will be disappointed.

“There is no single, simple change, no matter how radical, that will reset the water sector and restore the trust that has been lost,” wrote Sir Jon in a foreword to his report.

“Change will take time; it takes years to build new infrastructure,” he added on Breakfast.

“Things… may take a long time to get better.”

And remember, these are only recommendations and aren’t legally binding.

It will ultimately be up to the government to decide what changes it wants to put in place.

It has confirmed it is scrapping Ofwat and has said it will immediately accept another four recommendations in parliament later.

That means there are 83 recommendations left to go.