techUK responds to whitepaper on water reform

Read our summary of and reaction to the UK government's white paper and its ambitious agenda to redesign the water sector

Six months after the Independent Water Commission, chaired by Sir Jon Cunliffe, published its review of the water sector, the Government has released its white paper, "A new vision for water". Positioned as a once-in-a-generation opportunity, this document sets out an ambitious agenda to redesign the water sector and rebuild public trust in a system that has faced mounting criticism.

The white paper marks not the end of water sector reform, but the conclusion of the first phase. Building on initial government measures to "clean up the water industry", including the Water (Special Measures) Act 2025 and ringfenced infrastructure investment, it now launches a programme of systemic reform structured around five key themes:

Clearer long-term direction through the publication of a transition plan

A new integrated regulator to provide unified oversight of the water sector

Enhanced private investment to secure long-term sustainability

A water ombudsman to strengthen customer protections

Reforms to water treatment and security to safeguard supply and quality

The next critical milestone is the 2026 Transition Plan, to be published jointly by the UK and Welsh Governments alongside interim regulatory guidance. This will be followed by a Water Bill to be introduced in Parliament. techUK will continue to work with the Government, regulators, and industry to ensure that digital innovation is central to translating the white paper's vision into reality.

Specific commitments

While the white paper sets out the Government's vision for water sector reform, it is important to note that the forthcoming 2026 Transition Plan will provide the detailed roadmap for implementation. The Transition Plan will clarify timelines, responsibilities, and practical guidance for how these reforms will be delivered. However, we can already identify several core announcements that will reshape the sector (some of which have been known for a long time):

Regulatory transformation through the creation of a powerful new integrated water regulator represents the most significant structural change. This body will consolidate functions from Ofwat, the Drinking Water Inspectorate, the Environment Agency (its water specific responsibilities), and Natural England (its water specific responsibilities) into a single entity with enhanced powers for supervision, enforcement, and company-specific oversight. The Government will appoint leadership for this new regulator at the earliest opportunity to oversee the transition. This transformation will be underpinned by a reset of the legislative framework via a new Water Bill, including elements of the Urban Wastewater Treatment Regulations and the Water Framework Directive Regulations, where needed. The Government is also taking steps to ensure current regulators have the resources they need now for effective and timely enforcement. For example, to avoid further backlogs, DEFRA is implementing the EA’s digital projects.

The current fragmented system of over 20 different plans will be streamlined into two core planning frameworks – one for water supply and one for water environment. These will be supported by regional plans, aimed at clarifying investment priorities to meet national water and growth objectives, and new 25-year strategic guidance that replaces the current Strategic Policy Statements, providing long-term certainty for investors and companies. The regional plans will have a significant focus on nature-based solutions to reduce long-term costs and improve resilience, supported by the removal of regulatory barriers to facilitate these solutions.

The commitment to a 5/10/25-year planning approach marks a fundamental shift from short-term cycles to long-term horizons. The five-year price review cycle will be retained but reformed to function as checkpoints within longer delivery plans, with indicative funding commitments extending a decade ahead and high-level needs mapped out over 25 years.

The Government will develop a comprehensive picture of asset conditions across the sector, building on improved mapping of water infrastructure. New statutory resilience standards will be introduced to ensure all companies make forward-looking assessments of their systems and address regional fragmentation. The new regulator will include a Chief Engineer at its core to embed technical expertise and enable engineering-based supervision.

To ensure infrastructure receives adequate funding, the Government will abolish the Quality and Ambition Assessment, clearly define and ringfence capital maintenance expenditure, and review how asset depreciation is calculated. These changes aim to ensure companies are funded appropriately to maintain and improve asset resilience rather than being incentivised to underbid for necessary investment.

Water companies have committed to rolling out smart meters across 50% of homes and businesses by 2030, backed by a Smart Meter Delivery Board to oversee delivery. The Government will introduce a Mandatory Water Efficiency Label for products, which is expected to save customers around £57 million on water bills and £71 million on energy bills over the next decade. Leakage reduction targets remain in place – a 50% reduction by 2050 compared to 2017/18 levels, with £700 million investment over five years to achieve an initial 30% reduction by 2032.

Record investment of £11 billion in storm overflow improvements and nearly £5 billion in wastewater treatment works upgrades will be complemented by consolidated agricultural pollution regulations, an end to operator self-monitoring through the new Open Monitoring approach, and statutory resilience standards for water infrastructure. The Government will also double funding for catchment partnerships to strengthen local capacity for effective catchment planning.

The white paper commits to building nine new reservoirs, updating National Policy Statements, reviewing Permitted Development Rights, and expanding the Specified Infrastructure Projects Regulations to enable competitive procurement across all water infrastructure types and not just sewage-focused projects. RAPID (Regulators' Alliance for Progressing Infrastructure Development) will continue to coordinate major infrastructure delivery before being incorporated into the new regulator, with its remit potentially expanded to include wastewater and other strategic projects.

techUK view

techUK welcomes this white paper as the reset needed to place the water sector back on the right path. The commitment on smart meter rollout for both businesses and households, which has until now been lacklustre, and focus on long-term planning and resilience are particularly encouraging as the sector modernises to address the challenges of climate change, scarce resources, and competing demands for supply. Appointing a Chief Engineer within the new regulator will be an important step to deliver the technical competence required for infrastructure maintenance and development.

It is positive to see that a new Open Monitoring approach will be adopted for wastewater, driven by greater digitisation and automation. More open, better quality water data will enhance transparency and strategic planning, with the rollout of smart meters for businesses – not just households – key to delivering this. The white paper correctly identifies the limited transparency of companies and assets as a problem, yet this is an issue concerning data access as much as accountability. For example, water-stressed regions may not be easily identifiable to industrial consumers undertaking development, leading to insufficient understanding of supply constraints until late in the planning process.

Across all the commitments, it is also positive that the Government has recognised the importance of centring nature within the water system and supporting investment in the nature-based solutions and green infrastructure. More holistic, streamlined planning and decision-making within the regulator, in line with commitments made in the revised Environmental Improvement Plan (2025) will support biodiversity and enable nature recovery, ultimately resulting in greater long-term national resilience.

It is vital that the regulator’s new leadership is appointed immediately to drive these reforms forward. Whilst the commitment to attract more private investment is laudable, this must be combined with significant regulatory change to create pathways for third-party involvement in large strategic projects, such as data centres keen to invest in water reuse or resilience infrastructure. There is no clear regulatory model for co-investment; neither is there a formal framework distinguishing between potable vs non-potable water demand, allocation or siting, meaning data centres are currently resorting to potable water for cooling methods due to the lack of supply of alternatives.

techUK will continue to work with regulators and policymakers to ensure that digital solutions, such as digital twins and the Internet of Things, are placed at the heart of the upcoming Transition Plan to ensure it is truly transformative and effective in future-proofing the sector.

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