A New Vision for Water: The Long-Awaited White Paper on Reform to the Water Sector

This week saw the publication of the long-awaited Water White Paper “A new vision for water” on 20 January 2026. The 52-page White Paper sets out the government’s reforms for the overhaul of the water sector as a result of recent pressure on the industry including the Independent Water Commission’s report drafted by Sir Jon Cunliffe, summarised in our article, which included 88 recommendations for reform. The White Paper highlights that the government have three key goals to meet with the reform to the sector: delivery of safe and secure water supplies, protection and enhancement of the environment and to deliver fair outcomes for customers and investors.

The reforms are split into seven key themes within the White Paper:

• A new long-term direction for the sector;

• Resetting regulation by establishing a new, integrated water regulator;

• Attracting investment by making the sector more attractive and reliable for investors;

• Putting customers first by creating a new independent Water Ombudsman, safeguarding drinking water and increasing consideration of public health;

• Investment in storm overflows and wastewater treatment;

• Improvement of water security by enhancing asset health, streamlining infrastructure delivery and maintain more resilient infrastructure;

• Committing to a Transition Plan to lead the sector through the reforms.

A summary of the key reforms include:

• One single water regulator: The plans outline the introduction of a new integrated regulator which will be an amalgamation of the relevant water system functions of Ofwat, Drinking Water Inspectorate, EA, and Natural England functions. Regulation of the sector will move to a tailored supervisory approach which enable early intervention and company-specific oversight. Plans include new enforcement powers for the new regulator, a new Performance Improvement Regime (PIR) for underperforming water companies and obligations on third-party contractors, in addition to other reforms such ending operator self-monitoring, introducing a new ‘Open Monitoring’ approach for wastewater. The White Paper additionally outlines plans to introduce a Water Ombudsman to assist with dispute resolution and enhance customer protection.
• Long-term strategic direction and reform: The White Paper sets out a ‘new direction for water’, aiming to end the piecemeal approach to alignment between the sector and stakeholders. The aim is to establish a clear long-term strategy for the water sector, replacing fragmented planning with two streamlined frameworks: one for water supply and one for the water environment. Plans include reform to long-term planning using a five-year strategic guidance cycle, supported by the new 10 and 25-year reviews and the publication of a Transition Plan to guide the transition. This should ensure the water industry is more predictable for investors and companies creating stability allowing water companies to design future plans based on long term outcomes and targets. The White Paper also sets out the ambition to set a consistent approach across regulated sectors in the UK.
• Legislative reform: Existing legislation will be reformed and new legislation will be implemented, with particular focus being on the value for money aspect of procurement during the maintenance and building of projects and a consolidation. For example, the Specified Infrastructure Projects Regulations (SIPR), will be amended to include all types of water infrastructure to move towards a procurement model which sits alongside the Ofwat Direct Procurement for Customers (DPC), to ensure better value for money on procurements relating to the maintenance or building of a project.
• Asset upgrades: Reforms include plans to shift the focus away from enforcement of pollution incidents to stopping pollution at the source by investing in ‘pre-pipe’ solutions to support wastewater management earlier in the process, focusing on rainwater management, sustainable drainage and tackling sewer misuse. Investment in the assets will be a key part of this. The White Paper sets out the plans for the new regulator to include a Chief Engineer to oversee the engineering-based supervision of the sector.

Next steps

The reforms build heavily on the Cunliffe review and centre around more bespoke regulation of water companies through the new centralised regulator and a focus on protecting both the consumer and the environment. There is a particular focus on tackling wastewater pollution early on and creating a more stable, predictable industry which is attractive to investors by adopting long terming planning and targets. 

The White Paper states that in order to help smooth the transition, the government will, along with the Welsh government, publish a ‘Transition Plan’ during 2026. The vast quantity and significance of the reforms may impact the pace at which change will take place, which may ultimately be slower than the sector needs. 

Our cross-firm water sector group will be monitoring changes closely and will be considering the implications for the water sector as a whole and, in particular, for water and sewerage companies.

Written with the assistance of Sasha Anisman and Ryan Millett. 

These are once-in-a-generation reforms for our water system – tough oversight, real accountability, and no more excuses.

https://www.gov.uk/government/news/government-unveils-biggest-overhaul-to-water-in-a-generation