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Ofwat to be scrapped as sewage spills hit record levels
Ofwat to be scrapped as sewage spills hit record levels

The Independent

time11 hours ago

  • Business
  • The Independent

Ofwat to be scrapped as sewage spills hit record levels

Environment Secretary Steve Reed has confirmed the abolition of water regulator Ofwat as part of a major overhaul of the "broken" water industry. The new system will consolidate water functions from four different regulators into a single, powerful body. Mr Reed criticised water companies for prioritising £85bn in shareholder payouts since privatisation over essential infrastructure investment, leading to record sewage pollution and soaring bills. The changes are based on Sir Jon Cunliffe's report, which also recommended removing regulatory roles from the Environment Agency and Natural England. Sir Jon warned that water bills are projected to rise by almost a third by the end of the decade due to necessary investment in ageing infrastructure.

‘Never again': Regulatory reform pledged to prevent repeat of water bill hikes
‘Never again': Regulatory reform pledged to prevent repeat of water bill hikes

The Independent

time13 hours ago

  • Business
  • The Independent

‘Never again': Regulatory reform pledged to prevent repeat of water bill hikes

The Environment Secretary has said households will 'never again' face major water bill hikes as he announced an overhaul of regulation of the troubled sector. Steve Reed announced in a speech alongside the River Thames that regulator Ofwat would be scrapped, as part of measures to pull overlapping water regulation by four different bodies into one 'single powerful' regulator responsible for the whole sector. He made the announcement in response to an independent review by Sir Jon Cunliffe which called for the move, as one of 88 measures to tackle problems in the water sector. The review was commissioned by the Government to answer public fury over pollution in rivers, lakes and seas, soaring bills, shareholder payouts and bosses' bonuses. Mr Reed pledged the new regulator would 'stand firmly on the side of customers, investors and the environment', as he said the Government would cut sewage pollution by half by 2030 – based on a new, higher baseline of pollution in 2024 compared with previous targets relating to 2021. And it would oversee maintenance and investment in water infrastructure so that 'hard-working British families are never again hit by the shocking bill hikes we saw last year'. Questioned by journalists after the speech about future bill hikes, Mr Reed insisted it was 'absolutely the intention' that the reforms would ensure there was adequate investment in the long term to prevent the kind of 30% increase seen in customer water bills last year at the next price review in five years. He also accused the Tories of failing to ensure sufficient investment in crumbling pipes and infrastructure that would have prevented the recent hikes. But in a separate speech, review author Sir Jon warned that costs and bills are likely to continue to rise, as he recommended the Government introduce a national social tariff to help households struggling to pay. 'The cost of producing water and wastewater services is likely to increase over the medium and longer term as the industry has to replace ageing assets, respond to higher environmental and public health standards and continue to adapt to the challenges of population growth and climate change,' he said. 'And against that likely background of rising costs and rising bills, there is a need for a stronger safety net for the most vulnerable when exposed to water poverty.' Asked if investor returns will need to rise to attract the capital needed and contribute to bill hikes, Sir Jon said: 'All the investors I talked to said we are happy to accept a lower return … if you can give us lower risk on the downside. 'Bills will have to reflect what investors need, the equity they need. 'That is part of the cost of building the infrastructure that we need but at the same time, a regulator needs to continue to maintain pressure and efficiency.' Sir Jon's review did not explore renationalising water companies; ministers have refused to entertain the possibility despite demands from campaigners to return them to public ownership. Mr Reed warned nationalisation would cost £100 billion and slow down efforts to cut pollution. He said it was not the answer, adding: 'The problems are to do with governance and regulation, and we are fixing those problems so we can fix the problem of sewage pollution and unacceptable bill hikes in the fastest time possible.' The reforms would see a single regulator replace Ofwat and take in functions related to the water sector from the Environment Agency, which currently investigates pollution incidents and licenses water abstraction from the environment, as well as the Drinking Water Inspectorate and Natural England. Sir Jon suggested a new water regulator would take two years to set up after looking at the time frame for setting up Ofcom, the communications regulator, in the early 2000s. The process could involve bringing the different organisations together as one before integrating the staff and working out where there may be duplication or gaps. Sir Jon also said the Government will have to tackle the issue of securing a 'very high level of leadership', adding that the current system does not have the skills and expertise that will be needed in the new set-up. Asked if ministers need to carry forward all of his 88 recommendations to ensure a full reset of the sector, he said: 'I don't think you're going to solve the fundamental problem unless you tackle all of those issues. 'I think you can get improvement on all those dimensions, but I do think you need to address it all in order to move us to a different place.'

