Five areas where 'fundamental change' is needed to fix water system, report says

"Interlocking failures" in the water sector across England and Wales can be fixed through fundamental reform in five key areas, according to a major interim report.

The Independent Water Commission (IWC), established last year and led by a former deputy governor of the Bank of England, was scathing of government and regulatory oversight of the industry - long blighted by criticism over performance, particularly over sewage spills, shareholder payouts and bonuses for bosses. Money latest: Change to mortgage rules could drive up house prices Sir Jon Cunliffe said: "There is no simple, single change, no matter how radical, that will deliver the fundamental reset that is needed for the water sector.

"We have heard of deep-rooted, systemic and interlocking failures over the years - failure in government's strategy and planning for the future, failure in regulation to protect both the billpayer and the environment and failure by some water companies and their owners to act in the public, as well as their private, interest. "My view is that all of these issues need to be tackled to rebuild public trust and make the system fit for the future.

We anticipate that this will require new legislation." The commission, which is due to make its final recommendations later in the summer, failed to rule out the creation of a super regulator to bring oversight into alignment. Currently, regulation is muddied by a multi-body approach that includes Ofwat and the Environment Agency.

The five areas under scrutiny are:• Long term direction from government, including through the planning process.• The creation of a simplified legislative framework, which could include new objectives around public health.• Regulation but "a fundamental strengthening and rebalancing of Ofwat's regulation is needed.