Ofwat faces abolition in long-awaited overhaul of water industry regulation

The embattled water regulator for England and Wales will be abolished under recommendations from a government-commissioned review, the Guardian understands.

- Helena Horton Anna Isaac Rowena Mason

Ministers are set to announce a consultation on Monday into creating a new regulator, to coincide with the results of a review into the water industry by the former Bank of England deputy governor Sir Jon Cunliffe.

This consultation is likely to conclude with the abolition of Ofwat, the watchdog that polices how much water companies can charge for services, sources said.

Ofwat has faced intense criticism over its failure to prevent sewage spills, hefty dividend payments and ballooning debts across water companies in England and Wales.

The review will also recommend a new regulatory system.

The Cunliffe review was set up by the government amid growing public anger at the sector. It will be the largest review of the sector since its privatisation under Margaret Thatcher.

At its launch last year, the environment secretary, Steve Reed, said the review would "shape new legislation to reform the water sector so it properly serves the interests of customers and the environment".