UK overhauls regulation of 'broken' water system
UK overhauls regulation of 'broken' water system

France 24

time13 hours ago

  • Business
  • France 24

UK overhauls regulation of 'broken' water system

The move comes after years of angry complaints about the privately-run system and its much-maligned regulator Ofwat, including constant leaks and raw sewage being discharged into waterways and oceans. "Our water industry is broken," Environment Secretary Steve Reed said in a statement. The government will abolish Ofwat in response to failures identified by the Independent Water Commission, dubbed the most comprehensive review of the sector since its privatisation in the late 1980s. "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," Reed said. Spiralling bills and high executive pay at the water companies, alongside decades of dividends paid to their shareholders and underinvestment in crumbling infrastructure, have stoked public anger. On Sunday, it emerged the number of serious contamination incidents in England had risen by 60 percent in a year, prompting the government to vow to halve sewage pollution caused by water companies by 2030. "The water industry, the system of regulation that we have and actually our system for managing our rivers and waterways generally ... is failing," Jon Cunliffe, head of the Independent Water Commission, told Times Radio. Published alongside a 67-page summary detailing the 88 recommendations, the commission's report concluded the "complex and unintelligible" framework to upgrade infrastructure is "clearly not working". It urged the UK and Welsh governments to give themselves more powers to "direct" failing water firms, while also demanding an overhaul of their regulation. Britain's publicly-owned water and sewage industry was privatised in 1989 under the Conservative government of then-prime minister Margaret Thatcher. Then the sector had no debt, but that has now ballooned to tens of billions of pounds, which critics say has been partly used to pay generous dividends. Water campaigner Feargal Sharkey said Monday that successive governments had "lost control of this industry" and he had little faith the suggested reforms would succeed. "The beating heart of this debacle is ... corporate greed, the financial engineering, the exorbitant salaries," he told BBC News. "We were promised a proper root and branch wide-ranging review, including ownership and structure. We were promised champagne. All we've actually got is sour milk." © 2025 AFP

‘Never again': Regulatory reform pledged to prevent repeat of water bill hikes
‘Never again': Regulatory reform pledged to prevent repeat of water bill hikes

Yahoo

time14 hours ago

  • Business
  • Yahoo

‘Never again': Regulatory reform pledged to prevent repeat of water bill hikes

The Environment Secretary has said households will 'never again' face major water bill hikes as he announced an overhaul of regulation of the troubled sector. Steve Reed announced in a speech alongside the River Thames that regulator Ofwat would be scrapped, as part of measures to pull overlapping water regulation by four different bodies into one 'single powerful' regulator responsible for the whole sector. He made the announcement in response to an independent review by Sir Jon Cunliffe which called for the move, as one of 88 measures to tackle problems in the water sector. The review was commissioned by the Government to answer public fury over pollution in rivers, lakes and seas, soaring bills, shareholder pay outs and bosses' bonuses. Mr Reed pledged the new regulator would 'stand firmly on the side of customers, investors and the environment', as he said the Government would cut sewage pollution by half by 2030 – based on a new, higher baseline of pollution in 2024 compared to previous targets relating to 2021. And it would oversee maintenance and investment in water infrastructure so that 'hard working British families are never again hit by the shocking bill hikes we saw last year'. Quizzed by journalists after the speech about future bill hikes, Mr Reed insisted it was 'absolutely the intention' that the reforms would ensure there was adequate investment in the long term to prevent the kind of 30% increase seen in customer water bills last year, at the next price review in five years. 'The reforms that we're bringing in are intended to prevent the circumstances that led to those bill hikes,' he said. 'We're bringing it in so that there will be adequate investment in the long term in our water pipes and our sewage pipes, so they don't ever again crumble away to the extent that a big bill hike becomes necessary.' He accused the Tories of failing to ensure sufficient investment in crumbling pipes and infrastructure that would have prevented the recent hikes. In his speech, Mr Reed said the water industry is 'broken' and has been allowed to fail under a 'regulatory system that let them get away with it'. 'Our rivers, lakes and seas are polluted with record levels of sewage,' he said. Mr Reed blamed soaring water bills for straining household finances and warned that poor infrastructure is holding back economic growth. But ministers have refused to entertain the possibility of renationalisation, despite demands from campaigners to return water companies to public ownership, with Mr Reed warning it would cost £100 billion and slow down efforts to cut pollution. He said nationalisation was not the answer, adding: 'The problems are to do with governance and regulation, and we are fixing those problems so we can fix the problem of sewage pollution and unacceptable bill hikes in the fastest time possible.' The reforms would see a single regulator replace Ofwat and take in functions related to the water sector from the Environment Agency, which currently investigates pollution incidents and licenses water abstraction from the environment, as well the Drinking Water Inspectorate and Natural England.

