(Commonwealth_Europe) A highly anticipated interim review into the water sector in England and Wales has found deep-rooted and systemic failures across the industry, implicating water companies, government oversight, and regulatory bodies. The report, led by Sir Jon Cunliffe, former Deputy Governor of the Bank of England and Chair of the Independent Water Commission, outlines a sector in crisis and calls for a comprehensive restructuring of governance and regulatory frameworks.
The review concludes that a combination of chronic pollution, financial instability, operational mismanagement, and critical infrastructure deficiencies has severely undermined public confidence in the water industry. Cunliffe emphasized that no single radical reform would suffice, asserting that a “fundamental reset” is needed to restore trust and sustainability in the sector.
“We have heard of deep-rooted, systemic, and interlocking failures over the years—failures in government strategy and planning, failures in regulatory protection for consumers and the environment, and failures by some companies and their owners to prioritize public interest alongside private gain,” Cunliffe stated.
The review strongly criticizes the regulatory landscape, particularly the performance of Ofwat, the economic regulator, and the Environment Agency. According to Cunliffe, the overlapping responsibilities and lack of cohesive enforcement have led to accountability gaps and diminished public trust. He suggested that streamlining or potentially merging regulatory functions could improve oversight and effectiveness.
Moreover, Cunliffe indicated a possible shift in regulatory philosophy, proposing a more proactive and supervisory model that would empower regulators to intervene before crises emerge. He also alignment with public interest objectives.
Despite widespread public and political discourse advocating for public ownership of water infrastructure, the commission’s remit explicitly excluded consideration of this option—an exclusion campaigners have fiercely criticized. Cunliffe acknowledged this constraint, noting that while the current model should attract stable, long-term investors willing to accept modest returns, greater alignment with public benefit is crucial.
The interim findings drew immediate responses from environmental campaigners and politicians, many of whom expressed disappointment over the lack of definitive action.
James Wallace, CEO of River Action, described the report as “more of a sales pitch to international investors and overpaid CEOs” than a serious blueprint for reform. He urged the commission to look abroad for successful models of water management that prioritize public welfare over private profit.
Giles Bristow, chief executive of Surfers Against Sewage, argued the review failed to confront the structural drivers of environmental degradation.
“The criminal behavior, chronic lack of investment, and mismanagement that have led to our polluted waterways stem directly from a profit-driven model. While the report begins to acknowledge this reality, it does not yet articulate the necessary end to pollution for profit,” Bristow said.
Richard Benwell, Chief Executive of Wildlife and Countryside Link, stressed the urgency of political leadership in advancing robust environmental reforms.
“The findings point clearly to the need for enforceable water quality targets and cross-sector accountability. The time for political equivocation has passed.”
Liberal Democrat Environment Spokesperson Tim Farron MP went further, calling for the abolition of Ofwat. “The heart of the sewage scandal lies in a failed regulatory system. It will take more than superficial reforms to clean up the industry—Ofwat must be replaced.”
In response to the review, a spokesperson for Water UK, the trade association for the water industry, acknowledged the need for reform.
“There is consensus that the water sector, as currently structured, is not functioning effectively. This review should mark the beginning of comprehensive reforms. A simplified regulatory system that accelerates investment toward necessary improvements is essential.”
The urgency of the report’s findings was underscored this week when Thames Water, the largest water utility in the UK, revealed that private equity firm KKR had withdrawn from a proposed equity injection, casting doubt on the company’s financial stability.
The final recommendations of the Independent Water Commission are expected to be published later this year. Campaigners and policymakers alike are calling for those recommendations to include bold structural reforms, enforceable environmental standards, and mechanisms to hold water companies accountable to the public interest.
While the interim review is an important acknowledgment of systemic failings, its true impact will depend on the government’s willingness to implement meaningful change and restore public confidence in the management of a vital natural resource.
