A new regulator to replace Ofwat in Wales would require UK Government approval
(Image: PA)
The Welsh Government has published major long-term plans for stronger regulation of the water industry. The plans would mean setting up a new dedicated Welsh economic regulator for water in Wales, which would replace Ofwat.
It would require legislation and an updated framework designed to encourage investment, protect the environment, and deliver a water system that works for Wales.
It comes after a catalogue of sewage scandals and mounting public anger over water companies’ performance led to a major review which called for oversight of the industry in Wales and England to be completely overhauled.
The government consultation document makes clear that for its plans to happen it would need the UK Government to agree to devolve further powers to Wales – something which the current administration has come under fire for refusing in other areas such as justice.
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There needs, it says, to be “hard decisions”, including investment and changes to infrastructure which will “exceed what customers can reasonably afford”.
The long-term strategy to deliver the plans forecasts legislative change would happen between 2026 and 2028-29.
There would then be a new Welsh economic regulator and system planning function for water from 2028 until the early 2030s with an economic regulator for water set up and operating from the mid 2030s onwards.
The 88-page paper says despite investment improvements need to happen.
“Wales now faces a new reality. Climate and nature emergencies, alongside persistent challenges, demand urgent action,” says the report.
“The water system designed for a different time no longer meets the needs of our people, our environment, or our economy.
“We have made good progress but people across Wales are rightly concerned about sewage discharges, outdated infrastructure, and the condition of water in their communities. We cannot stand still. It is time for fundamental reset.
“Improving the health of our rivers will require action across the whole water environment.
“Pressures from land use, agriculture, and the way organic materials are managed once applied to land all contribute to the condition of our catchments.
“We are therefore taking a whole-system approach, ensuring work to change water governance in Wales is aligned with wider action to address nutrient pollution, strengthen accountability, and restore trust that the system works in the public interest.”
The report says the following measure need to happen:
- A separate regulator for Wales. This would “strengthen public confidence and support long-term investment in infrastructure and environmental protection”;
- a clear, long-term strategic direction that articulates national priorities, sets interim targets, and provides a framework for delivery across sectors;
- a change from a “fragmented and process-heavy planning towards a coherent, outcome-focused system”;
- a longer-term integrated plan covering water resources and water supply, drainage and wastewater, and environmental water quality to inform investment priorities and to provide clarity to the wider system, for example land use planning; and
- working with the water industry to reduce inappropriate materials entering their network such as wipes, sanitary products, cotton buds, fats, oils, and greases by preventing these items from being flushed or poured away. Reducing this burden on water systems protects the environment, lowers maintenance costs, and strengthens resilience, helping communities enjoy cleaner, safer, and more reliable water while supporting more stable and potentially lower bills.
The report says any reforming governance, enforcement and monitoring in Wales will be a “complex and interdependent process”.
“It will begin with a comprehensive review of existing frameworks to identify gaps, overlaps, and areas of weakness. This will be followed by engagement across government, regulators, industry and civil society to design a system that reflects Welsh values and priorities.
“Throughout effective engagement with the UK Government will be essential, particularly during the period when regulation of Welsh water companies continues through the new UK Government water regulator, until the Welsh regulator is established.
“The process will then move forward through legislative and operational change, coordinated with the establishment of the new Welsh regulator, with regulation of Welsh water companies continuing through the new English regulator until the Welsh regulator is in place,” it says.
It however says that changes could lead to “confusion, resistance, or unintended consequences” and the reforms could be seen as “punitive or overly centralised”.
Afonydd Cymru, which represents river trusts in Wales, told the BBC the proposals provided “a beacon of hope” but urged the government to act quickly.
Chief executive Gail Davies-Walsh said: “It must be remembered that it is just a consultation at this stage and nothing yet is set in stone”.
She added that the “thorny question of funding was not resolved either”.
Interim chief executive of water regulator Ofwat Chris Walters said: “This Green Paper sets the framework for the future of the water sector in Wales, which we welcome. The creation of a dedicated regulator for Wales will strengthen scrutiny and accountability within a framework designed specifically for Wales, marking an important evolution in how companies will be overseen going forward.
“As the Welsh Government develops the regulatory new body, we remain committed to the delivery of our core functions and are already working closely with Welsh Government, Defra, Natural Resources Wales and other regulators to ensure that the sector moves towards a more integrated and resilient future.
“Our 2024 Price Review approved record investment in Wales- more than £6.3bn- which will enable major improvements for customers and the environment by 2030.”
Derek Walker, Future Generations Commissioner for Wales, said: “This needs to be a wake-up for the water industry and is an overdue opportunity to fix the problems of the past and become a clean water abundant nation. Welsh Government has acted decisively, and we now need to make sure that securing healthy waters for Wales is a priority for the UK Government and the next Welsh Government.
“Everything must be done to ensure the transition to a new body happens without delay to deliver long-term environmental recovery and affordability, alongside strengthened compliance and regulation.
“Any investment in the water system must work urgently to restore nature, support food production, improve climate resilience and deliver new housing and infrastructure as we protect the long-term health of our rivers, seas and the water that’s essential to life.”
Deputy first minister Huw Irranca-Davies said: “Our ambition is clear and bold: clean and thriving rivers, safe and high-quality drinking water, fair and affordable services, and modern infrastructure ready for the future. We will strengthen accountability, rebuild trust, and create a system that is simpler, stronger and more transparent.
“Wales now faces an urgent reality. Climate and nature emergencies, ageing infrastructure, and public concerns about water quality demand decisive action. The system we have today was designed for a different era. It is time for a fundamental reset.”
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