The Impartial Water Fee (IWC) reported its findings on 21 July, the fruits of an eight-month investigation, billed as the biggest assessment of the water sector in England and Wales since privatisation.1
It has had the sad process of determining easy methods to restore belief in a system that by all accounts is taken into account damaged. Historic precedents have been clearly briefly provide and the fee’s chair Sir Jon Cunliffe mentioned it was “our personal Nice Stink”,2 referencing the 1858 disaster – when a lot of the stream of the Thames was deemed to be uncooked sewage3 – which led to the creation of the sewer system within the first place.
As this newest second of reckoning has approached, many have floated the thought of abandoning the private-sector mannequin in its entirety. The £100 billion estimated price of renationalisation is the opposite facet of that coin, and The Occasions editorial praised the assessment’s mixture of recognizing “the extent of the sector’s failure” however with out “denying business realities as many within the Labour Social gathering would have preferred him to do”.4
As with the Nice Stink, Cunliffe was insistent that change wouldn’t occur in a single day. Bazalgette’s nice mission required a 15-year dedication to start to see outcomes. Cunliffe’s principal suggestion was on the statute books inside hours of his report’s publication. That is the choice to abolish OFWAT and convey the capabilities of 4 completely different water regulators into one.5
The present regulatory system “is fragmented and overlapping”, mentioned DEFRA, “and totally joined-up regulation is crucial for the system to fulfill the calls for of the long run and be certain that non-public water corporations act within the public in addition to the non-public curiosity”.6
Such an excellent regulator will rely upon the hiring of sufficiently expert people with expertise of working within the sector, and the assessment mentioned this might imply providing “appropriate remuneration, outdoors of public sector pay controls… and supply efficient profession paths in order that experience may be retained”.7
Commenting in The Occasions, Feargal Sharkey complained that the plan to exchange OFWAT was not addressing “the underlying foundational cracks”, and he appeared unconvinced that a lot about OFWAT would change past “the brass plaque by the entrance door”.8
The true concern on the coronary heart of the present disaster, he mentioned, was “enterprise capitalism and company greed, and the exploitation of monopolies supplying ingesting water to milllions of individuals”. And none of this, he believed, was addressed by the assessment.
A optimistic prescription? Methods pondering to be adopted
Thoroughness was one level on which commentators might need struggled to seek out fault, and the assessment’s 484-page itemisation of issues was accompanied by “some glorious and wide-ranging suggestions”, within the view of Mark Lloyd, chief government of the Rivers Belief.
“I imagine that the suggestions on this complete report, if applied by authorities, would result in a dramatic enchancment within the water atmosphere and much more cost effective supply,” he mentioned.9
He praised, for instance, the report’s requires “an growing in funding for Catchment Partnerships, and the creation of recent regional planning our bodies as a part of a methods method to managing water with clearer strategic path from authorities.”
The introduction of those new regional planning our bodies was one in every of 5 of the assessment’s 88 suggestions that the federal government opted to instantly undertake, in the deal with made by Setting Secretary Steve Reed to parliament on 21 July.
Key to the method would be the adoption of “methods planning”, which has been utilized in quite a lot of different sectors, and the report consists of case research on Nationwide Vitality Methods Operator (NESO), and Regional Flood and Coastal Committees (RFCCs). Methods planners, mentioned the report, “will extra successfully combine planning throughout the entire water system”, and this will likely be performed at a regional stage in England (by way of eight new planning authorities) whereas Wales can have a single nationwide planning authority.
These will likely be unbiased, mentioned DEFRA, and can embrace illustration from native councils, public well being, atmosphere, agriculture and customers, amongst others.
By way of these new planning authorities, the federal government goals to deal with the essential want to hurry up the development of essential infrastructure, and commentators noticed that no new water reservoirs have been created in England and Wales in over 30 years, for instance.10
The Rivers Belief additionally praised the assessment’s calls for “{that a} clear path for supply of plans is created to keep away from plans being written however not delivering change.”
Suggestions of the assessment that have been instantly adopted included “vital reforms to Operator Self-Monitoring, with larger use of digitalisation, automation and third-party assurance”.
Steve Reed offered particular element in his deal with: “Water corporations are already required to publish information on some sewage spills inside one hour. We’ll roll out real-time monitoring throughout the wastewater system. All this information will likely be made publicly out there on-line.”
