Ofwat is set to be scrapped as part of the most significant overhaul of the UK water industry since privatisation.
A government-commissioned review, led by former Bank of England Deputy Governor Sir Jon Cunliffe, will recommend the creation of a new regulator. Ministers are expected to launch a formal consultation next week.
The move comes amid growing public anger over a surge in sewage spills, rising bills, and mounting debts among water companies. Serious pollution incidents in England rose by 60% last year, prompting criticism of Ofwat’s failure to hold firms accountable. The watchdog, established in 1989, has been criticised for permitting excessive shareholder payouts and chronic underinvestment in infrastructure.
The Cunliffe review, commissioned to restore public confidence, will propose replacing Ofwat with a regulator that better aligns environmental oversight, customer protection, and financial management. The consultation will coincide with the release of the final report on Monday.
One of the most pressing concerns is Thames Water, which is burdened with £20bn in debt and facing potential collapse. It is currently in talks with Ofwat and creditors about a rescue deal that could involve temporary state ownership under a special administration regime.
Cunliffe’s interim findings warned that the existing regulatory framework had “largely lost public trust,” citing confusion caused by overlapping roles between Ofwat, the Environment Agency, and the Drinking Water Inspectorate. The final report is expected to recommend streamlining these bodies to improve accountability and enforcement.
Environment Secretary Steve Reed previously said the review would lay the groundwork for new legislation to ensure the water industry better serves customers and protects the environment.
