These include clearer direction from government, a simplified legislative framework, overhauled regulation, a rethink of water company structures and ownership – and a much tougher focus on asset health.
“We have heard of deep-rooted, systemic and interlocking failures over the years,” said Sir Jon.
“Failure in Government’s strategy and planning for the future, failure in regulation to protect both the billpayer and the environment and failure by some water companies and their owners to act in the public, as well as their private, interest.”
The interim report highlights how government needs to set a clear, long-term strategy for the sector that reflects the pressures from agriculture, development, energy and climate change.
It also calls for regional systems planning and stronger local involvement in decisions about pollution, infrastructure and water resilience.
Regulation
On legislation, the Commission notes the sector is governed by a tangle of 80 separate laws, making regulation inconsistent and confusing. Cunliffe says: “We anticipate that this will require new legislation.”
The report suggests Ofwat’s current approach—benchmarking firms against each other—is not enough. Instead, it proposes a “supervisory approach” more like financial services, allowing for earlier intervention and deeper scrutiny of company performance.
Environmental regulation also needs an overhaul. The Commission backs stronger capabilities, stable funding and better tech for regulators, while calling for joined-up working between economic and environmental watchdogs to remove costly friction.
The report also reflects growing concern over private water companies, with calls for stronger governance, more transparency and a pivot towards long-term investors with a low-risk, low-return mindset.
In its final report, the Commission will explore tougher duties for management.
On infrastructure, the picture is equally bleak. Asset health is poorly understood, with no consistent mapping of pipes, plants and pumps.
The Commission is weighing up new resilience standards and compulsory reporting on asset condition.
Cunliffe’s message is clear: “I have heard a strong and powerful consensus that the current system is not working for anyone, and that change is needed.” The final report is due later this summer.
