The Cunliffe Review was greatly anticipated by the industry, and it’s now here
The full report was published this morning (Monday 21 July 2025). Among the numerous headlines that grabbed everyone’s attention, many questions surfaced.
Our Account Director for Water, Jordan Rowse, delved deeper than the headlines and digested a few of the recommendations, putting them into context and setting out the next steps. This morning, 21 July 2025, the eagerly and much anticipated full report was published by Sir Jon Cunliffe and the Independent Water Commission. A report that is 464 pages long, packed full of evidence and bolstered with 88 recommendations.
For months the talk in the water sector has very much been on this report and how far it would go. The water sector is at an inflection point, and was this the report that was going to leave no stone unturned and finally set a course to change the sector for the better?
The state of the water sector workforce
With all of its inconsistencies, imperfections and questionable performances, there is a sector that is made up of genuinely good, hard-working and passionate people who all want to create a safer and better environment for the future, and to ensure that the water delivered to your taps is to the best possible standard. For those working on the front-line, for too long they have had their integrity questioned – too scared and embarrassed to wear their water company-branded clothes out to the shops on their lunch break. There is no acknowledgement of the current workforce in the report which is a shame, other than a focus on how the sector needs to attract a workforce fit for the future to ensure maximum resilience.
Water’s prominence in public discourse
According to the 2021 Census, just shy of 200,000 people in England and Wales worked in the water sector – for water companies directly and within the supply chain. That is less than 1% of the population but, despite this, water seems to have dominated society over the last few years. It is something that is on the news both daily and online and a subject we can get notifications and alerts about every time there is a sewage discharge or pollution incident at a designated bathing water. It was one of the keys issues in the 2024 general election, a key theme in local elections across the country in recent years, and a key priority for the current Government. In the first year of this Government we have seen the Water (Special Measures) Act 2025, the establishment of the Independent Water Commission, the Call for Evidence and the publication of the recommendations, alongside an inquiry from Parliament’s own Environment, Food and Rural Affairs Select Committee with their own recommendations. The can has well and truly been opened.
The Commission’s approach to reform
The Call for Evidence generated over 50,000 responses, and Sir Jon Cunliffe and his team met with over 250 organisations, including a marathon session with the Parliament’s chief environment scrutineers – the EFRA Select Committee. There is no doubt that Sir Jon has built an impressive team and done a commendable job in such a short period of time. In his foreword, he confirms his objective was “to set the system for water in England and Wales on a course to lasting change across several key areas”. However, a common theme throughout this process has been the reminder that there is “no single, simple change, no matter how radical, that will reset the water sector and restore the trust that has been lost. The sector requires fundamental reform on all sides.” The key, therefore, to unlocking fundamental change lies with the 88 recommendations set out in the report. So, where do we start?
Local engagement and regulatory overhaul
One of the key principles of change must be ensuring that national priorities translate into meaningful local delivery. Customers are being asked to pay more and more, but feel they are getting less of a say. Local engagement and ownership have been missing, leaving many communities feeling excluded from decisions that affect their water environment. The biggest headline over the weekend and since publication has been the recommendation on the future of Ofwat and water regulation. The report recommends bringing together Ofwat, the Drinking Water Inspectorate, and the water environment functions of the Environment Agency and Natural England into a new organisation in England, with new economic regulatory responsibilities within Natural Resources Wales. What does this mean? The Commission is clear that there is a need for a much stronger and integrated regulatory framework. It needs to be able to respond to challenges, regulate the water sector as a whole and secure public confidence. In England, the Commission is recommending that the water functions of all the existing regulators are combined into one integrated water regulator for England.
