White Papers, consultations, reports, updates – all pointing towards increased accountability, along with guidance on the implementation of sanctions and their enforcement when environment policies are breached. The last six months have shown positive moves by the Government to find ways to make enforcement of environmental law easier, quicker and more effective.

In this article, we highlight some of the key reforms shaping the future of environmental compliance and outline what organisations need to know.

1. A new vision for water – Defra's white paper

A key area of focus to improve compliance with environmental policies and regulations is the water sector. On 20 January 2026 the Government published its white paper - A New Vision for Water – describing it as a once in a generation plan to transform the water system in England and Wales and the most ambitious overhaul of the UK water sector since privatisation.

The white paper responds to the Independent Water Commission's Final Report (the Cunliffe Report) published in July 2025, following the Commission's review of the regulatory framework for the water sector in England and Wales. The Cunliffe Report set out 88 recommendations on how to reform the regulation, and improve the functioning, of the water sector – to effect a fundamental reset and restore trust. The white paper adopts many of these recommendations and sets out the government's action plan for water going forwards.

For a summary of the key reforms proposed in the white paper please take a look at our article Water sector reforms: key measures in the "a new vision for water" white paper.

Probably the most significant reform in the white paper is the intention to create a new integrated regulator, created by bringing together the water functions currently held by Ofwat, the Drinking Water Inspectorate (DWI), the Environment Agency (EA) and Natural England. Its core mission will be to deliver 'fair and effective regulation that protects and improves public health, safeguards the environment and drives investment. It will have robust powers to oversee both water companies and other sectors whose activities impact the water environment - to provide greater stability and transparency for the public, investors and the water industry.

The DWI currently has a range of enforcement options available to protect public health and in the most serious cases it can prosecute those who break the law, but it cannot directly impose financial penalties. The new water regulator will have the power to act far more quickly against companies who are not complying with drinking water regulations, including having the ability to impose financial penalties where appropriate.

The new water regulator will also have the power to take enforcement action against any third party operating a water treatment or supply asset or acting on behalf of a water company in another relevant capacity. Third parties that are contracted to build and operate assets on behalf of water companies will have statutory obligations, which will ensure action can be taken against them to secure compliance with national security and emergency directions. To ensure water companies are doing enough to protect the supply of water to consumers, new powers to make legislation on sufficiency will be introduced and legislation allowing the regulator to take stronger action against water companies who fail to ensure a sufficient supply will be considered.

The government will be issuing a package of measures to ensure improvements in performance across the water sector, giving the regulator stronger tools to intervene at an earlier stage. A new Performance Improvement Regime (PIR) for poorly performing water companies will be introduced – designed to stop companies from falling into a cycle of decline.

The PIR will empower the regulator to intervene decisively when companies underperform. Rather than waiting for 5-year price reviews, the regulator can set improvement plans or penalties mid-period to "fix failures" and protect customers and the environment. The supervisory teams assigned to each company will continuously monitor asset health, financial metrics and compliance. This will effectively introduce an ongoing "MOT" style check of pipes, pumps and infrastructure, meaning problems will be caught early and companies will no longer be "marking their own homework" when it comes to asset resilience and pollution incidents.

Additional steps will also be taken to improve the culture and leadership within water companies. Steps have already been taken through the Water (Special Measures) Act 2025 (WSMA) to ban unjustified bonuses and restrict dividend payments, and the white paper confirms that a new regime to hold senior leaders more accountable will be implemented.

The white paper confirms the direction of travel but there is a still a huge amount of detail to be provided on how the proposed reforms will be implemented and how they will work.

2. Guidance on 'Pollution Incident Reduction Plans'

Earlier in January, Defra released guidance on the mandatory requirement for water and sewerage companies to issue Pollution Incident and Reduction Plans (PIRPs) - PIRPs and Implementation Reports: how to prepare and publish.

