This could be the biggest set of reforms since privatisationpublished at 06:34 British Summer Time 21 July

06:34 BST 21 July

Simon Jack
Business editor

Sir Jon Cunliffe has proposed the biggest reform of the regulation and governance of the water sector in England and Wales since privatisation over thirty years ago.

He recommends establishing a single regulator in England to replace Ofwat, the Drinking Water Inspectorate, and the Environment Agency’s water responsibilities – with a similar body for Wales.

He suggests giving extra ombudsman powers to the existing Consumer Council for Water and the establishment of a new social tariff.

He also proposes eight new regional water planning authorities in England and one for all of Wales.

Excessive debt and inappropriate dividends that threaten some companies' resilience – such as Thames Water – would be addressed by minimum capital levels and powers to block ownership changes if not in the company's long-term interests.

It also suggests more government direction of the regulator to provide long term predictability for would-be investors.

Recreational use of water is recognised by proposing putting public health officials on water planning bodies.

The reforms are deep and wide, and Environment Secretary Steve Reed is expected to use them as the basis for a new white paper to be put before in the Autumn.

Image source, PA Media

We'll be hearing shortly from the report author, former Bank of England deputy governor Sir Jon Cunliffe, who led the Independent Water Commission.

He's going to be speaking on BBC Breakfast from 06:30 BST.

We'll bring you the key lines - follow along by hitting watch live.

Esme Stallard
Climate and science reporter

The final report from Sir Jon Cunliffe contains 88 recommendations for the government to transform the water industry – covering regulation, environmental monitoring, legislation and financial management of water companies.

The report stretches to 465 pages, so bear with us as we trawl through it and bring you the biggest changes Sir Jon recommends.

The report has just been published. It recommends that there be a single water regulator for England and Wales, replacing Ofwat – as well as the Drinking Water Inspectorate.

The report says of the new regulator: "In England this would replace Ofwat, the Drinking Water Inspectorate and water-environment related functions from the Environment Agency and Natural England."

You can read the report here, external.

Esme Stallard
Climate and science correspondent

The UK has an old Victorian plumbing system - something that, at the time, was revolutionary. It helped to stop the spread of disease, but now it is causing a few problems.

The way the system works is that both rainwater and sewage go into the same pipes. But with population growth, more extreme weather brought about by climate change, and ageing infrastructure, the system cannot cope with both.

Sometimes the system becomes overwhelmed and sewage has to leave via emergency points into our waterways - known as overflow points.

But investigations by the BBC have previously revealed that sometimes these overflows are being used even in dry weather or very low rainfall.

This spilling of sewage would be in breach of water companies permits - and illegal.

Esme Stallard
Climate and science correspondent

The regulation of the water industry in England is spread across four different bodies:

Ofwat looks at:

• The financial performance of water companies
• Whether customers are getting the service they paid for
• The long-term supply of water

The Environment Agency (EA):

• Has oversight of how water companies treat the environment
• Issues permits for each site a water company owns
• Monitors how much sewage is being discharged and any potential damage to aquatic and marine life or human health

The Drinking Water Inspectorate:

• Monitors the quality of drinking water

The government Department of Environment, Food and Rural Affairs (DEFRA):

• Sets the agenda and rules on what those other bodies have to implement

The EA and Ofwat regularly interact – so if the EA picks up repeated breaches, Ofwat may look into what issues are at play. In May, Thames Water was fined the biggest penalty on record for breaching rules on sewage and shareholder pay-outs after an investigation by the EA and Ofwat.

The Cunliffe report is also looking at Wales - the system is slightly different as the water sector there is not-for-profit. The environmental performance of the industry is overseen by Natural Resources Wales and policy set by Welsh Ministers.

Esme Stallard
Climate and science correspondent

There has been reporting that Ofwat, the regulator that oversees the financial running of water companies, is to be scrapped.

It is not yet clear what a replacement will look like.

But in the meantime, late on Sunday night the government announced there would be a new ombudsman - “a consumer champion”.

The role of this body will be to oversee disputes between customers and water companies such as securing compensation for bill payers if there is disruption to supply.

Such a body already exists for the energy sector, and the government said it was part of their efforts to put “customers at the heart of water regulation”.

Earlier this month, the government announced, external an increase to the automatic payouts customers are entitled to following supply issues and flooding.

Mark Poynting
Climate reporter

The Independent Water Commission published its interim findings in June, drawing on more than 50,000 responses from the public, environmental groups, regulators and industry.

The commission found “deep-rooted, systemic and interlocking failures”– hardly a surprise to anyone keeping half an eye on the state of our rivers.

It criticised successive governments for bad planning and some water companies for not acting in the public interest.

But perhaps the strongest words were left for the regulators, which the commission said had failed to hold water companies to account to protect bill payers and the environment.

It added that it was “considering options for significant streamlining and alignment of the regulators”, which are currently split between economic and environmental goals.

That could pave the way to a major overhaul in how water companies are held to account.

Let’s wait and see what recommendations come out on this today.

Image source, PA Media

It's not long now until the report into the water system is released. Here's how we're expecting the key moments this morning to play out:

• 06:00: Full report is released
• 09:45: Sir John Cunliffe, who chaired the review, will give a speech at the London Water and Steam Museum
• 10:30: Environment Secretary Steve Reed is due to deliver his speech reacting to the report

Mark Poynting
Climate reporter

Image source, Getty Images

Last October, the government set up the Independent Water Commission, led by former Bank of England deputy governor Sir Jon Cunliffe, to conduct a major review into the water industry in England and Wales.

Today, we're getting the final report.

It was sparked by growing public concern about sewage spills and rising bills, as well as decades of underinvestment in the sector, with climate change and population growth straining it further.

Environment Secretary Steve Reed, who has described the water industry as "broken", said that this is the biggest review of the industry since 1989 – when it was privatised.

This is “our opportunity to clean up our water once and for all", he said.

But the commission won’t consider the idea of nationalising private water companies, Reed said, arguing that it would be too expensive and wouldn’t necessarily lead to improvements.

So, today’s report will only give recommendations. It will ultimately be up to the government to decide what changes it wants to make.

The report is due to be released in about an hour's time - we'll be diving into it and bringing you the key findings along with expert analysis throughout the morning, so stay with us.