Ofwat to be abolished

The government has announced that Ofwat, the water regulator, is to be abolished and a new single, powerful regulator to be established to be responsible for the entire water system.

Ofwat will be abolished and its functions will be merged with water functions across the Environment Agency, Natural England and the Drinking Water Inspectorate in a new single regulator, in the biggest overhaul of the water sector since privatisation. 

At the moment, there are four separate regulators responsible for the water industry.

Secretary of State for the Environment, Steve Reed has pledged to strengthen regulation, clean up the country’s rivers and protect the public from soaring water bills. 

The proposals will be consulted on this autumn and form the basis of a new Water Reform Bill. 

Reed said: "Our water industry is broken. That is why this Government will fix our broken regulatory system so the failures of the past never happen again.  

"The Government will abolish Ofwat. In the biggest overhaul of water regulation in a generation, we will bring water functions from four different regulators into one. 

"A single, powerful regulator responsible for the entire water sector will stand firmly on the side of customers, investors and the environment and prevent the abuses of the past.

"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."

The announcement follows the publication of the Independent Water Commission, chaired by Sir Jon Cunliffe.

The Commission covers how the system is regulated, how to manage the competing demands on water, how water companies are governed and how critical water infrastructure is kept resilient both now and in the future and sets out 88 recommendations.

The Commissions recommended a single integrated water regulator, greater consumer protection, stronger environmental regulation and clear strategic direction, among others.

Sir Jon Cunliffe said: "Restoring trust has been central to our work. Trust that bills are fair, that regulation is effective, that water companies will act in the public interest and that investors can get a fair return.

"Our recommendations to achieve this are significant. They include the management of the whole water system, regulation of the water industry, the governance and financial resilience of water companies and a stronger voice for local communities and water customers.

"In this report I have considered what is best for the long-term future of water.  This is a complex sector with a highly integrated system, responsible for the second-largest infrastructure programme in the UK.

"Resetting this sector and restoring pride in the future of our waterways matters to us all. In countless conversations in the last nine months I have been struck by the urgent need and passion for change. Doing this will require hard work, strong leadership and sustained commitment. But it can and must be done.

"I am grateful to all to all those who have contributed generously and constructively to our work with their time, expertise and challenge."