Ofwat scrapped in “largest overhaul of water since privatisation”

Ofwat is to be replaced by a single water regulator responsible for the entire water system, the Government announced on Monday, 21 July.

In what the Government claims is the “biggest overhaul of the water sector since privatisation”, Ofwat’s functions will be merged with water functions across the Environment Agency, Natural England and the Drinking Water Inspectorate to form a new single, powerful regulator.

In a speech at Kingfisher Wharf, the Secretary of State for the Environment, Steve Reed pledged to strengthen regulation, clean up the country’s rivers, and protect the public from soaring water bills.

“Our water industry is broken,” Reed said. “That is why this Government
will fix our broken regulatory system so the failures of the past never happen again. 

“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.”

The creation of one powerful regulator will be responsible for the entire water
sector, in a bid to restore public faith and investor confidence in the nation’s water industry. 

The current fragmented approach of four separate regulators splits up economic, environmental and drinking water regulation. This complex web of regulators has led to contradictory and competing priorities. 

The aim of the reforms is to ensure that all regulation is in lock step to deliver for customers and the environment, bringing all water regulation under one roof.

The proposals will be consulted on this autumn and form the basis of a new Water Reform Bill. 

This comes on the back of a personal commitment from Environment Secretary, Steve Reed, to cut sewage pollution from
water companies in half by 2030. Working to make rivers the cleanest they’ve been since records began, the Government claims that it is the most ambitious sewage target in UK history.

The Government has also begun rebuilding the entire water network through a £104 billion investment to upgrade crumbling pipes and build sewage treatment works across the country.

These reforms build on previous initiatives over the past year to clean up England’s rivers, lakes, and seas: 
• £104 billion to upgrade crumbling pipes and build sewage treatment works across the country
• Customer bills earmarked for investment must now be spent one new sewage pipes and treatment works –
not spent on shareholder payments or bonuses 
• Company fines reinvested into local initiatives, with over £100 million being invested into local clean-up projects in communities 
• Largest budget for water regulation: the Environment Agency received a record £189 million to fund hundreds of enforcement officers to inspect and prosecute pollution water companies
• Polluter Pays: the law changed so that regulators can recover the cost of enforcement activity, ensuring that the polluter pays
• Banning wet wipes containing plastic in England, reducing microplastics 
• The Water (Special Measures) Act: banned unfair bonuses for 10 polluting water bosses this year and threatened prison sentences for law-breaking executives 

Alongside the creation of a new single regulator in England, the Welsh Government will also work to devolve economic regulation of water to Wales.