Government could scrap Ofwat, launch new regulator
By Josh White
Date: Friday 18 Jul 2025
(Sharecast News) - The government is preparing to scrap Ofwat, the water regulator for England and Wales, as part of sweeping reforms following a damning review of the sector, according to a report from the Guardian on Friday.
A consultation on creating a new water regulator was expected to be announced next week, the Guardian said, timed to coincide with the publication of a government-commissioned review led by Sir Jon Cunliffe, the former deputy governor of the Bank of England.
The review, ordered amid public anger over sewage pollution, soaring bills, and financial instability in the sector, was likely to recommend a new regulatory framework and the eventual abolition of Ofwat.
An overhaul would mark the most significant shake-up of the water industry since its privatisation in 1989.
Ofwat had come under sustained criticism for its handling of the sector, including its failure to prevent sewage spills, its oversight of large dividend payments to shareholders, and its inability to rein in spiralling debt levels.
Cunliffe's interim findings highlighted that the existing regulatory system had "largely lost public trust" and lacked coherence, with three separate agencies - Ofwat, the Environment Agency, and the Drinking Water Inspectorate - often duplicating efforts and delaying enforcement actions.
He was expected to propose consolidating regulatory powers into a single body.
The most acute pressure point is Thames Water, the UK's largest water company, which is burdened with £20bn in debt and at risk of collapse.
Thames is currently negotiating with Ofwat and creditors to avoid falling into special administration, a form of temporary state control.
A government spokesperson declined to comment on the reports, while Ofwat also made no statement.
However, the Guardian said insiders at the regulator acknowledged concerns over increased investor uncertainty if a replacement framework was not clearly defined.
Environmental data released earlier in the week showed a sharp rise in serious pollution incidents by water companies, up 60% in 2024 to 75 cases.
Thames Water alone accounted for 33 incidents, more than doubling its total from the previous year.
Reporting by Josh White for Sharecast.com.
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