"Water costs to increase by a third over the next decade, with a potential requirement for water meters"
The independent government commission has published a landmark report on England and Wales' troubled water sector, making several key recommendations to rebuild public trust, improve water system resilience, and ensure equitable and sustainable water management.
The report, which includes 88 recommendations, aims to address long-standing issues such as financial mismanagement, steep bill hikes, and sewage being published into waterways. One of the most significant proposals is the replacement of multiple regulators with single integrated bodies.
Currently, four separate bodies have areas of oversight in England: Ofwat, the Drinking Water Inspectorate, and parts of the Environment Agency and Natural England. The report suggests abolishing these regulators and replacing them with one single water regulator for England and one for Wales. This move is intended to streamline oversight and improve efficiency.
Another key recommendation is the introduction of compulsory water metering. Currently, around 63% of households have meters, which charge based on actual use and incentivize conservation. The report proposes making water meters compulsory across all households to address water scarcity and usage efficiency.
The report also proposes establishing new regional water authorities. Nine new independent regional water planning authorities (eight in England, one in Wales) are proposed. These authorities would be responsible for local water investment plans that reflect community priorities and streamline planning across sectors impacting water (public health, agriculture, environment, consumers).
To enhance consumer protection, the report calls for upgrading the Consumer Council for Water into a Water Ombudsman to improve dispute resolution and proposes transferring consumer advocacy to Citizens Advice. It also recommends introducing a national social tariff to ensure consistent financial support for low-income customers, addressing regional disparities in bill caps.
The report suggests strengthening environmental standards and regulation. This includes stronger oversight and improvements in operator self-monitoring through digitalization and inspections, tighter regulation on abstraction, sludge, and drinking water standards, updating environmental legislation, and introducing legally binding long-term water environment targets.
The commission also recommends reforming wholesale tariffs and promoting water reuse. Changes to wholesale pricing for industrial users and encouragement of water reuse and rainwater harvesting schemes are proposed to promote sustainability.
The report further suggests increasing the regulator's powers and financial resilience. The regulator should have more power to block company decisions that harm customers' interests and impose minimum capital requirements to reduce company reliance on debt.
Finally, the report urges the government to develop a 25-year minimum horizon water strategy to align long-term planning with consumer, environmental, and economic goals.
These recommendations come at a time when water bills have risen significantly. The average water bill rose by £123 per year in April, with significant regional variations. Southern Water customers saw a 47% increase, and Thames Water customers a 31% increase. Thames Water was fined £123 million in May 2021 for breaching rules on the management of waste water and the payment of dividends.
Some critics argue that the latest reforms do not go far enough and suggest renationalisation as a solution. Mike Keil, chief executive at the Consumer Council for Water, emphasizes that the success of the changes depends on the commitment of water companies to improving their culture, conduct, and performance.
Low-income customers can request a social tariff from their water company, but each company has its own scheme and eligibility criteria. The report outlines a series of recommendations to reduce public health risks, improve infrastructure management, and boost water reuse through initiatives like rainwater harvesting schemes.
Jon Cunliffe, who led the independent review, warned that bills could rise by another 30% in real terms over the next five years. The report sets out proposals to improve affordability and customer service, and the success of these proposals will be crucial in restoring public trust in the water sector.
[1] Independent Government Commission, (2022), Report of the Independent Water Review. [2] Government Response to the Independent Water Review, (2022). [3] Water UK, (2022), Response to the Independent Water Review.
- The independent government commission's report, titled 'Report of the Independent Water Review,' suggests the introduction of a national social tariff to ensure consistent financial support for low-income customers, addressing regional disparities in bill caps.
- In an effort to streamline oversight and improve efficiency, the report proposes the replacement of multiple regulators with single integrated bodies for both England and Wales.
- To enhance sustainability, the commission recommends promoting water reuse and rainwater harvesting schemes, as well as changes to wholesale pricing for industrial users.
- The report urges the government to develop a 25-year minimum horizon water strategy to align long-term planning with consumer, environmental, and economic goals. This strategy aims to address long-standing issues in the water sector, such as financial mismanagement and steep bill hikes.
