A year of water under review

23 September 2025

The government has consulted widely and deeply on how to reform the water sector – it’s high time for delivery

The autumn is arriving, bringing with it some welcome rainfall to quench thirsty ground and rivers. Likely too, an uptick in storm overflow discharges. And we have a new secretary of state in the environment, food and rural affairs brief, in Emma Reynolds, who comes from the Treasury.

Following the Independent Water Commission’s Cunliffe Review report in the summer – and its 88 recommendations on how the performance of the water sector might be improved – the government’s response will be critical to the future health and resilience of our rivers, lakes and seas. At will also be instructive of its mindset as to where these things sit in terms of priorities within its groaning to-do list.

Cunliffe of course was the big show in town over the past year. A deep technocratic dig into the problems and potential solutions, although within the confines of the existing water industry ownership model. Its findings pointed at issues with water industry performance, governance, regulation, culture, investment (especially in maintenance), coordination with wider, key water system players, and the extent to which the large amounts of money spent actually achieve the best outcomes for society and the environment. Its recommendations addressed these, with some eye-catching headline regulator reconfiguration, proposals to put in place catchment system management through regional water authorities (systems planners) and a whole load of additional, specific and technocratic adjustments.

But there have been others busily reviewing the general state of the sector and it’s worth noting their various reports that have all, in different ways, cast light on how far the UK’s water challenges extend. Also, that there is very strong consensus that the time has come for some serious reform.

In 2023 the House of Lords Industry and Regulators Committee looked explicitly at the work of Ofwat in an original and then follow-up inquiry. It pointed to the need to be more ambitious with targets for water companies, produce a national water strategy, give regulators more resource to do their work properly, and accelerate delivery of major infrastructure.

Earlier this year the National Audit Office examined the effectiveness of the regulatory regime for the water sector, considering its ability to drive its long-term objectives of delivery, good performance and the necessary level of investment and financial sustainability to achieve those outcomes. Its headline summary was stark – but aligned with the Lords – that Defra and its regulators have “failed to deliver a trusted and resilient water system”.

The House of Commons Public Accounts Committee (PAC) expressed concern that with water bills rising for the fastest rate in 20 years, consumer trust in water companies had been eroded by a stream of reports of pollution alongside dividends and bonuses. It said that Defra, as the responsible government department, must ultimately take responsibility for the failure, and that regulators Ofwat and the Environment Agency had been “missing in action” in failing to ensure regulatory compliance by companies, whose environmental performance it described as “woeful".

The latest in the Environment Agency (EA’s) regular summaries of environmental performance of water companies was a bleak read in the early part of this year. It pointed to a 60 per cent increase in Category 1 and 2 serious pollution incidents over the year 2023-24 and a similar decline in the level of water company self-reporting of these over the same period. Contrasting this with the expectation set under the Water Industry Strategic Environmental Requirements of a trend towards zero such incidents, as well as the public interest in the issue, the EA described the situation as “unacceptable”. It pointed to various measures such as increased inspections and the need for pollution incident reduction plans to tighten the regulatory screw on this performance failure.

The House of Commons Environment, Food and Rural Affairs Committee – which exists to scrutinise issues within the remit of the Department of the Environment, Food and Rural Affairs (Defra) – this summer came down hard on the sector and its regulators too. It said that “senior leadership in the water sector and the regulatory system have failed” and described a “culture that is deaf to the crisis” within several companies.

It called on the Independent Water Commission to propose “strong and significant reforms” and for the government to not shy away from alternative industry ownership models, especially were an existing company taken into a special administration regime, the insolvency process for companies with a public interest function. Its suite of recommendations echoed and underlined many that had been made before on issues of governance, financial behaviours and governance.

On regulation itself, government commissioned its own review. The Corry Review, which reported this past April, dug into how environmental regulation might be made more effective whilst also enabling the government’s growth agenda. Unsurprisingly, it concluded that the regulatory regime wasn’t working as well as it might; that water regulation is complex, layered and challenging to both comply with and enforce. Alongside a general detangling of regulations, Corry proposed the concept of constrained discretion, which Cunliffe also echoed. This is the idea that, while coming down hard on the worst transgressions, standards for regulatory compliance might be made more forgiving in some areas and to enable more innovative and multi-outcome approaches. Importantly, the Corry Review underlined the need for the whole water system to move into a far more advanced digital world to enable better transparency, regulation, planning and cross-sector cooperation.

There were also more grass roots-led reviews, such as the People’s Commission on the Water Sector, whose report railed against the government’s decision to exclude public ownership of water companies from the Cunliffe Review scope. The sector and government should ignore the People’s Commission’s findings and evidence at their peril: they point to the anger and frustration that exists across large numbers of voters who engage with and care for their local water bodies and the environment generally.

The ball is squarely in government’s court

All this scrutiny does one thing above all: it heaps pressure on the new secretary of state to shift the dial on water sector performance and governance. Emma Reynolds’ predecessor, Steve Reed (who has moved across to become housing secretary), made bold claims on what government would deliver for water, both on the campaign trail pre-election as well as while in post. Reynolds must now deliver on all that. The critique and reports, and the tone of her predecessor mean she somehow has to ensure that, come the next election, the public can see signs of progress: regulatory compliance data moving in the right direction; evidence of improvements on the ground and in the river; water companies behaving differently. That is a gargantuan task to deliver on before 2029.

It will start with the forthcoming water white paper. Defra officials are scrambling to understand how to practically implement the most important recommendations of the Cunliffe Review and set that out in a strategy that will be scrutinised to the nth degree. The turnaround time between now and the government’s self-imposed autumn deadline for the white paper is frighteningly brief. What mustn’t be repeated is the last government’s Plan for Water: a comprehensive enough document which pointed to the many and varied pressures on the water system (and many solutions) but crucially without the commitments or measures in place to actually address them.

On 02 December, CIWEM’s A Fresh Water Future Conference will bring together leading representatives of government, regulators, water companies and a host of wider management and delivery bodies, stakeholders and commentators. They will thrash out just what can be meaningfully delivered in the next handful of years and what must be put in place to enable the right longer-term trajectory for water management.

Prime Minster Sir Keir Starmer has said recently that in the second year of his government’s term in office the emphasis has to move squarely into the delivery phase. This is absolutely the case for water. After all the scrutiny and with ample consensus on the need for a bold response, the government’s next steps on water policy and regulatory change could not be more defining.

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CIWEM’s A Fresh Water Future Conference 2025 takes place on 02 December 2025 at 30 Euston Square, London. Book your ticket now.

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Alastair Chisholm is director of policy at CIWEM