Water bills could rise by 30 per cent over next five years as damning report into 'broken' industry published
Bosses at Severn Trent Water said they are "ready to play their part" in shaping the water industry's future after a damning report was published today (July 21).
Water regulator Ofwat is now set to be scrapped after an independent report from the Independent Water Commission (IWC) described the water industry as "broken".
After a nine-month enquiry the commission, chaired by Sir Jon Cunliffe, delivered a 465-page report containing 88 recommendations to reform how water is supplied in the UK, accusing water companies of "pursuing short-term private interest" at the expense of the public interest.
Key among those reforms is the scrapping of water regulator Ofwat, which the commission said had "failed", and replacement of the body with a new "integrated regulator" for water, along with nine new regional water authorities to deliver on local priorities.
The new integrated regulator in England would also include the Drinking Water Inspectorate, as well as taking on the water functions from the Environment Agency and Natural England.
Sir Jon Cunliffe said that a massive investment was now required in the nation's water infrastructure - with the possibility that bills could rise by up to 30 per cent over the next five years.
A spokesperson for Severn Trent Water, the region's main water supplier with more than 4.6 million customers, welcomed the publication of the report, and said it was going "further and faster" to make improvements.
Earlier this year, the firm came under fire from North Shropshire MP Helen Morgan after it announced profits of around £320 million.
“We’re ready to play our role in shaping the future of the water sector following the publication of Sir Jon Cunliffe’s important review," they said.
"Our customers can be assured that we’re already getting on with delivering a huge £15bn investment in the Midlands and we are consistently recognised as industry leaders for performance - including going further and faster to reduce spills from storm overflows."
However some water campaigners say the reforms do not go far enough, with many calling for water companies to be taken out of profit-seeking private ownership and re-nationalised, a move ruled out by the recommendations in the report.
Founder of River Severn campaign group UpSewageCreek, Claire Kirby, said the report had a "narrow scope" and said regulator Ofwat had failed to look after the interests of customers or the environment.
"The problem is corporate finance and private ownership. We need to take water back into public hands immediately," she told the Shropshire Star.
The report published today said ownership models did "not appear to be the most important driver of company outcomes", but added in its recommendations that a new regulator should be able to consider whether it would a water company should transition to an "alternative ownership model" on a case-by-case basis.
In the immediate wake of the report, the Government confirmed plans to scrap Ofwat, with legislation for a new regulator set to be laid out in the House of Commons this week.
'Lack of infrastructure is holding back economic growth'
Secretary of State for the Environment Steven Reed said the new initiatives would deliver the "change" that the public had voted for in the 2024 general election, and said over £1bn of private investment would go towards repairing the country's infrastructure.
"The lack of water infrastructure is holding back economic growth," he said.
"Water companies have been allowed to profit at the expense of British people when they should have been investing to fix our broken water pipes. A broken regulatory system let them get away with it, failing customers, investors and the environment.
"Water regulation has been too weak and ineffectivive. Having four separate regulators has created a merry-go-round which has failed customers and the environment. Ofwat has failed to protect customers from water companies mismanagement of their hard earned money.
"The new regulator will stand firmly on the side of customers, investors and the environment and will prevent the abuses of the past."
An Environment Agency report released last week criticised an "unacceptable" upturn in pollution incidents involving nine water companies in 2024.
Welsh Water, a not-for-profit company which serves 1.4 million customers across Wales, said it welcomed the publication of the Independent Water Commission’s report and would "take time to carefully consider its findings and recommendations".
“We are committed to working closely with governments, regulators, and stakeholders to respond to the commission’s insights," said a spokesperson.
"This is an important opportunity to strengthen public trust, improve our services, and ensure we are well positioned to meet the significant challenges facing the sector.”
