Independent Water Commission

Roger Gale Excerpts

Monday 21st July 2025 Commons Chamber

[Mr Deputy Speaker (Sir Roger Gale)]

Before I call the Secretary of State to make his statement, I place on the record the fact that Mr Speaker and the Deputy Speakers were disappointed to see extensive coverage in the media this morning of Ministers’ responses to the Independent Water Commission, before the House has had the opportunity to consider the matter. It would be nice to think that the normal courtesies will be resumed.

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

Thank you, Mr Deputy Speaker. I have, of course, saved the bulk of my responses for you and the House this afternoon. With permission, I would like to update the House on the Government’s plans to reform the water sector.

The water industry is clearly failing. Our rivers, lakes and seas are polluted with record levels of sewage, and water pipes have been left to crumble into disrepair. I share customers’ fury at rising bills. Right now, hosepipe bans are in place across the country because not a single new reservoir has been built in over 30 years, and the lack of water infrastructure is blocking economic growth. Water companies have been allowed to profit at the expense of the British people when they should have been investing to fix our broken water pipes. They got away with this because of a broken regulatory system that has failed both customers and the environment. The public expressed their fury in last year’s general election and voted for change. That change will now come.

In just one year, we have put in place the building blocks for change. First, we restored accountability by giving the regulators more teeth and introducing a ban on unfair bonuses, severe and automatic penalties for breaking the law, and jail sentences for the most serious offences. Secondly, we are investing £104 billion of private sector funding to rebuild the water network, upgrading crumbling pipes, repairing leaks, building new sewage treatment works and digging out new reservoirs. It is the single biggest investment in the history of the water sector, and it allows me to make a new commitment to the country: this Government will cut water companies’ sewage pollution in half by the end of the decade. That is the most ambitious commitment ever made by any Government about water pollution, and it is just the start. Over a decade of national renewal, we will restore our rivers, lakes and seas to good health.

The third building block for change is today’s final report from Sir Jon Cunliffe’s Independent Water Commission. I express my thanks to Sir Jon, his officials, and all those who have contributed to this outstanding piece of work. I agree with Sir Jon that water regulation has been too weak, too complex, and ineffective. Having four separate regulators with overlapping and conflicting remits has failed both customers and the environment. Ofwat has failed to protect customers from water companies’ mismanagement of their hard-earned money, and it has failed to protect our waterways from record levels of pollution. Today, I can announce that this Labour Government will abolish Ofwat. We will bring water functions from four different regulators into one—a single powerful super-regulator responsible for the entire water sector, with the teeth it needs to enforce the high standards that the public rightly demand.

The new regulator will stand firmly on the side of customers, investors and the environment and prevent the abuses of the past. For customers, it will oversee investment and upgrade work, so that hard-working British families are never again hit by the shocking bill hikes that we saw last year as customers were left to pay the price of failure by the previous Government. For investors, 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 funding. For the environment, it will reduce all forms of pollution to clean up our rivers, lakes and seas for good. We will work closely with the Welsh Government to devolve the economic regulation of water to Wales.

I will publish a White Paper this autumn giving the Government’s full response to the Independent Water Commission’s final report and launching a consultation on it. Following that, I will bring forward a new water reform Bill early in the lifetime of this Parliament. Ofwat will remain in place during the transition to the new regulator, and I will ensure that it provides the right leadership to oversee the current price review and investment plan during that time. To provide clarity during this period, I will issue an interim strategic policy statement to Ofwat and give ministerial directions to the Environment Agency setting out our expectations and requirements. We will publish a transition plan as part of our full Government response in the autumn.

Today, we are immediately taking forward a number of Sir Jon’s recommendations. First, we will establish a new statutory water ombudsman—a single, free service to help customers resolve complaints such as incorrect bills, leaking pipes or water supply failures. The new ombudsman will have the legal powers to protect customers and will bring the water dispute resolution process in line with other utilities, such as energy. It is part of the Government’s ambition to put customers at the heart of water regulation.

Secondly, we will end the era of water companies marking their own homework. We will end operator self-monitoring and transition to open monitoring to increase transparency and help restore public trust. Water companies are already required to publish data on some sewage spills within one hour. We will roll out real-time monitoring across the wastewater system, and all this data will be made publicly available online. That will ensure that the regulator and, importantly, the public have the power to hold water companies fully accountable.