The WSMA has inserted provisions into the Water Industry Act 1991, requiring the preparation and publication of PIRPs and associated Implementation Reports. The intention is that publication will increase transparency about the steps water companies are taking to address performance issues, reduce pollution incidents and their impact on the environment.

The first PIRP must be published by 1 April 2026, with both PIRPs and Implementation Reports requiring publication by 1 April 2027 (and annually thereafter).

PIRPs will require water and sewerage companies to:

  • review the measures that are currently in place and resulting pollution incidents attributable to their system over the preceding calendar year; and
  • explain how they will reduce the occurrence of pollution incidents that are attributable to their system in the next calendar year (for example through better monitoring and customer awareness campaigns).

Implementation Reports will require water and sewerage companies to assess the extent to which they have succeeded or failed to implement measures designed to reduce the occurrence of these pollution incidents.

It will be a criminal offence for both the company and its chief executive personally if PIRPs are not produced and published. Both the chief executive and the company may be prosecuted, and the penalty will be an unlimited fine. Chief executives will have a statutory defence if they can show they took all reasonable steps to ensure compliance – but no such defence will be available to the company. Regulators may also impose civil sanctions as an alternative to prosecution, which will require a lower burden of proof.

This marks a definite shift from the previous voluntary regime, where only some water companies elected to produce and publish PIRPs, to a mandatory legal obligation with serious consequences for a failure to comply. Going forwards a company's PIRP implementation record will also be considered in any regulatory and enforcement decisions that have to be made in the future.

3. Environmental Improvement Plan

The UK Government published its updated Environmental Improvement Plan (EIP) in December 2025, outlining the steps it intends to take in order to improve the natural environment and setting interim targets to keep the UK on track to meet its long-term statutory targets. The EIP sets out 10 headline goals and makes 91 commitments, giving businesses, communities and policymakers a clear roadmap for environmental action and investment over the next five years.

In relation to the water sector / industry, the EIP confirms that water companies will face stricter penalties for pollution, will have obligations to invest in infrastructure and nature‑based solutions, and closer collaboration with farmers as well as local authorities. Similarly, industry reliant on water abstraction may face licence modifications and housebuilders will need to find ways to reduce water consumption.

See our EIP 2025: what businesses need to know for a summary of the issues covered by the updated EIP and implications arising from it for key stakeholders.

4. Strengthening penalties for water companies

The WSMA introduced new powers to enable the EA to hold water companies to account and impose sanctions against those that are responsible for breaches of environmental regulations. These powers include provision to allow automatic penalties to be issued by the EA for a defined list of offences, and provision to lower the standard of proof for EA civil sanctions – allowing appropriate penalties to be issued more swiftly for minor to moderate offences, without the need for lengthy criminal proceedings.

The EA can already use civil sanctions, imposed direct rather than by the courts. While these sanctions are more flexible and might be a more appropriate alternative to criminal proceedings, the standard of proof required is still the criminal one – the EA must be satisfied beyond reasonable doubt that an offence has been committed.

The majority of water company non-compliance with environmental requirements amount to minor or moderate offences, mainly arising from breaches of permits or licences. The requirement for breaches to be proven beyond reasonable doubt makes it more difficult for the EA to impose civil penalties. The Government therefore published its consultation on strengthening penalties for water company offences in October 2025, consulting on changes that would allow the lower burden of proof (on the balance of probabilities) to be used to impose civil sanctions.

The consultation sought views on using the powers under the WSMA to:

  • Allow the EA to impose variable monetary penalties (VMPs) to the (lower) civil standard of proof for a range of minor to moderate offences committed by water companies (water companies being defined as water and sewerage undertakers and licensees) under the regimes for environmental permitting, water abstraction, water impounding and drought.

    • Secondary legislation will be required to set the maximum penalty that can be imposed under the civil standard of proof. The consultation sought views on proposed caps of £350,000 or £500,000 – above which the EA could only impose VMPs on offences proven to the criminal standard.

