How can water enable resilient growth and infrastructure delivery?

Water is rapidly emerging as a potentially critical constraint on UK industrial growth and infrastructure delivery, alongside tightening supply. This article explores the need for early-stage water planning, cross-sector coordination, water recycling, and policy reform to support resilient water infrastructure and enable industrial decarbonisation.

Jen Ashwell and Douglas Haycock share their thoughts after attending the UK Industrial Water & Infrastructure Security Summit in Manchester earlier this month.

Water as an enabler of growth

There is a clear shift in how water should be understood within the infrastructure and development landscape. The consistent message across regulators, water companies and industry was that water is no longer a background utility issue but an increasingly critical requirement for economic growth and industrial decarbonisation. Demand for water is rising rapidly, while climate pressures, population growth and ageing infrastructure are tightening supply. In some regions, this is leading to a scenario where “drought” is forecast to become the norm. The Environment Agency emphasised that it is no longer appropriate to assume public water supply will meet future industrial demand, reinforcing the need to treat water as a strategic input from the outset. This topic is also getting political attention; by way of example, the Environmental Audit Committee (a Commons Select Committee) is currently reviewing the risks and opportunities to the sustainability of data centres in the UK, including potential associated water demands, with questions being asked on whether the planning regime is adequate to control demand.

The case for ‘water-first’ planning

A central theme was the need to bring water considerations forward in the development process. Water companies are encouraging developers to engage at the earliest stages of site selection and design, reflecting the established approach taken to electricity grid connections. The current planning and development system does not adequately support this, meaning projects risk progressing too far before encountering significant supply constraints. The clear message was that water should sit on “page one” of project business cases, with early clarity on supply options, infrastructure requirements and potential regulatory pathways, including abstraction licensing and discharge controls. This is of particular importance to those industries for whom water is a key input to the industrial process.

System coordination

There is also a highlighted need for greater integration and a system-wide approach to infrastructure planning. Water can no longer be treated in isolation from other sectors. Industrial decarbonisation schemes, in particular, depend on alignment between water, energy, transport and digital infrastructure, and failure to coordinate these elements risks delaying or undermining delivery. Spatial clustering of development, particularly in established industrial regions such as Humber, Teesside and HyNet, was identified as a mechanism for improving efficiency and enabling shared infrastructure. However, this approach also raises questions around cumulative environmental impacts and highlights the need for planning at a cluster or regional scale rather than on an individual project basis.

Mainstreaming alternative water supply

A key area of focus was the need to diversify away from traditional reliance on potable water. There was strong support for scaling up the use of recycled water and effluent reuse, particularly where industrial demand does not require drinking water quality. At present, there is a tendency to default to potable supply, which is increasingly unsustainable. While there is clear potential for recycled water to become a mainstream solution, barriers remain in the form of regulatory uncertainty, lack of standardised delivery models and limited experience within consenting regimes. Other supply options, including desalination, mine water recovery and localised reuse systems, are also being explored, though each brings its own technical and environmental considerations.

Demand uncertainty

A persistent challenge is the difficulty of forecasting demand from emerging industries. Water companies must make significant long-term investment decisions with extended lead-in times, yet demand signals remain uncertain and heavily dependent on wider policy and market developments. This creates a tension between investing too early, with a risk of underutilised assets, and investing too late, constraining growth. As a result, there is increasing emphasis on collaboration between industry and water companies to develop more robust demand scenarios and enable more confident investment decisions.

Policy alignment

Policy fragmentation is seen as a key barrier to progress. While there is growing recognition of the role of water in supporting industrial growth, the current framework is not yet aligned. Differences in approach between government departments, delays in sector-specific policy development, and uncertainty around regulatory regimes for water reuse and new infrastructure all contribute to a lack of clarity for developers and investors. A more coordinated and stable policy environment will be essential to unlock investment and enable a shift away from project-by-project competition towards a more strategic, sequenced approach to delivery. The Water White Paper, following the Cunliffe Review, highlighted similar issues and it is clear that there is strong industry support for a clearer, more streamlined, policy framework.

Financing future infrastructure

There was broad agreement that investment in new water infrastructure will depend on the development of a strong and reliable pipeline of projects, supported by standardised procurement approaches and scalable delivery models. Mechanisms such as Direct Procurement for Customers are expected to play a growing role in introducing competition and efficiency, while government support and guarantees may be necessary to de-risk large-scale schemes. Ultimately, however, the cost of new infrastructure is likely to be shared across consumers, industry and the public sector.

A strategic inflection point

The water sector is at a potential inflection point. Water is moving to the forefront of infrastructure planning and industrial strategy, and its availability will shape the pace and location of future development. For promoters and investors, the implication is clear: water must be treated as a core strategic consideration from the earliest stages if the UK is to deliver its growth and decarbonisation ambitions.

Burges Salmon represents clients across industries affected by this new consideration. Burges Salmon is widely recognised as having a preeminent water practice. Our cross-firm Water Sector team acts on a variety of high-profile instructions for clients across the sector, including statutory undertakers, licensees and companies within the supply chain. Our team has a detailed understanding of the key legislation affecting the sector and how relevant regulators operate in practice.

For further information, please contact Jen Ashwell or Douglas Haycock.