Sewage crisis: new report calls for greater regional involvement in water industry as part of fundamental reforms

It was tasked by the UK Government to carry out the largest review of the sector since privatisation in the face of widespread public anger over pollution, bills and bosses’ bonuses although ministers ruled out nationalising water companies.

The report has been published as Britain’s biggest water company Thames Water is again facing the spectre of temporary nationalisation after private equity firm KKR pulled out of plans for a £3bn bailout.

Last year, Yorkshire Water chief executive Nicola Shaw was awarded a remuneration package of around £1m despite the company being one of the worst offenders when it comes to sewage overflows.

Sewage spills have contributed to a situation in which no single river in Yorkshire is considered to be in good overall health, with the Environment Agency giving Yorkshire Water a “red” rating due to rising pollution incidents.

And water supplies are under pressure after the driest spring in decades has left farmers struggling and millions of households facing the possibility of hosepipe bans, while ministers have warned climate change, a rising population and crumbling infrastructure is putting future supplies at risk.

In the interim report published this morning, the commission said multiple issues need to be tackled to rebuild public trust in the ailing sector.

It called for regulator Ofwat’s role to be strengthened and for the watchdog to adopt a more “supervisory” approach to oversight of water firms.

Former Bank of England deputy governor Sir Jon Cunliffe, who led the review into the water sector in England and Wales, told the BBC that more effective regulation was a huge part of solving the problem, with a regulator that could step in early before things got worse.

He said: “Because when they get worse, as you can see, they are very difficult to sort out, and we need an environmental regulator with the capability to monitor and enforce.”

He also said that having regulators with different remits and responsibilities for different parts of the process had made the water system “expensive and incoherent”.

The interim review urges the Government to provide clearer long-term direction on what is needed from the water system, and warns key elements of current legislation are “badly in need of review and rationalisation”.

It proposes greater regional decision-making around local water systems, and emphasises the need for a greater focus on long-term, responsible investment and ownership within the industry.

The report said: “The commission has heard that engagement with key regional and local actors is weak and the local voice is lost in the system.”

Environment Secretary Steve Reed said: “Our rivers, lakes and seas are polluted, and our water system is broken.

“That is why I launched the Water Commission to outline recommendations for a once in a generation opportunity to transform our water industry and ensure it delivers the service the public deserves.”

Nidd Action Group chair David Clayden said: “We would welcome greater citizen involvement at a regional level.

“I’m waiting to see how much of this can really be put into practice.

“The long-term nature of the decisions that need to be taken are going to be increasingly constrained by Government spending.”