The UK Government’s January 2026 White Paper, A New Vision for Water, is heralded as the most ambitious attempt to reform the water sector since privatisation in 1989. It emerges from a period of declining public trust, and growing frustration with a fragmented regulatory system. Ministers describe the proposals as a once in a generation plan to transform England and Wales’ water system, addressing issues that have accumulated for decades. Is it a new vision?
Unavoidable overhaul
England is projected to face a daily shortfall of five billion litres of public water by 2055, with a further one billion litre per day gap for businesses and industries that rely on water abstraction to operate.
Even if current plans for new infrastructure and resilience improvements are fully delivered, supply and demand are moving in the wrong direction. Climate pressures, rising demand, slow progress on leakage and limited new resource development have created structural challenges. Public frustration has also intensified. Sewage spills, infrastructure failures, and financial viability concerns have become symbols of a system viewed as failing both consumers and the environment.
The White Paper responds to and builds on the findings of the Independent Water Commission (IWC) in July 2025, chaired by Sir Jon Cunliffe. The IWC called for a “fundamental reset” of the sector (as covered in our August analysis), including the abolishment of the water regulator, Ofwat. Those recommendations follow the Water (Special Measures) Act 2025 and the Government’s pledge to reform water regulation, restore public trust, and improve environmental standards. Whilst the Government has secured £104 billion of investment for the 2025-2030 period (the largest in the sector’s history), ministers emphasise that investment and systemic change are what is needed to transform the sector.
A shift in direction
The White Paper is explicit about the need to attract investment into the water sector. This priority is highlighted at the outset of the Executive Summary and reiterated throughout the document. Many of the proposed reforms are presented through the lens of securing greater investment. What also emerges is a move towards a more collaborative approach, with an emphasis on building strong partnerships with all parties, which the Government considers is key to both unlocking future investment and successfully implementing the scale of reform needed in the sector. This shift towards collaboration will be welcomed by those that have been at the coalface of interfacing with (at times) a combative and impermeable regulatory regime, and could be a turning point for the sector.
Another core element of the White Paper is the proposed reconfiguration of how the sector is directed and regulated. The Government intends to:
- Strengthen long-term direction by revising Strategic Policy Statements;
- Implement a new supervisory approach to regulation targeted to the specific needs of each water company to improve performance;
- Simplify the planning landscape to reduce overlap between water resources, drainage, wastewater, and storm overflow programmes; and
- Enhance regional planning so that decisions reflect catchment needs and environmental constraints.
Together, these reforms reflect a recognition that a one-size-fits-all approach to regulation and fragmented planning has hindered coherent long-term decision-making and environmental outcomes. Specifically, the new supervisory approach is intended to transform the way water companies are regulated, shifting to an approach that is more proactive, risk-based, company-specific and outcomes-focused.
A single integrated water regulator
One of the most consequential reforms is the creation of a single integrated water regulator. The Government will abolish Ofwat and merge relevant functions from the Environmental Agency, the Drinking Water Inspectorate and Natural England into one body with a broad mandate to:
- Protect public health and the environment;
- Ensure fairness for customers and bill affordability; and
- Strengthen financial and operational resilience across the sector.
The new regulator will combine engineering, scientific and economic expertise in a way the current structure has not been able to achieve. A Chief Engineer will oversee a shift towards engineering based supervision of asset health and project cost assessments, while a drinking water quality advisory group of scientific experts will inform regulatory decisions.
Enforcement powers will also be significantly tightened. The new regulator will be able to impose financial penalties for drinking water non-compliance without court proceedings, enabling faster intervention. A new Performance Improvement Regime will allow the regulator to step in earlier when companies show signs of decline, reflecting the Government’s view that reactive enforcement has contributed to system failures.
So far, reaction from the water sector has been mixed. While regulators welcome the rationalisation, environmental groups have warned that only a well resourced and genuinely independent regulator will be able to tackle entrenched problems.
An expanded regulatory perimeter
Another significant development is the expansion of the regulatory perimeter to include third party operators of water assets. The reforms also propose changes to the Water Industry (Specified Infrastructure Projects) (English Undertakers) Regulations 2013 (SIPR) to broaden the circumstances in which the regime can be used, enabling greater flexibility for major projects to be competitively delivered by third‑party infrastructure providers. The Government and Ofwat are working to relax the criteria for SIPR designation to accelerate delivery and improve value for billpayers, with further amendments under consideration as part of the post‑Cunliffe reform programme.
Under the reformed framework, the new regulator will be given the power to take enforcement action directly against any organisation operating treatment or supply assets or providing critical services on behalf of water companies. This has implications for outsourcing models, public-private partnership structures, engineering firms, technology vendors and long term asset operators. In practice, this marks a shift in how regulatory responsibility is to be shared across the water sector’s supply chain and means that:
- Contractual risk allocation will need to revisited;
- Operational transparency and data sharing requirements may need to expand; and
- The regulated entity will no longer serve as the primary point of accountability.
Wastewater and pollution control
The White Paper also sets a new direction for wastewater and pollution control. It signals updates to the Urban Waste Water Treatment (England and Wales) Regulations 1994, potentially moving the UK closer to the EU’s strengthened polluter pays model, where producers and dischargers bear a greater share of environmental compliance responsibility. This shift could affect wastewater-heavy sectors such as agriculture, food processing, chemicals and pharmaceuticals. The Government is also planning consultations in early 2026 on bringing sewage sludge applied to land under the Environmental Permitting Regime and potentially extending permitting to cattle farming, representing a regulatory expansion with significant implications for sewerage undertakers, farm operations and food supply chains. Separately, the Government has confirmed that water abstraction and impoundment will also move into the Environmental Permitting regime. We expect this will bring more consistent oversight to how water resources are allocated and used.
Water security and efficiency
The White Paper places strong emphasis on water security, with water companies committing to achieving 50% smart meter rollout by 2030, supported by a Smart Meter Delivery Board, with the aim of enabling customers to manage consumption and identify leaks more effectively. Coupled with this are ambitious leakage reduction commitments: 30% by 2032 and 50% by 2050, backed by £700 million in investment.
Transition, implementation and wider implications
The Government recognises that such sweeping reforms require careful sequencing. A Transition Plan, to be published later in 2026, will clarify roles, responsibilities and timelines, providing the sector with a roadmap ahead of the forthcoming Water Reform Bill (which is likely to be some way off).
Although these reforms are targeted at the water sector, their implications extend far beyond them. Industry and manufacturing, particularly heavy water users, will encounter tighter discharge limits, new abstraction controls and pressure to adopt circular water processes. Developers and local authorities will see planning frameworks shift toward more stringent water efficiency and infrastructure contribution requirements. Agriculture also faces significant transformation, with stronger pollution controls, potential new permitting duties, and greater scrutiny of land spreading and runoff – all of which will impose new operational and monitoring burdens.
Concluding remarks
‘A New Vision for Water’ does not simply adjust the regulatory system – it seeks to rebuild it. The Government aims to create a more collaborative, integrated, accountable and technically robust framework capable of addressing both historic failings and future resource pressures. Its success will depend on the capability and independence of the new regulator, the realism of the Transition Plan, instilling the confidence needed in investors and in the ability of water companies and their supply chains to adapt for the future. ‘A New Vision for Water’ is a starting point but, as always, the devil will be in the detail.
