Independent Water Commission

Monday 21st July 2025 Written Statements

[The Secretary of State for Environment, Food and Rural Affairs (Steve Reed)]

On 23 October, we asked the former Deputy Governor of the Bank of England, Sir Jon Cunliffe, to undertake the biggest review of the water sector since privatisation. The Independent Water Commission was tasked with producing recommendations to fundamentally transform how our water system works.

We are delighted that today the Independent Water Commission has published its final recommendations. We are grateful to Sir Jon, his officials and all those involved for the outstanding work they have done to review the regulation of our water industry.

The report has clearly set out the ways in which the current system is broken, and is failing the environment, customers and investors.

The Government will now act quickly, turning the page on a broken system with root-and-branch reform to revolutionise the water industry and clean up our rivers, lakes and seas for good.

The commission has highlighted the complexity and failure of current water regulation. The current fragmented approach of four separate regulators splits up economic, environmental and regulation of drinking water. This complex web of regulators has led to contradictory and competing priorities.

These regulatory arrangements have failed to deliver for customers, while allowing companies to pay out huge dividends and bonuses.

Subject to consultation this autumn, Ofwat is to be replaced by one single water regulator responsible for the entire water system. The Government will abolish Ofwat and merge its functions with water functions across the Environment Agency, Natural England and the Drinking Water Inspectorate to form a new regulator.

This single powerful regulator will be responsible for the entire water system. It will provide the clarity and direction required for a strong partnership between Government, the sector and investors to attract billions of pounds of new investment. It will have the power to balance different priorities in the national interest, overseeing investment and maintenance and protecting customers from massive bill hikes. It will be responsible for the entire water sector, restoring public faith and investor confidence in our water industry. And it will ensure all forms of pollution are reduced to clean up our rivers, lakes and seas for good.

We will work with the existing regulators and the unions to ensure a smooth transition to the single new regulator. Ofwat will remain in place during the transition to the new regulator and we will ensure they provide the right leadership to oversee the current price review and investment plan during that time.

We will work with our colleagues in the Welsh Government to ensure these reforms protect water customers across both England and Wales.

The Government’s full response to the Commission’s recommendations will be outlined later this year through a White Paper, on which we will invite views via a consultation. The proposed reforms will then form the basis of a new water reform Bill which we will introduce early in this Parliament.

We are establishing a new partnership where water companies, investors, communities and the Government will work together to deliver the change we all want to see.

[HCWS865]