This week, as the much-anticipated Cunliffe review’s first stage is set to be published, the demand for urgent reform in the water industry may remain unanswered. The sector has faced significant criticism due to rising costs, environmental pollution, and substantial dividend payouts.

Sir Jon Cunliffe, a seasoned civil servant and former deputy governor of the Bank of England, will present findings from his independent water commission after conducting a comprehensive seven-month investigation. An interim report detailing his findings is expected to be released as early as Tuesday.

The inquiry was initially promoted as a potential overhaul of the water industry, marking the most significant changes since its privatization in 1989. The commission examined various issues, including customer bill settings, environmental regulations, the financial stability of water companies, and the attraction of long-term investments within the sector.

However, expectations for a radical overhaul of the industry’s regulatory framework—including a possible replacement of Ofwat, the Environment Agency, and the Drinking Water Inspectorate by a single super-regulator—seem unlikely at this time.

Reports suggest Cunliffe may delay significant reform until the final report is issued or may choose to focus on restructuring existing regulatory bodies instead.

Long-standing campaigns have emphasized the need for enhanced measures to prevent water pollution, particularly from storm overflows, which is likely to be a central aspect of the commission’s focus, as it falls under the jurisdiction of both Ofwat and the Environment Agency.

The industry association WaterUK has indicated that the public desires improved water quality and increased access for activities like wild swimming and water sports, with many now ranking river health as one of their top environmental concerns.

In March, the Environment Agency reported that data for storm overflow spills in 2024 revealed “spill counts and durations remain unacceptably high across England.”

A report by the National Audit Office earlier this year criticized the regulatory system’s effectiveness, stating: “Regulators have failed to deliver a trusted and resilient water sector… consumer trust is at an all-time low, and confidence in water companies to act in the interest of the environment and provide reliable service has deteriorated.”

Environment Minister Emma Hardy described the regulatory framework as broken, asserting that reforms should eliminate the ability for negligent water companies to avoid accountability.

Even Ofwat’s input acknowledged challenges within the regulatory framework, including its fragmented nature. There have been suggestions for a centralized strategic planning body or a counterpart to the national energy system operator, ensuring coordinated oversight of essential water services across the country.

Cunliffe is anticipated to advocate for a supervisory framework aimed at ensuring that the tens of billions of pounds designated for investment in the sector over the next five years are allocated effectively. This approach could aid in balancing affordability with environmental sustainability, alleviating some of the decision-making burden from water companies.

While this progress has begun, there remains uncertainty regarding the funding and management of strategic infrastructure projects, such as new reservoirs and plans to transport water from the Midlands to the south via the Grand Union Canal.

Additionally, Cunliffe may address calls for mandatory nationwide home water metering to improve accountability for water consumption, enabling suppliers to detect localized leaks more effectively.

Earlier this year, Cunliffe remarked, “The commission’s initial assessments have revealed a range of serious and often interconnected issues. Significant changes will be necessary to address these concerns and restore trust in a system that has broken down among customers, environmental organizations, investors, and companies.”