The incentives that Ofwat puts in place for companies are too complicated, fail to match public expectations, and in many cases are not bringing about a culture of improvement. Despite public consultation, there are too many to provide a clear picture of company performance. There is scope for simplification and, given that the Government is in the process of reviewing national targets for water, there is an opportunity for better alignment and prioritisation. Simplification could clarify company performance and help rebuild trust, as would reconnecting public expectations and rewards achieved. Penalties are important but they also have the potential to create a negative feedback loop, encouraging further failure. These penalties should not be to the detriment of investment. (Conclusion, Paragraph 47)