On 20 January 2026, the UK Government published its White Paper, “A New Vision for Water”, setting out a comprehensive package to transform the water sector in England.

The White Paper is in response to, and reflects a number of recommendations made by, the Independent Water Commission (led by Sir Jon Cunliffe) for reform of the water sector. It also builds on more recent legislative interventions, including in particular the Water (Special Measures) Act 2025, which, among other things, introduced measures and restrictions on bonus related pay for senior bosses.

We outline below some of the key reforms proposed in the paper.

Resetting regulation

Considered to be perhaps the most transformative proposal is the abolition of the current economic regulator Ofwat and the creation of a new 'single integrated regulator' to carry out the current water-specific functions of Ofwat, the Environment Agency, the Drinking Water Inspectorate and Natural England.

The mission for this single new regulator will be to oversee economic, water quality, environmental, and corporate governance matters, deliver fair and effective regulation, adopt a proactive, risk-based supervisory approach to enable company specific oversight and early interventions to improve outcomes for customers and the environment.

Water companies can expect:

  • Company-specific supervisory teams with continuous engagement: Dedicated teams supported by specialist advisers and overseen by the regulator’s board that will develop granular understanding and tailor oversight to each company.
  • Earlier intervention and recovery tools: A new Performance Improvement Regime, informed by supervisory insight, to enable rapid intervention, by way of both supportive and punitive measures, in underperforming companies. Companies at higher risk will be required to maintain a contingency Special Administration Regime plan to ensure that, if needing to be appointed, an administrator can keep critical services running.
  • Further legislative reform: Providing for regulation to be focused on supporting improved outcomes and giving increased flexibility, constrained by appropriate guardrails, to the new regulator and the development of decision-making principles – all underpinned by the regulatory principles of transparency, consistency, accountability and proportionality.
  • Greater use of enhanced regulatory enforcement powers: The new regulator will be able to impose financial penalties directly for breaches of drinking water regulations; possess enhanced security and emergency oversight, including no-notice inspection powers; and the ability to take action against third parties operating a water treatment or supply asset, or acting on behalf of a water company in another relevant capacity.

Attracting investment

The Government acknowledges that the water industry needs more investment over the long term and sets out its intention to move the sector to long-term strategic planning by:

  • Introducing a structured 5/10/25‑year planning approach: which involves firm funding certainty for the first five years (by maintaining the current five-year price reviews), indicative commitments for the following five years, and visibility of high‑level funding needs over a 25-year period.
  • Attracting long-term investment: by simplifying performance commitments, unlocking competition through changes to the New Appointments and Variations (NAV) market, and ensuring stable and fair returns.
  • Consistent cross-sector approach: by ensuring consistency of approach across similar regulated sectors, including in particular on how regulators set the cost of capital, and alignment with other sectors by introducing a 'statutory appeals process' which changes the Competition and Markets Authority (CMA)'s role and remit in relation to company appeals against the regulator's decisions on price controls and other matters.
  • Providing additional avenues for capital and competition: by amending the statutory threshold to allow a wider range of projects to qualify for delivery under Specified Infrastructure Projects Regulations (SIPR) and expanding SIPR beyond sewage schemes to all types of water infrastructure.
  • Encouraging the use of green financing: through green bonds to support nature‑based solutions and diversify investor bases.

Customer protection

The Government states that it is committed to ending 'huge price hikes' and ensuring water bills are a predictable cost that rise smoothly and represent value for money, recognising current pressures on household budgets. Support is to be strengthened for vulnerable households through the statutory WaterSure scheme, which will be reformed to extend and improve eligibility and support.

A key proposal for strengthening customer protection includes the establishment of a 'new, independent, impartial, strong and accredited' Water Ombudsman (similar to but also learning from the best practices of similar schemes in other utilities sectors) to address customer concerns and complaints. Companies will also be expected to do all they can to improve customer service with strengthened 'customer measure of experience' (C-Mex) targets and increased regulatory monitoring of company performance.

Additional reforms include measures to safeguard drinking water quality and increase public health considerations across the system. These include: a mandate for the new regulator to establish a 'drinking water quality advisory group' which will have responsibility for safeguarding drinking water quality; improving testing capability; and establishing a cross-departmental Public Health Water Taskforce led by a Chief Medical Officer.

Cleaner water

The Government is committed to tackling pollution from storm overflows, wastewater treatment and agricultural sources. Companies and landowners can expect measures which are focused on:

  • Stopping pollution early: with a greater emphasis on and shift towards 'pre‑pipe' solutions, such as sustainable drainage and prevention of sewer-misuse, which is supported and delivered through new legislation, different funding streams and regulatory mechanisms.
  • Addressing pollution from private sewers: which is the main culprit for pollution in rivers and other watercourses. The proposals include working across government to take a full system approach and work in partnership with relevant parties to tackle pollution and protect precious habitats.
  • Tackling agricultural pollution: by consolidating the current regulatory framework to establish a single set of stronger and clearer national standards which will embed best practice while safeguarding air and soil health.
  • Ending operator self‑monitoring: by moving to an 'Open Monitoring' regime that uses digitisation and automation to make data publicly accessible in near real time for monitoring wastewater. The approach will incorporate intelligence‑led inspections and third‑party assurance and will optimise the wider monitoring framework.

Long term resilience of the water system

The paper recognises that lack of investment has led to ageing infrastructure which is struggling to cope with increased demand and proposes measures to future-proof water infrastructure by improving long term resilience, securing future supplies while maintaining a fair deal for customers and investors.

This includes developing a better understanding of the state of play of existing assets, improving asset mapping and developing new statutory resilience standards to require companies to make forward-looking long-term assessments of their systems. The new regulator will also be tasked with implementing a series of changes to the price control process to ensure sufficient funding is allocated to maintaining and improving asset resilience.

Additional measures include: the implementation of a better planning regime which results in greater coordination and assistance between the water sector and planning processes to reflect and cater for alignment of infrastructure requirements within both sectors; a review of Permitted Development Rights in order to ease smaller works and updating National Policy Statements for water resources and wastewater to guide nationally significant infrastructure.

The use of smart metering to encourage efficient consumption is also discussed with plans to roll out smart meters to around 50% of homes and businesses by 2030, along with tariff reforms. The White Paper reaffirms the intention for a mandatory water efficiency label to cut bills and drive product innovation through innovation sandboxes to encourage collaboration. The Government will also promote reuse and rainwater management in homes and large non‑household sites to reduce demand and enhance resilience.

Next steps: preparing for the transition plan

Implementation of (at least some of) the regulatory reforms set out in the paper will take time. The Government will therefore develop, working collaboratively with the current regulators, water companies, sector investors, and environmental organisations, and publish a Transition Plan later this year.

Among other things it will focus on and outline the coordinated and streamlined approach required to implement the proposed reforms and guide the sector through the transformation reforms by providing a clear and straightforward roadmap, with clarity on the roles and responsibilities of relevant parties.

As the water sector undergoes significant transformation, companies are being urged to proactively align their business strategies with evolving Government guidance. Active participation in the Transition Plan workstreams, offering organisations an opportunity to shape the sector’s future and clarify their roles and responsibilities within the new governance framework, is also encouraged.

We will continue to monitor these developments and provide further updates as the transition plan takes shape.