On 23 October 2024, the UK and Welsh Governments announced the launch of an Independent Commission into the water sector and its regulation, marking the largest review of the water industry since it was privatised in 1989. 

Chaired by Sir Jon Cunliffe, the former Deputy Governor of the Bank of England, the Commission forms part of the Government’s “long-term approach to ensuring we have a sufficiently robust and stable regulatory framework to attract the investment needed to clean up our waterways, speed up infrastructure delivery and restore public confidence in the sector” . 

The Commission will draw upon a panel of experts from across the regulatory, environment, health, engineering, customer, investor and economic sectors. While the panel will not include representatives from the privatised water companies, it will engage with the industry and is intended to “establish a new partnership between government, water companies, customers, investors, and all those who enjoy our waters and work to protect our environment”.

A key aspect of the Commission’s remit will be to consider systemic issues in the water sector.  Following the review, it will be expected to provide recommendations to the UK and Welsh Governments in Spring 2025.  Those recommendations are anticipated to help establish, (among other outcomes):

  • a “clear vision” for environmental, public health, economic and customer outcomes; 
  • strategic catchment-based approaches to planning; and 
  • improved and more stable regulation of the sector, leading to better outcomes for the environment and customers.   

Any recommendations which the UK and Welsh Governments take forward are also expected to form the basis for further legislation, and therefore the outcome of the review will be of key interest to many within the industry.  It is also notable that thus far, the Government has refused to rule out taking significant measures such as abolishing the water industry’s economic regulator Ofwat, and reforming the industry’s environmental regulator, the Environment Agency, as a result of the recommendations.  However, it has confirmed that renationalisation is not being considered.  

The announcement of the Commission follows in the wake of some notable recent developments in the sector, including the launch of the Water (Special Measures) Bill and provisional indications from Ofwat that customer bills will likely need to rise by an average of £19 per year between 2025 and 2030 in order to meet the sector’s infrastructure and investment demands (with many WaSCs suggesting that higher increases are required).  It also marks a renewed focus on the legal and practical regulation of the sector, at the same that Ofwat has announced a consultation on potential additional powers it could receive under the Water (Special Measures) Bill.

Some sector experts have welcomed the establishment of the new Water Commission, with Water UK, the trade association for the water industry stating that the “current system is not working and needs major reform… We hope this Water Commission can take a fundamental look at the root causes and provide clear recommendations on the changes needed”.

The launch of the Commission will be of real interest to many.  It remains to be seen how the Commission will engage with stakeholders and what recommendations the Commission will make as a result of its findings. However, it is clear that the sector is facing many challenges not least arising from population growth, climate change and ageing infrastructure all of which are often drowned out by the heated debates coming out of sewage discharge issues.  I hope that this Commission will take some of the heat out and really tackle the issues in the round, thereby ensuring that we have a sector fit for the coming decades.

If you have any questions or would like further information on how these developments may impact you please contact Mike Barlow or visit our website.