After winning power last year, the Labour government ordered an examination of the privatised water industry in England and Wales, which needs huge investments to fix aging infrastructure and stem record sewage spills into rivers and lakes that have angered the public.

Former Bank of England deputy governor Jon Cunliffe, who has led the review, published 88 recommendations in his findings, saying that the separate financial and environmental regulation of the sector, which sees Ofwat set bills and monitor companies’ financial health, was not working.

“The current regulatory landscape is fragmented and overlapping and fully joined-up regulation is essential for the system to meet the demands of the future and ensure that private water companies act in the public as well as the private interest,” his review said.

Among the recommendations, the review said the new regulator should set “minimum capital” requirements for investors, and it should also be able to block changes in water ownership if they were not deemed to be in the long-term interests of the company.

In order to attract investment, the report said the government should give direction to the regulator to support stability and predictability – a reference to what returns an investor could make and perhaps how fines for sewage leaks should be handled.