Government’s swift response to Ofwat’s fate
DEFRA have already responded, a matter of hours after the publication of the report confirming Ofwat’s fate. The Secretary of State has confirmed Ofwat is to be abolished, stating: “Our water industry is broken. That is why this Government will fix our broken regulatory system so the failures of the past never happen again. The Government will abolish Ofwat. In the biggest overhaul of water regulation in a generation, we will bring water functions from four different regulators into one. A single, powerful regulator responsible for the entire water sector will stand firmly on the side of customers, investors and the environment and prevent the abuses of the past.” That didn’t take long, but nothing, yet, on the rest of the
Key recommendations for water sector reform
For the water enthusiasts, there are some other interesting recommendations:
- The introduction of a National Water Strategy for England and Wales to guide long-term, cross-sectoral planning
The Strategy should be cross-sectoral, setting out in one place the requirements on all the sectors impacting on or interacting with the water environment. - Industry investment planning should be conducted on a 5/10/25 year basis with the greater certainty and granularity for the first 5 years, more indicative plans for the following 5 years and higher level indication for the longer term
Inspiration has been taken from the model in Scotland in setting out proposals for investment planning. Scottish Water’s recent Long Term Strategy was designed to draw out exactly this type of approach. - Establishment of eight regional systems planners in England and a national planner in Wales
Streamline the current nine water industry plans into two: Water Supply and Water Environment. The systems planner would take on the responsibility to be a single point of contact for water planning consultations. - Integrate public health objectives and allow for constrained discretion in regulatory decisions
The Commission believes the current lack of emphasis on public health within the framework for the water environment is a major gap that needs to be addressed. - Enhance consumer protections, including a mandatory water ombudsman and a national social tariff
A new, mandatory water ombudsman service would give a clearer route to resolving complaints. National social tariffs would provide fair, consistent support for low-income customers who are unable pay their bills. It is recommended that consideration should be given to whether to convert the Consumer Council for Water into a new mandatory Water Ombudsman. - Introduce statutory resilience standards
To improve resilience, the Commission is recommending that statutory resilience standards be adopted, that requirements for companies to map their assets should be strengthened, and oversight improved through the supervisory approach. It is also recommending that legislation and enforcement powers relating to security should be strengthened. To support more timely delivery of infrastructure, the Commission is making recommendations to strengthen arrangements in four areas: planning, planning processes, regulatory coordination, and standardised practices. - Embrace and support greater innovation
The Commission has heard that, in parts, the legislative framework for water is too inflexible and overly prescriptive in nature which is therefore limiting innovation. Innovation in the water industry is critical for productivity growth and has the potential to facilitate better quality outcomes and lower customer bills. The water industry has experienced a significant slowdown in productivity growth since 2008, averaging 0.1% per year between 2009 and 2017. - Need for better communication and consultation with and through stakeholder engagement
The review found how communication appears to be inconsistent, with the Commission hearing that stakeholders rarely receive feedback on how their input has shaped decisions, which undermines transparency and trust.
Implementing transformative change
Sir Jon and his Commission are clear: delivering a fundamental reset of the water sector requires transformative change. The breadth and ambition of the recommendations set out in his report collectively represent a once-in-a-generation reform programme – one he believes is capable of supporting consumers by providing a fair service and steering the sector towards long-term sustainability and resilience. However, the scale of change he is proposing significant and these changes cannot take place overnight. They must be planned and implemented carefully, and the first step in that process if for the UK and Welsh governments to respond to the report later this year. Many of the reforms that are being proposed will require primary legislation to be delivered – but that was always the intention. This would be the most significant piece of water legislation in England and Wales since the Water Industry Act 1991. Because of that, legislation of this nature will take time. The Commission expects the legislation itself would require at least a year of development, followed by a year in passage through UK Parliament and the Senedd.
The Commission assumes the Welsh Government may choose to introduce its own Bill as water is a devolved area. In addition to that, and given what the report says about consultation and engagement around the sector, the UK and Welsh governments may also want to consult on some of the more substantial recommendations ahead of legislation. The report recommends that consultation would need to take place prior to the end of 2025 for implementation to be delivered in a timely manner.
Comparing Cunliffe and EFRA inquiries
In due course, the Government will also be responding to the EFRA Select Committee inquiry into Reforming the Water Sector. I will save my analysis of the EFRA inquiry for another day, but in summary, there is some alignment between the two pieces of work. Not least as both stemmed from and with political intention. Both are aligned on the need for stronger regulation, better customer protection and stakeholder engagement, urgent action on pollution, and improved infrastructure investment. However, there are some points of difference. The Commission proposes a full system reset, while EFRA focuses on immediate accountability and performance within existing structures. There is a need to move away from this short-termism to deliver long-term resilience and improvements. How will the Government balance the two? Is it possible to demand immediate action while creating radical reform? I guess time will tell.
Next steps for the government
I expect the government to respond to both in the autumn, before any water reform begins its legislative journey. The baton has now been handed to the Secretary of State – how many of the recommendations will the government accept, and how far will they now go? Wimbledon may be over, but the ball is very much in the government’s court now in the heart of SW1.
Read the Independent Water Commission final report