Thirdly, we commit to including a regional element within the new regulator to ensure greater local involvement in water planning. By moving to a catchment-based model for water system planning, we can tackle all sources of pollution entering waterways, so that they can be cleaned up more effectively and more quickly. This will ensure—for the first time—that water infrastructure investment plans align with spatial planning to support faster regional economic growth. The lack of water infrastructure that held back development around Cambridge and Oxford for so long will not happen again.

The new regulatory framework will recognise the risks investors take and, if they meet their obligations, they will see a fair, stable return on their investment. Just last week, I signed the Government’s new water skills pledge to make sure that the sector has the skills and workforce it needs to deliver this vast investment.

This Labour Government were elected to clean up water pollution and ensure that unacceptable bill hikes can never happen again. We now have all the building blocks in place to make that happen. We are establishing a new partnership based on effective regulation, where water companies, investors, communities and the Government will work together to clean up our rivers, lakes and seas for good.

[Mr Deputy Speaker (Sir Roger Gale)]

I call the shadow Minister.

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[Steve Reed]

I was, of course, on the television show in question with the hon. Member for Clacton (Nigel Farage). I think he told us six times that he had no idea—well, that much we knew. It is this Government who have a plan to clean up our waterways. We have put in place the building blocks for change, and that allows me to stand before this House and commit that by 2030 we will reduce sewage pollution from water companies by 50% as we move towards a decade of national renewal in order to clean up our waterways for good.

[Mr Deputy Speaker]

I call the Liberal Democrat spokesperson.

[Tim Farron (Westmorland and Lonsdale) (LD)]

I thank the Secretary of State for advance sight of his statement, and Sir Jon Cunliffe for his report and for his work in producing it. The Liberal Democrats have long argued for the abolition of Ofwat, and for the creation of a new, consolidated and powerful regulator. In fact, we put it to the Public Bill Committee and it was supported by neither the Labour party nor the Conservative party, but today’s proposal seems to include doing just that, so we strongly welcome the statement. It is a reminder to the wonderful volunteers and water campaigners across the country that their work is absolutely worth while and has made a huge difference. My message to them is: thank you so much and keep going, because we still do not know the details and the nature of the new regulator, and we still see no sign in the report of any plan to tackle the toxic nature of the water industry’s ownership structure.

Why is there no plan to change the structure of the industry itself? Even the best regulator in the world will fail if water companies are still owned by those who care nothing for the quality of the lakes, rivers and seas, and who care only about making as much profit as possible in return for very little investment. Is it really acceptable to ask bill payers for a 30% rise when there is no guarantee that the water company will not be siphoning off huge chunks of that money in dividends, pay rises or bonuses? Why is there nothing in the statement that will truly empower the volunteers, citizen scientists and water campaigners I just mentioned? Why are we not giving places on water company boards to the likes of the Eden Rivers Trust, the South Lakes Rivers Trust, Save Windermere, the Clean River Kent Campaign, Surfers Against Sewage and Windrush Against Sewage Pollution, known as WASP? Why is there no mention of monitoring the volume of sewage spills as well as the number of incidences, and no mention of including legally binding pollution reduction targets?

Although the statement is welcome and we rightly celebrate the Liberal Democrat campaign wins that it is full of, our job as a constructive and effective Opposition is to scrutinise the detail and to carry on campaigning to clean up our waterways and our water industry too. That is exactly what we shall do.

[Several hon. Members rose—]

[Mr Deputy Speaker (Sir Roger Gale)]

Order. It is apparent that a very considerable number of Back-Bench Members wish to participate in this statement. There are two further statements to follow before we come to the main business of the day, which is also very important, so I urge colleagues on both sides of the House to ask brief questions and not make statements.

[Andrew Pakes (Peterborough) (Lab)]

Residents in Peterborough and across Anglian Water’s catchment area will welcome the statement and the bold action taken. They know all too well that the water system is broken. One of the issues we on the Environment, Food and Rural Affairs Committee have looked at is the need for water infrastructure. Can my right hon. Friend confirm that the drive and determination he has shown today to fix the water system will also drive forward the Fens reservoir and the infrastructure we need in the east of England? After a generation of delay on reservoirs, we now have the opportunity to succeed. Can he tell us that this will stay on track, and we will get the jobs and the water resources we need in the east?

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[Steve Reed]

Yes, we are looking at what recommendations we can bring forward early; others will be part of the consultation.

[Mr Deputy Speaker (Sir Roger Gale)]

I call the ever-patient Peter Swallow.

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[Steve Reed]

I think my hon. Friend has already done the job for me.

[Mr Deputy Speaker (Sir Roger Gale)]

That concludes the statement. I thank the Secretary of State and the shadow Secretary of State for their presence throughout a lengthy session.