What to expect from environmental law in 2026 – Water

This is the second of our five articles on what to expect from environmental law in 2026. This article focuses on Water.

There was continued regulatory focus on the water sector during 2025, including the publication of the Independent Water Commission’s report (better known as the Cunliffe Report) into the water sector.  The key conclusions of that report were summarised in our article, but more broadly, the Cunliffe Report recommended a key step-change in how the water sector should be regulated. In addition, last year ushered in AMP 8 – the new regulatory period for water companies which will last until 2030 and will have implications for Environment Performance Assessments, WINEP delivery and the delivery of Price Review commitments. 

Looking ahead to 2026: 

• The Environment Agency (EA) recently consulted on proposals to strengthen civil penalties for water companies pursuant to powers it was granted under the Water (Special Measures) Act 2025.  Proposals included: 

  • plans to introduce variable monetary penalties (VMPs) to a civil standard for a number of offences under the EPR 2016 and the WRA 1991; 

  • plans to expand the current requirement to report significant pollution incidents (cat 1 and 2) to all pollution incidents; and 

  • an announcement that the EA will consult on updates to its Enforcement and Sanctions Policy in due course.

  If implemented, these changes could significantly increase water companies’ exposure to high value fines. The consultation closed in December 2025 and we await a summary of the responses and the EA’s response.

• Off the back of the Cunliffe Report, the Government has committed to scrapping Ofwat and introducing a new ‘super regulator’ for the water sector, which would take on the water-related functions of Ofwat, the EA, Natural England and the Drinking Water Inspectorate.  The Government has not announced a timeline for the development of the new regulator yet, but a strategic policy statement setting out next steps and the Government’s formal response to the wider recommendations of the Cunliffe Report are anticipated soon.

• It remains to be seen if, when and how DEFRA, the EA and Ofwat will implement the recommendations made by the Office for Environmental Protection (OEP) following its review into whether those authorities had fulfilled their statutory duties in regulating combined sewer overflows. Further information on the recommendations is set out in our article. Following the Cunliffe Report, it is unclear whether these recommendations still stand and we await further details on their status. 

• In Scotland, SEPA is currently gathering views on a raft of water management issues via its ‘Safeguarding Scotland’s Water Environment’ consultation. Topics include wastewater and sewer management, chemicals in water and water use and scarcity.  The consultation closes on 3 March 2026 and it remains to be seen how Scottish water policy may align or diverge with the rest of the UK moving forwards.

Burges Salmon advises on a wide range of environmental law, including the topics outlined above.  If you have any questions on environmental law please contact a member of the Environment Team.

Written with the assistance of Helena Sewell.