Upping the innovation ante
Innovation would possibly maintain the important thing to addressing lots of the issues confronted by the water sector however R&D ranges appear to be languishing, and a tradition of danger aversion prevails, within the assessment’s findings. It contrasted the £33 million R&D spend of the water assortment, remedy, and provide business in 2023 with the £1.2 billion spent by the telecommunications business.
Inadequate funding is one side of the innovation shortfall, mentioned the assessment, which additionally appeared to indicate how different sectors had it higher (or simpler). For instance, the OFWAT Innovation Fund, at £400 million, contributed roughly 0.38% of complete business spending on innovation over the 2024 Value Assessment interval.11 In distinction, the power sector receives a a lot increased proportion of its innovation funding from the ringfenced Community Innovation Allowance, the £450 million Strategic Innovation Fund, and contibutions from the £1 billion Web Zero innovation fund.
Inadequate funding was one in every of 4 foremost points it noticed as “resulting in a scarcity of innovation within the water business”, with the others being danger aversion, lack of collaboration throughout the business, and short-termism (or “Lack of visibility in long-term supply necessities”).
On the matter of danger aversion, the actual fact of the sector’s being run in a monopoly vogue clearly meant “a scarcity of incentives to innovate”, and the assessment mentioned “new mechanisms” have been wanted to facilitate innovation inside water firm and regulator tradition.
Many points of the regulatory and legislative panorama have created limitations to innovation, and among the Name for Proof responses have supported the notion of regulatory sandboxes, to “permit water corporations to check new ideas and progressive approaches, probably in actual world situations, with out being topic to the complete regulatory burden.” On this, Sir Jon Cunliffe had appeared to criticise the regulatory system’s reliance on strict guidelines, calling as an alternative for “constrained discretion” — in different phrases, a versatile framework that enables experimentation whereas sustaining oversight. This will likely be key to unlocking innovation in respect of issues like nature-based options and automatic monitoring methods.
The assessment famous the gradual adoption of recent applied sciences and options, together with nature-based options, which it had been noticed typically get caught in “pilot purgatory”, as a July 2025 report by CIWEM has noticed.12
Threat aversion can be a pure by-product of the extraordinary public and political scrutiny the business is now beneath, mentioned the report, which is making it harder for corporations to justify risk-taking or experimental work.
Certainly the suggestion that corporations could be permitted “regulatory forbearance” as a part of an effort to assist a few of them get onto a surer footing (and which would come with a tightening of possession and governance as a requirement) amounted to permitting water corporations to “dodge fines”, within the evaluation offered by The Guardian.13
Notes
[1] “Written Assertion: Impartial Fee and Assessment of the Water Sector”, 24 October 2024. Hyperlink: https://www.gov.wales/written-statement-independent-commission-and-review-water-sector?utm_source=chatgpt.com
[2] “Ofwat abolished in revolution for the water business”, The Occasions, 22 July 2025.
[3] The Science of Sewage: What Occurs When We Flush?, by Julian Doberski. Pimpernel Press Ltd. Sept 2024.
[4] “Water stress”, The Occasions, 22 July 2025
[5] In England this may exchange Ofwat, the Consuming Water Inspectorate and water-environment associated capabilities from the Setting Company and Pure England. In Wales, Ofwat’s financial tasks will likely be built-in into Pure Sources Wales, in keeping with DEFRA.
[6] “Roadmap to rebuild belief in water sector unveiled in main new report”, press launch from DEFRA, 21 July 2025.
[7] Indepedent Water Fee, Closing Report, 21 July 2025, p197. See hyperlink: https://belongings.publishing.service.gov.uk/media/687dfcc4312ee8a5f0806be6/Independent_Water_Commission_-_Final_Report_-_21_July.pdf
[8] “Company greed is on the coronary heart of this”, The Occasions, 22 July 2025.
[9] “Impartial Water Fee Report Might Result in Dramatic Enhancements for Setting and Public”, press launch, The Rivers Belief, 21 July 2025.
[10] “Ofwat abolished in revolution for the water business”, The Occasions, 22 July 2025.
[11] Indepedent Water Fee, Closing Report, 21 July 2025, p420.
[12] “Nature-based options can work for the water sector – however it takes a step-change inthinking”, CIWEM. Hyperlink right here.
[13] “Water assessment in England and Wales: seven key takeaways”, The Guardian, 22 July 2025.
