King’s Speech: Clean Water Bill to Shake up Water Industry

Maggie Burns and Allan Owen explain the impact of the Government’s proposed Clean Water Bill.

The Government’s proposed Clean Water Bill marks a significant step in the ongoing reform of the water sector, introducing wide-ranging changes aimed at strengthening regulation, improving environmental outcomes, and restoring public confidence. Investors will be watching closely to assess the impact of these changes on the attractiveness of the water sector for private investment. Maggie Burns and Allan Owen explain what you need to know.

The UK Government has confirmed in the recent King’s Speech that it intends to introduce a Clean Water Bill (the “Bill”), signalling the continuation of significant reform across the water sector in England and Wales.

The Bill follows a series of recent interventions, including the Water (Special Measures) Act 2025, the independent Cunliffe Review, and the “New Vision for Water” white paper. Together, these reflect a clear policy direction: more active regulation, stronger enforcement, and a focus on rebuilding public trust in a sector facing sustained criticism.

The Government has framed the Bill as a “once-in-a-generation” reform, moving away from a system where water companies have been seen to “mark their own homework”, and towards a model of more visible oversight and accountability.

In this article, we summarise the key changes to be introduced in the Bill and provide our initial insights.

A sector under pressure

While the privatised water model has delivered significant investment since 1989, the sector is now under intense scrutiny.

The Government’s own assessment highlights a combination of structural challenges:

• rising environmental concerns, including millions of hours of sewage discharges annually and increasing pollution incidents;
• aging infrastructure and leakage, with around 19% of treated water still lost before reaching customers;
• growing demand, driven by population growth (up by around 11 million since privatisation) and climate change pressures;
• fragmented regulation, with multiple bodies and overlapping obligations creating complexity; and
• weak public confidence, exacerbated by performance issues, financial structures (including high levels of gearing), and concerns over customer value.

The result is a system that, in the Government’s view, “has failed customers and the environment” and now requires fundamental reform.

Key Reforms

A new integrated regulator

A core proposal is the creation of a single, independent and integrated regulator, bringing together functions from Ofwat, the Environment Agency, the Drinking Water Inspectorate and Natural England.

The aim is to address today’s fragmented oversight by giving the regulator a compete, system-wide view of performance, alongside stronger powers to identify issues early and intervene decisively.

From a market perspective, this could be a positive development. A more integrated approach has the potential to:

• better balance customer affordability, environmental protection and investor confidence; and
• provide clearer, more consistent regulatory signals.

However, successful implementation will be key, particularly in ensuring that consolidation genuinely simplifies regulation rather than introducing further layers of complexity.

Stronger enforcement and oversight

The Bill signals a shift towards a more supervisory and interventionist regulatory model, including:

• enhanced enforcement powers, including stronger penalties, expanded inspection powers (including no-notice inspections), and earlier regulatory intervention;
• a proposed Performance Improvement Regime, enabling intervention where companies are underperforming; and
• broader reforms to oversight, including a move away from operator self-monitoring and greater regulatory scrutiny of company performance.

This reflects a broader policy objective of delivering cleaner rivers, lakes and seas, improving operational performance, and increasing accountability.

While stronger enforcement is likely to improve outcomes, it will be important that regulatory action remains proportionate and predictable, to avoid undermining confidence in the regime.

Smart metering and water efficiency

A further priority is the acceleration of smart water metering, alongside measures to promote water efficient appliances and improved data use.

Smart metering is expected to:

• help customers identify and reduce usage;
• support leak detection and system efficiency; and
• enable fairer, usage-based billing.

We have previously considered the opportunities and challenges associated with smart metering in more detail here.

Expanding competition through NAVs

The Bill also looks to expand the New Appointments and Variations (“NAV”) framework, enabling new water and wastewater providers to serve new developments.

This is framed as a mechanism to:

• support housing delivery and economic growth;
• increase competition in infrastructure provision; and
• help unblock major development corridors.

As the NAV market evolves, clarity around risk allocation and regulatory treatment will be critical to maintaining investor participation.

Planning and long-term resilience

The Bill also proposes to streamline planning by consolidating current requirements into two core long-term planning frameworks, potentially supported by national water targets.

Alongside this, the Bill emphasises:

• statutory resilience standards;
• improved asset mapping and system visibility; and
• more strategic, long-term investment planning (over 5, 10, and 25-year horizons).

These changes are intended to provide greater certainty for both regulators and investors, while reducing duplication in planning processes. Whilst detail remains relatively scant at this stage, the measures appear to be positive, facilitating decision-making by providing a clearer long-term planning horizon.

Looking ahead

The Bill represents a significant opportunity to address long-standing challenges within the water sector, particularly in improving environmental performance, strengthening oversight, and rebuilding public confidence.

However, these ambitions must be carefully balanced against the continued need for private sector investment in the industry. The Government has already highlighted the importance of unlocking long-term capital, pointing to £104 billion of private investment to support infrastructure upgrades, and future reforms will need to sustain this trajectory.

In practice, this will require a framework that offers:

• clear, coordinated and stable regulation;
• proportionate and predictable enforcement; and
• manageable and well-defined risk allocation.

If delivered effectively, the Bill has the potential to move the sector onto a more sustainable, resilient and trusted footing for the decades ahead.

Maggie Burns is an Associate and Allan Owen is a Partner at Sharpe Pritchard LLP.

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