  • Allow the EA to use new automatic penalties in circumstances that are straightforward and easy to prove.
    • Introducing new civil standard Fixed Monetary Penalties (FMPs) for permit and license breaches and allow the EA to impose automatic penalties.
    • Replace existing criminal standard FMP powers (for appropriate abstraction offences) with automatic civil standard penalties.

The types of environmental breaches that could be subject to an automatic FMP will include failing to report a significant pollution incident within 4 hours, breaching certain data requirements and failing to have an accurate and reliable monitoring device in place to measure the quantity of water abstracted. The consultation proposes the introduction of deemed permit conditions which, if breached would result in an automatic FMP. These deemed conditions would be standardised across relevant permits or licences, to support the EA in easily identifying an offence.

The penalty values proposed range from £5,000 to £10,000 (for very large organisations - those with a turnover of over £250 million). This sum would increase to £20,000 where a company does not discharge its liability following an initial notice of intention to issue a penalty.

The consultation closed on 3 December 2025, and the Government will use the feedback to inform implementation of the new penalties in secondary legislation. The EA will also consult on amendments to its Enforcement and Sanctions Policy, setting out how the new penalty powers will be used.

5. The Environment Agency enforcement and sanctions policy

The Environment Agency enforcement and sanctions policy (ESP) has also been generally updated recently. The update relates to offences arising from breaches of the Environment Act 2021 (EA 21). Reforms to the ESP were introduced on 10 October 2025, following a public consultation which sought customers' views on proposed amendments needed to make the ESP apply EA 21 civil sanctions.

The ESP was first issued in April 2018, setting out how the Environment Agency conducts enforcement activity for environmental offences. It explains the results the EA wants to achieve, the regulatory and penalty principles they uphold, the enforcement and sanction options available to them and how they make enforcement decisions. There are four Annexes to the ESP which provide specific detail on the enforcement framework to be adopted when environmental offences occur.

The EA published its consultation response, also on 10 October 2025, and that response confirmed the implementation of a new Annex 4, which explains how the EA will use new powers to impose the civil sanctions introduced in relation to the extended producer responsibility regime for packaging and packaging waste (pEPR).

Annex four confirms that criminal prosecution will be reserved for particularly reprehensible conduct, such as fraud, bad faith and misleading statements or conduct. In relation to civil sanctions it confirms as follows:

  • Fixed Monetary Penalties - will be imposed for specific breaches, with a standard penalty of £1,000 under pEPR. If unpaid within 56 days, the penalty will be increased by 50%.
  • Variable Monetary Penalties – will be calculated using a stepped approach, adapted from the Sentencing Council's guidelines. Penalties can be unlimited and are determined based on the seriousness of the breach, including culpability and harm to the environment. The starting point for the most serious offences by large organisations is £1 million.
  • Compliance Notices – will be issued when a person needs to take action to comply with the law, such as when data returns are not submitted as required. These may be accompanied by monetary penalties.
  • Enforcement Undertakings – will be considered if voluntary offers from offenders to rectify the effects of a breach and prevent recurrence are made. If the offers are accepted, they will become legally binding and will preclude further prosecution or civil sanctions for the same breach.
  • Enforcement Cost Recovery Notices – these will be issued where the EA seeks to recover the costs incurred in the enforcement process. They cannot be combined with a FMP and should be included as part of an enforcement undertaking.

It is anticipated that there will be further amendment required to Annex 4, to cover the sanctions that will flow from breaches of the upcoming Digital Waste Tracking (DWT) system and the Deposit Return Scheme (DRS) system, which are due to be in force from October 2026 and October 2027 respectively.

What's next for environmental enforcement and sanctions

There is a positive move to improve enforcement of sanctions where environmental rules and regulations have been breached. Clear routes for enforcement will allow penalties and redress to swiftly follow when breaches have occurred. This can only be a good thing for the environment.

If you need support navigating the evolving enforcement landscape, or would like to discuss any of the issues arising from this overview please contact Andrew Litchfield or Natalie Barton-Howes.