Water industry faces ‘root and branch reform' after landmark review
Water industry faces ‘root and branch reform' after landmark review

The Independent

timea day ago

  • Business
  • The Independent

Water industry faces ‘root and branch reform' after landmark review

The water industry is set to be completely overhauled following the publication of a landmark review of the sector on Monday. Environment Secretary Steve Reed is expected to promise 'root and branch reform' of the sector in a bid to clean up England's rivers and limit rises in water bills. The commitment will follow the publication of the final report of the Independent Water Commission led by former Bank of England deputy governor Sir Jon Cunliffe. In a speech responding to Sir Jon's report, Mr Reed is set to describe the water industry as 'broken' and welcome the commission's recommendations to ensure 'the failures of the past can never happen again'. He is also widely reported to be preparing to abolish the industry's beleaguered regulator Ofwat, which has faced criticism for overseeing a sharp rise in sewage pollution while failing to crack down on executive pay and large dividends at debt-ridden water companies. In his interim report, Sir Jon criticised the way the sector was regulated, with duties split between Ofwat, the Environment Agency and the Drinking Water Inspectorate. On Sunday, Mr Reed would not confirm that Ofwat was in line to be scrapped, but declined to express confidence in the regulator either, saying it was 'clearly failing'. Both the Conservatives and the Liberal Democrats have agreed that water regulation needs to change. Urging the Government to be 'transparent' about what would replace Ofwat and how it would work, Tory shadow environment secretary Victoria Atkins said: 'No one disputes that the water sector is under pressure, and we all want to see meaningful improvements. 'Reforming regulation must be focused on improving performance and guaranteeing water security.' Lib Dem leader Sir Ed Davey has called for the creation of a Clean Water Authority that could 'hold these water companies to account' and 'fine them when they fail'. While Mr Reed has pledged to avoid the need for 'huge shock hikes' in water bills, such as the 26% increase seen this year, reform is unlikely to lead to a fall in costs for consumers. The Government hopes that investment in long-neglected infrastructure will make large bill increases unnecessary, but Mr Reed acknowledged on Sunday that there needed to be 'appropriate bill rises' to secure 'appropriate levels of investment'. He is also unlikely to commit to expanding social tariffs that could help households struggling with bills at the cost of higher charges for wealthier families, saying he was yet to be convinced that this was needed. Prior to Monday's announcement, Mr Reed had already committed to halving sewage pollution in England's rivers by 2030 thanks to a £104 billion investment from the sector in upgrading infrastructure. He has also announced the creation of a new, legally binding water ombudsman, expanding the role of the voluntary Consumer Council for Water and bringing the sector into line with other utilities. But the Conservatives have accused Labour of copying the policies of the previous government. Ms Atkins said: 'Labour have already wasted a year since the general election as they came into office with no plans for water, instead claiming that the work we started in office is their own.'

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