Environmental (Commonwealth Union)_ England and Wales’ water sector is in chaos and needs to be fundamentally transformed if customers, the environment, and public trust are to be protected, according to the interim report of a pioneering review released by the independent Water Commission on Tuesday.
Led by Sir Jon Cunliffe, former deputy governor of the Bank of England, the commission’s report gives a damning portrait of a system riddled with pollution, financial risk, regulatory failure, and mismanagement. Its findings amount to one of the most comprehensive criticisms of the water industry in decades.
There have been fundamental, systemic, and interlocking failures over the last few years,” Sir Jon declared. “Failures of government policy, of regulatory control, and of company culture.”
The review was commissioned by the UK government in October 2024, following a public uproar over sewage dumping, record water bills, and profits running counter to decaying infrastructure. While nationalization was ruled out initially, it seems from the review that radical legislation and regulatory overhaul would be required to address the crisis.
A Sector in Crisis
The commission highlights three fundamental areas of failure.
- Government Strategy – Failure to plan in the long term and set clear policy
- Regulatory Weakness – Ineffective enforcement and weak regulation
- Corporate Accountability – Private profit taking precedence over public service in water companies
It also points to a general collapse of public trust, driven by increasing openness about sewage overflows and executive pay. In just 2023-2024 alone, more than 3.6 million hours of sewage spillover were recorded as legally permitted during wet weather but strongly damaging to rivers, wildlife, and public health.
Regulators within the industry
The financial regulators within the industry, including Ofwat, the Environment Agency, and Natural Resources Wales, were arguably the most acutely condemned.
Sir Jon felt that regulation must shift from “detached oversight” to dynamic, active engagement, the same as banks are supervised.
We need a regulator that is close to firms… not just so they can come in and assist early on, but so that they can spur firms to improve, he told BBC Breakfast.
The commission is considering in its current deliberations whether to merge and coordinate regulators, citing fragmentation as a hindrance to effective action.
Public Frustration and Political Pressure
Over 50,000 public responses from industry experts, campaigners, and community organizations shaped the review.
“What we heard was unequivocal: the system is not working as people want and need it to,” said Sir Jon in the report’s foreword.
Reacting to the critique, Environment Secretary Steve Reed acknowledged that the system is “broken” and pledged the government to officially respond to the final report of the commission, published later this summer.
Meanwhile, Welsh government ministers said they were considering the report, with opposition parties adding their calls for more action.
Liberal Democrat Tim Farron branded the current regulatory regime as a “failure” and stated, “It’s time for Ofwat to go.”
Conservative Victoria Atkins defended the steps taken in the past by referring to criminal prosecutions and full monitoring of storm overflows when her party was in power.
The Industry Responds
The trade association for the industry, Water UK, recognized that confidence has been lost with the public and hoped the review would lead to a “fundamental reset”.
“What we are seeking… are proposals which will allow us to rebuild trust by doing much more, much faster,” said Stuart Colville, deputy chief executive.
But others claim change must be more profound.
James Wallace, River Action UK chief executive, said the review falls short of addressing the fundamental problem.
“This is less a plan to revive our rivers than it is a sales brochure for overseas investors,” he warned. “We need to put water quality and public good first.”
Investment Without Confidence
Despite recent announcements of billions of pounds’ worth of investment, for example, a 26% typical rise in bills in April 2025, the public does not trust how that money is being spent.
The sector is also coming under increasing pressure from climate change, population growth, and decades of underinvestment with much of what already exists outdated and strained.
The interim report bluntly states that even the most well-funded plans may be ineffective without a new regulatory and strategic framework.
Next Steps: Final Report Due this Summer
The Water Commission’s final report will be delivered later this summer, in 2025. It will include detailed legislative and structural proposals for government to consider.
In the meantime, pressure will continue to mount—on regulators and companies and on politicians, who will need to decide whether they are willing to remake the system or become accomplices to its further breakdown.
