King's Speech 2026: Clean Water Bill

Clean Water Bill

“My Government will improve critical infrastructure with legislation to clean-up the
water industry”

● The Government was elected with a clear mandate to clean up the rivers,
lakes, and seas, having inherited record levels of pollution incidents from
water companies. In under two years, it has taken swift, decisive action:
introducing the Water (Special Measures) Act to raise standards, enforce
accountability, and make pollution cover-ups a criminal offence; banning more
than £4 million in bonuses for polluting water bosses; unlocking £104 billion of
private investment to rebuild vital infrastructure; and commissioning Sir Jon
Cunliffe to lead the most comprehensive independent review of the sector
since privatisation.

● The situation demands further bold action to deliver fundamental, long-term
reform. This once-in-a-generation Bill will shift the sector away from a system
where water companies mark their own homework by putting in place
stronger, active supervision and oversight through a powerful new regulator
capable of integrated management of the water system. Alongside the Bill, the
Government is also taking forward non-legislative reforms to end the era of
Operator Self-Monitoring. Together, these changes will deliver cleaner water,
strong protections for customers and the environment, more reliable services,
and a stable, long-term framework to support sustained investment.

What does the Bill do?

● The Bill will strengthen confidence in the water sector – restoring the public’s
trust, giving investors the stability to back long-term upgrades, and providing
the clarity needed to support economic growth. It will ensure the sector plays
its full part in delivering clean water and a healthy environment.

● The Bill will:

○ Put consumers firmly first with a new Water Ombudsman to ensure
complaints are taken seriously and resolved quickly, strengthening
consumer advocacy, and providing stronger customer protections –
helping households understand, manage, and get better value from
their water bills. In delivering reform, the Government will ensure that
higher ambitions for the water sector and better, lasting outcomes for
customers are delivered in the most effective and efficient way, keeping
customer bills affordable and as predictable as possible.

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○ Create a new, independent and integrated water regulator by
bringing together the relevant functions of Ofwat, the Drinking Water
Inspectorate, the Environment Agency and Natural England. This will
end today’s fragmented oversight and ensure the regulator has a
complete view of company performance. With clearer accountability,
stronger teeth, and the right tools to identify problems earlier and act
decisively, the new regulator will help restore the public’s confidence
that the sector is properly overseen and drive the long-term investment
the system needs. This directly supports the Chancellor’s Regulation
Action Plan by ensuring the water regulator helps unlock growth rather
than hold it back.

○ Deliver cleaner rivers, lakes, and seas by providing the legislative
tools to ensure targets are ambitious, enabling pre-pipe solutions like
sustainable drainage systems to reduce spills and consolidating and
strengthening agricultural pollution rules. Outdated frameworks will be
updated so pollution is tackled at source and environmental standards
keep pace with new pressures. This will be supported by attracting and
securing the long-term investment needed to bring the waterways back
to good health.

○ Unlock economic growth and housing delivery through reforms to
the New Appointments and Variations framework, which enables new
water and wastewater companies to be appointed for new
developments. This will support the delivery of ambitious housing
targets, alongside strengthened planning powers, and measures to
promote competition in infrastructure delivery. These changes will help
unblock major growth corridors such as Oxford-Cambridge and support
the Northern Growth Strategy. This will help get critical water
infrastructure built faster, support new homes, and lower long-term
costs for consumers.

○ Strengthen the financial resilience and long-term stability of the
sector through a modernised economic regulation regime including the
new regulator taking a supervisory approach to improve oversight and
establishing a Performance Improvement Regime to ensure earlier
intervention for poorly performing water companies. Reforms to the
dispute process will align water regulation with other sectors, enabling
faster, more targeted decisions. These reforms will restore confidence,
reduce risk, and create a stable, long-term investment environment
needed to fund the upgrades the water system depends on.

