Water watchdog to be axed in ‘broken’ sector shake-up

Water regulator Ofwat will be abolished as part of an overhaul of the regulatory system, the environment secretary has confirmed.

- ARCHIE MITCHELL

Steve Reed said the water industry is “broken” and firms have been fleecing the public under a “regulatory system that let them get away with it”.

Mr Reed made the announcement in response to an independent review by Sir Jon Cunliffe commissioned by the government to answer public fury over pollution in rivers, lakes and seas, soaring bills, shareholder payouts and bosses' bonuses.

He said the move to create a single “powerful” regulator, taking in the functions of four existing bodies with overlapping functions, would curb pollution and “prevent the abuses of the past for customers”.

The overhaul, he said, would ensure “British families are never again hit by the shocking bill hikes we saw last year”, and committed to cut water companies' sewage pollution in half within five years.

Mr Reed blamed soaring water bills for straining household finances and warned that poor infrastructure is holding back economic growth. And he blamed rogue water bosses prioritising payouts to shareholders over investment in infrastructure over decades.

He said: “Around £85bn was paid out to shareholders since privatisation, and we've seen from the state of sewage in our waterways that there was inadequate investment going into into the water system.

“There were people there that were gaming the system... the previous government allowed regulation to be too light touch.”

Mr Reed thanked Sir Jon and his team for their “outstanding” report.