“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, 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.
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.
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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”, it is argued. • Transparency and accountability within private water firms. • The management of water industry assets, including pipework.
Sir Jon added: “I have heard a strong and powerful consensus that the current system is not working for anyone, and that change is needed. I believe that ambitious reforms across these complex and connected set of issues are sorely needed.
“I have been encouraged to see, on all sides of the debate, that people have been prepared to engage constructively with our work; I look forward to that continuing as we enter the final stages.”
Environment Secretary Steve Reed said of the report: “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.
“The government will respond to the Commission in full in due course and outline next steps to benefit customers, attract investment, and clean up our waterways for good.”
Anything other than a win for Labour would have been a humiliation in this contest.
It wasn’t any old local by-election – this was a contest where Labour knew it could act as a mini barometer of Sir Keir Starmer’s recent U-turn on winter fuel payments and become a test of how popular the politics of Nigel Farage are in Scotland.
Labour are power hungry and have, for a long time, set their sights on forming the next Scottish government.
The prime minister will this morning be breathing a sigh of relief after clinching this shock victory over the SNP and Reform UK.
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1:01
New MSP’s message to Farage and ‘his mob’
This contest on the outskirts of Glasgow came at a time where Labour had been firefighting and grappling with polling suggesting they had blown their chances of ousting the SNP from power in Edinburgh after almost 20 years.
The SNP had a spring in their step during this campaign after a chaotic couple of years.
First Minister and SNP leader John Swinney had apparently stemmed the bleeding after the infamous police fraud investigation, endless fallout over gender identity reforms, and last year’s general election where they were almost wiped out.
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This result leaves them no further forward than 12 months ago with questions over the party’s strategy.
Image: SNP and Reform UK election billboard posters in Larkhall. Pic: PA
Reform UK is very much in the Scottish picture now, finishing a few hundred votes behind the nationalists.
This is a party led by a man who barely registered any support north of the border for many years. A remarkable transformation.
The surge in support has spooked many because they know fine well Nigel Farage is only just getting started.
One poll had Reform UK forming the next official opposition at Holyrood. After tonight, that might be a tall order but Mr Farage is shaking things up at the expense of the Conservatives.
The unpredictable nature of this contest may give us a taste of what is to come.
Andy Carter, senior winners’ adviser at Allwyn, said: “We are now on the verge of potentially creating the biggest National Lottery winner this country has ever seen.”
The previous largest prize pot was won by an anonymous UK ticket-holder, who took home £195m on 19 July 2022.
Just two months earlier, Joe and Jess Thwaite, from Gloucester, won £184,262,899 with a Lucky Dip ticket. At the time, Joe was a communications sales engineer, and Jess ran a hairdressing salon with her sister.
Mr Thwaite said he woke up at 5am as usual, and checked his phone to see an email saying, “Good news, you have won a prize”.
But he did not immediately wake his wife, choosing to let her sleep in.
“I saw how much and I didn’t know what to do,” Mr Thwaite said.
“I couldn’t go back to sleep, I didn’t want to wake Jess up, so I just laid there for what seemed like forever. I spent some time searching for property with no budget limit, which was a novelty!”
When his wife woke up, she assumed the National Lottery app was wrong.
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1:24
Winner ‘thought it was a scam’
In February last year, Richard and Debbie Nuttall were revealed as the UK winners of a £61m EuroMillions jackpot – who at first thought they had only won £2.60.
The couple from Lancashire split the £123m prize with a winner in Spain.
This year’s biggest prize, of £83m went to a UK winner in January.
The Scottish government minister died in March at the age of 57, having last year taken medical leave to undergo treatment for secondary breast cancer.
First Minister John Swinney congratulated Mr Russell following the result.
In a post on X, the SNP leader said Ms Loudon had “fought a superb SNP campaign”.
He added: “We have made progress since the election last year but not enough. We still have work to do and we will do it.”
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With Reform UK never having won an election in Scotland, party deputy leader Richard Tice said candidate Ross Lambie coming in third was a “massive boost for us”.
Image: Reform UK deputy leader Richard Tice turned up to the count to support candidate Ross Lambie. Pic: PA
He added: “It’s a fantastic result, just a few hundred votes away from the SNP, nobody predicted that.
“I think that sets us up with excitement and momentum for the next 11 months into the Holyrood elections.”
Image: Davy Russell celebrating with Scottish Labour leader Anas Sarwar and the party’s deputy leader Dame Jackie Baillie. Pic: PA
Mr Russell said the constituents had voted to “take a new direction” with his party.
He added: “Like the people here in Hamilton, Larkhall and Stonehouse, and right across Scotland, we all feel we have been let down by the SNP.
“They’ve broken our NHS, wasted our money, and after nearly two decades they don’t deserve another chance.”
Image: Mr Sarwar and Mr Russell on the campaign trail. Pic: PA
Mr Russell said the community had also “sent a message” to Reform UK leader Nigel Farage “and his mob tonight”.
He added: “The poison of Reform isn’t us, it isn’t Scotland, and we don’t want your division here.
“Reform have no real answers to the issues we face, and they can’t beat the SNP here or replace them across Scotland.”
Mr Russell said his party was ready to “fix” the NHS and “end the SNP’s addiction to wasting your money”.
He added: “The road to a new direction for Scotland in 2026 – with Anas Sarwar as first minister and a Scottish Labour government – begins right here. So, let’s go and win it together.”
Image: By-election Scottish Conservative candidate Richard Nelson (left) and Reform UK candidate Ross Lambie. Pic: PA
Ten candidates went head-to-head in the Holyrood by-election:
• Collette Bradley, Scottish Socialist Party – 278 votes • Andy Brady, Scottish Family Party – 219 votes • Ross Lambie, Reform UK – 7,088 votes • Katy Loudon, Scottish National Party (SNP) – 7,957 votes • Janice MacKay, UK Independence Party (UKIP) – 50 votes • Ann McGuinness, Scottish Green Party – 695 votes • Aisha Mir, Scottish Liberal Democrats – 533 votes • Richard Nelson, Scottish Conservative and Unionist Party – 1,621 votes • Davy Russell, Scottish Labour Party – 8,559 votes • Marc Wilkinson, Independent – 109 votes
The votes were verified and manually counted at South Lanarkshire Council headquarters in Hamilton.
Image: Dame Jackie got emotional after Mr Russell’s win. Pic: PA
Campaigning became heated in the run up to the by-election, with Reform UK accused of running a “racist” ad on Facebook against Scottish Labour leader Anas Sarwar.
Reform leader Mr Farage continued to double down, accusing his rival of “sectarian politics”.
In response, the Scottish Labour MSP branded Mr Farage a “poisonous little man” and accused him of running a “campaign of dirt and smear”.
First Minister Mr Swinney had earlier warned it was a “two-horse race” between the SNP and Reform UK, urging voters to “defeat the gutter politics” of Mr Farage.
With less than a year to go before the Scottish parliament election, the result potentially offers a snapshot of how the political landscape north of the border could look in 2026.
Mr Sarwar said: “I think people need to change the script, because we’ve proven the pollsters wrong.
“We’ve proven the commentators wrong, we’ve proven the bookies wrong. We’ve proven John Swinney wrong and so many others wrong too.”