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 ○ Build long-term resilience into the water system through statutory
resilience standards and better asset mapping. These reforms will be
underpinned by clearer long-term planning and strengthened strategic
guidance, giving the sector the stability needed to invest in resilient
assets for the future. This will be backed by stronger powers for the
regulator to enforce security, including no-notice inspections to ensure
realistic testing of security measures.

○ Strengthen drinking water protection and public health by giving
the new regulator stronger enforcement powers and responsibility for
convening expert advisory groups to keep drinking water standards
world-leading.

○ Boost water efficiency and secure future supplies by accelerating
the use of smart metering to enable customers to identify leaks, reduce
water wastage, and realise bill savings; all while encouraging the
uptake of water‑efficient appliances through the forthcoming water
efficiency labelling scheme. This will support fairer and more
transparent charging as bills reflect actual water use. This will be
complemented by the digital communication of drought and
temporary‑use restrictions, as well as by driving water reuse
infrastructure across homes and businesses, cutting leakage, reducing
bills, and easing pressures on supplies.

○ Create a stable, long-term planning framework by consolidating
existing water industry planning into two core planning frameworks and
exploring establishing national water targets. This would give
companies, investors, and regulators clear five, 10, and 25 year
direction and the potential to reduce duplication and unnecessary
administrative burden where planning and reporting are streamlined.

Territorial extent and application

● The Bill will extend and apply to England and Wales, with some measures
expected to apply to Scotland.

Key facts

● The water industry in England and Wales was privatised in 1989, water
supply and sewerage are delivered by 16 private companies. However, unlike
most markets, water companies are regional monopolies with limited
competition. England and Wales are unusual in having a fully privatised water
system, whereby companies own the assets, infrastructure, and operation of

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 water services.

● The water system, regulation and the regulators have failed customers
and the environment. In the 37 years since privatisation the population has
grown by 11 million, climate change and aging infrastructure has created
unprecedented demands on the water system and reform is now needed. This
has been compounded by a failure of regulation, with a system that relied too
heavily on water companies marking their own homework.

● The legislative and regulatory framework developed by successive
Governments has left a complex and fragmented regime. Within this
context, water companies are not delivering what is expected of them, both by
regulators and the public. This poor performance is evident in Ofwat requiring
companies to return £157.6 million to customers in 2025–26 due to
underperformance, and Ofwat’s 2024–25 performance-related pay
assessment confirmed more than £4 million of unfair bonuses were blocked
using new powers in the Water (Special Measures) Act.

● Pollution pressures have also come from agriculture, affecting around 41
per cent of water bodies (more than wastewater at 36 per cent). Between
2020-25, 49 per cent of farms inspected by the Environment Agency were not
fully compliant with agricultural water regulations.

● To address these challenges, the Government commissioned the largest
review of the water sector since privatisation. The Independent Water
Commission revealed the scale and severity of the problems in the water
sector. Gearing (levels of debt) at some companies has gone above 80 per
cent, making them vulnerable to financial shocks. The lack of strategic
direction is clear through the four different types of investment plans required
of companies, the 46 statutory obligations on companies set out in the Water
Industry Strategy Environmental Requirements, and the over 26 pieces of
legislation covering the sector.

● There is limited evidence of improvements without intervention. In
England, serious pollution incidents were up 60 per cent in 2024 compared to
2023. Data from Event Duration Monitors installed at storm overflows
nationwide shows that discharges into rivers, lakes and seas occur for millions
of hours each year - 3.61 million hours in 2024 and 1.8 million hours in 2025,
largely depending on rainfall. The National Infrastructure Commission has
stated that we will face a five billion litres a day shortfall for public water
supplies by 2055 if action is not taken.

● Around 19 per cent of water entering distribution in England is still lost
to leakage. This means almost one-fifth of treated drinking water never

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 reaches a tap.

● Transformative change is therefore needed to secure a system that will
work for the long-term. This Bill delivers that change. The majority of
measures in this Bill are underpinned by the extensive engagement, research,
and recommendations made by Sir Jon Cunliffe in his final report and set out
in the Water White Paper.

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