Sky-high bills and sewage at its worst in over a century: What is the future of British water?

Britain’s water system, a damning new review has warned, is “broken” – and only a major regulatory overhaul will fix it.

Spearheaded by former Bank of England deputy governor Sir Jon Cunliffe, the once-in-a-generation Independent Water Commission review excoriates water companies for “failing to deliver much of what society demands and expects, including for the economy”.

Sewage pollution, sky-high bills, and eye-watering shareholder bonuses: the 465-page dossier makes for sobering reading.

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The review backs a strong new regulator, tighter environmental rules, social tariffs for low-income customers and greater financial resilience. But will its recommendations be enough? Campaigners fear not. The review lacks concrete plans for nationalisation or executive pay caps.

“By excluding public ownership as a possible solution, the government has proven that they are still wedded to Thatcher’s failed privatisation experiment and are committed to putting the interests of investors above the needs of the public,” said Hugo Fearnley, from nationalisation campaign group We Own It.

Since 1989 – when companies were privatised – £85 billion has been extracted from the water sector in dividends and other payouts to shareholders. But the Independent Water Commission opted against considering nationalisation, claiming it was beyond its remit.

Joe Davies of Take Back Water called the review “a welcome admission of failure”.

“But it still only represents thoughts rather than actions,” he added. “The only thing that will make any real difference is bringing water into public ownership.”

So what’s going to change – and what won’t? Let’s dive into the detail.

What are the key recommendations in the Cunliffe review?

The water sector’s failures are immediately obvious to anyone who has paid a water bill or tried to go for a wild swim.

This visibility makes it a uniquely bipartisan issue. According to new More in Common polling, 73% of Reform UK voters describe fixing water pollution as “very important”, only just shy of the 75% of Greens voters who do so.

The government is tanking in the polls: fixing our water system could be a rare example of a tangible success.

Ministers have pledged to adopt the review’s key recommendations. These are:

Scrapping Ofwat and the Drinking Water Inspectorate

Today, environment secretary Steve Reed announced plans to abolish Ofwat, one of the review’s recommendations.

“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 regulators will be combined into one “powerful, combined” body. This watchdog would also assume the environmental regulation responsibilities of the Environment Agency and Natural England.

“A single regulator would be able to oversee all operations of a water company from all angles and come to a ‘whole firm view’ of performance issues and compliance failures, the report reads.

Ofwat had been criticised by campaigners as “toothless”. In December, it permitted the water companies to enact record bill increases (£31 per year per household).

Gary Carter of GMB Union welcomed the decision to scrap Ofwat – but added that this alone would not be enough.

“GMB formally called for Ofwat to be abolished last year, so we welcome this move,” he said. “But water companies cannot be let off the hook. They’re the ones who’ve allowed our rivers and waterways to get in the state they are; splashing out on dividends and top brass pay, instead of infrastructure, whilst racking up huge debts.”

In Wales, Ofwat’s economic responsibilities would be integrated into Natural Resources Wales, the review said. It also calls for the creation of eight regional water system planning bodies in England and a national authority in Wales.

Strengthening consumer protections

The commission proposes turning the voluntary Consumer Council for Water into an ombudsman to strengthen customer protection. It also recommends a national social tariff for low-income households.

Currently, low-income customers are entitled to access financial support schemes from companies, but these are often poorly advertised.

“The Consumer Council for Water estimate that two million customers may not be getting the financial support that they are entitled to due to low awareness,” the report warns.

Last year, a CCW report found that nearly a fifth (18%) of customers were struggling with bills, and 40% more would struggle to cope with increases. Bill hikes were approved by Ofwat shortly thereafter.

New environmental rules

In 2024 alone, raw sewage was released into UK waterways 592,478 times, for a combined 4.7 million hours.

Report author Sir Jon Cunliffe today compared our current crisis the Great Stink of 1858.

“Back in 1858, the River Thames had become an open sewer,” he said. “London’s infrastructure hadn’t kept up with the population and economic development growth.

“It got to the point where parliament was disabled by it, it could not operate, the stench was so great. The newspapers called it The Great Stink.”

The commission urges sweeping environmental reforms to tackle this scandal, calling for tougher rules on sludge treatment and drinking water quality.

To curb pollution, it backs digital tracking and independent oversight of wastewater discharges. With droughts worsening, it recommends compulsory metering, reformed industrial tariffs, and investment in water reuse and rain harvesting.

But environmental campaigners were not impressed. James Wallace, CEO of River Action, queried how the government would enforce these new rules.

“This was a once-in-a-generation opportunity to reset a broken and corrupted system. Instead, the [Independent Water Commission] blinked… When raw sewage is pouring into our waterways and reservoirs run dry, tinkering with regulatory half-measures simply isn’t enough to restore public trust.”

What’s missing?

No mention of nationalisation

The Independent Water Commission chose not to consider nationalisation, stating it was outside its mandate. Ministers are reportedly exploring new intervention powers but stop short of public ownership.

This misses the point, says Fearnley.

“We cannot afford to play around with the fine print while a vital public resource goes under,” he continued. “What we are witnessing is the catastrophic collapse of privatised water.”

No cap on CEO pay

Despite public fury over soaring bills, pollution, and failing infrastructure, the Independent Water Commission has ruled out capping executive pay – claiming it would put off “the best people.”

Meanwhile, Thames Water’s CEO took home £2.3 million last year while the company dumped sewage and ran up £16bn in debt.

Severn Trent’s boss earned over £3m as spills surged.

Fearnley dismissed the idea that tighter regulation alone would be enough, saying: “The report points to more regulation, banning bonuses and bigger fines. These are all sticking plaster solutions that the water bosses will continue to dodge and ignore.”

Davies echoed this concern.

 “We are still being asked to reach into our pockets to bail out a system that has failed us time and time again,” the Take Back Water campaigner said. “Why should we pay when the service is broken?”

What could the government actually do?

Despite pledging to implement the report’s headline reforms, ministers continue to steer clear of the one option campaigners say would actually work: public ownership.

 “The report hasn’t really grappled with whether it is possible to have a system for private profit that also respects bill payers and protects the natural environment,” said environmental barrister Paul Powlesland from Lawyers for Nature. “It sort of feels a bit like window dressing.”

While scrapping Ofwat has been hailed as bold, Powlesland questioned why the same powers couldn’t have simply been used earlier. “A new regulator might help a bit,” he said, “but really only if they’re given the powers and obligations that you could just give to the current regulators.”

Powlesland believes meaningful progress is possible – but only if the government stops shielding water companies from accountability. “The law says most of this sewage pollution shouldn’t be happening,” he said. “Keep fining the companies until it’s more expensive to dump sewage than to fix the problem.”

“If the work was actually done over the next two to five years, and the money invested to fix the worst performing outfalls, I would, within five years, be happy to swim in [my river], in dry weather… It is very doable. It could be done.”

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