Government announces water regulator Ofwat will be abolished - everything you need to know and how it will affect your household

Water regulator Ofwat will be scrapped and replaced with a new independent body, the government has confirmed, as new plans to overhaul a ‘broken’ system are announced.

The announcement has followed a major review into England and Wales’ water sector, which found a ‘broken regulatory system’ has allowed water companies to profit at the expense of British people, rather than investing in water infrastructure. You may recall that back in December, it was announced that water bills would rise by 36% on average over the next five years, leaving many households feeling increased financial pressure.

Ofwat will be replaced by a new single, ‘powerful’ regulator that will take on the responsibilities of Ofwat, the Environment Agency, Natural England and the Drinking Water Inspectorate, with Secretary of State for the Environment, Steve Reed, stating this move will prevent abuses of the past and benefit customers, this is everything you need to know.

The announcement comes after the Independent Water Commission released Sir Jon Cunliffe’s report, AKA The Cunliffe Report, which had 88 recommendations on how to change the water industry in England and Wales.

It called for a single water regulator, devolved planning and resources, greater consumer protection, greater environmental regulation, and infrastructure reforms. It called for better management of public health risk in waters, as well as tighter oversight of water company ownership.

In real terms, it will take at least two years for the new regulator to be put into place, and Ofwat will continue to operate until the new regulator is ready.

Today (21 July) in a speech at Kingfisher Wharf, Steve Reed, Secretary of State for Environment, Food and Rural Affairs, pledged to strengthen regulation, clean up the country’s rivers and protect the public from soaring water bills.

‘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,’ he said.

‘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.’

In a statement, Ofwat has responded to this morning’s announcement:

‘The Cunliffe Report sets out a new direction for the water sector.

‘While we have been working hard to address problems in the water sector in recent years, this report sets out important findings for how economic regulation is delivered, and we will develop and take this forward with government. Today marks an opportunity to reset the sector so it delivers better outcomes for customers and the environment. Ofwat will now work with the government and the other regulators to form this new regulatory body in England and to contribute to discussions on the options for Wales set out in the report.

‘In advance of the creation of the new body, we will continue to work hard within our powers to protect customers and the environment and to discharge our responsibilities under the current regulatory framework. We will also work collaboratively with all our stakeholders to ensure a smooth transition.’

It’s unclear exactly how consumers will be affected as regulators change, as information is still being announced. However, Steve Reed has recommended customers invest in water meters to help with the rise in water bills.

While the reforms aim to bring about better services and more affordable bills, for the time being, your water bill is likely to remain the same, so it is a good idea to look for ways to save water and different ways to save water in your garden to cut back on your usage. If you’re struggling to pay your bills, always get in touch with your water company for support, and they may be able to offer a repayment plan.

What do you think about the reforms? Do you think it will improve water services in the UK?