This blog gives a summary of some of the key changes relevant to the environment.

A new regulator and regulation

One of the key reforms proposed by the White Paper is the creation of a new, single water regulator which will take on the water-related functions of Ofwat, the Drinking Water Inspectorate,

Ofwat is the economic regulator of the water and sewage sector. Its duties are set out in s. 2 and 3 of the Water Industry Act 1991. They include: furthering the interests of consumers, ensuring water companies carry out their statutory functions, ensuring water companies can finance their statutory functions, and further the resilience of water companies’ water supply and wastewater systems. Ofwat also regulates water bills for consumers through a price review mechanism.

The Drinking Water Inspectorate is responsible for the quality of drinking water in England and Wales. It has oversight of the Water Supply (Water Quality) Regulations 2016 which sets the standard for “wholesomeness” of drinking water.

The Environment Agency has a range of responsibilities for water in England, including responsibility for abstraction licences (i.e. removal of water from the ground) and the environmental permitting regime, including groundwater and surface water discharge permitting. 

Natural England provides advice to government on the impact of projects on the environment, as well as being a statutory consultee for projects that are likely to effect the environment. Thus, under s. 4 Water Industry Act 1991 where Natural England is of the view that an area of England is of special interest by virtue of its flora, fauna or geological or physiological feature, water undertakers must consult Natural England before undertaking any works which are likely to destroy or damage part of that land. Similarly, Natural England is a statutory consultee on planning applications. In significant parts of England, Natural England’s advice regarding the nutrient impact has impeded the delivery of new housing development.

The White Paper argues that the current system of water regulation is piecemeal in approach and this is exemplified in the overlapping and cross-cutting regulatory remits of these four regulators.

The new regulator will have four objectives:

• Protect public health and the environment;
• Ensure water company bills are fair and affordable for customers;
• Strengthen the water sector’s financial resilience and ability to attract long-term investment required to meet its ambitions, ensuring that the sector supports economic growth;
• Provide robust oversight of water companies to maintain and enhance the long-term health and resilience of their infrastructure.

The White Paper also announces the intention to give the regulator “constrained discretion”. The paper does little to flesh out what this will mean in practice but indicates that it intends for the regulator to be focused on outcomes as opposed to process. This, however, does little to tell us whether the new regulator will have greater discretion over enforcement action, discretion over how to carry out its oversight, or over the substantive requirements placed on water companies.  

As well as omitting to elaborate at this stage on its vision of “constrained discretion”, no timetable has been provided for when the new water regulator will be established. The Government commits to publishing a “transition plan” in 2026, but gives little insight into when the announced changes will be brought into effect.

Reformed regulation

Accompanying the reformed regulator is reformed approach to water planning. The White Papers notes that numerous different plans that water companies must have regard to and generate themselves. The multitude of different plans creates a complex web of policy that actors in the water industry must consider and keep up to date with.  The White Paper considers that these lead to inefficiencies in the system. For example, under the current system water companies must prepare and maintain water resources management plans (s. 37A Water Industry Act 1991). Water companies must consult the Environment Agency and Natural England before preparing these plans. Government Guidance on preparing water resource management plans indicates that water companies in England should consider the Government’s 25 Year Environment Plan, Drought Plans, River Basin Management Plans, Drainage and waste water management plans, Drinking water safety plans, local authority plans, local nature recovery strategies (see here).

To simplify the system, the Government has announced that it will reduce the number of “water framework plans” to two: water environment and water supply. It states that these plans will be underpinned by “consistent assumptions and metrics at national and regional levels”.

The attempt to reduce the number of ‘planning documents’ can be compared to the introduction of the National Planning Policy Framework in 2012 which sought to significantly reduce the amount of planning policy. The water White Paper does not, however, specify which of the plans it intends to replace with these two new plans. Many of the current plans do not pertain just to water. Thus, local nature recovery strategies target the biodiversity for the areas they cover. Whilst this necessarily includes biodiversity of relevant waterways, it is broader than this. For now, the White Paper leaves uncertainty as to how the new water plans will interact with existing plans.   

Addressing pollution

The White Paper announces a number of proposals to combat water pollution.

First, the White Paper affirms the commitment to provide additional funding to combat water pollution. This includes £11 billion towards storm overflows and £5 billion to allow for upgrades to wastewater treatment works to remove phosphorous (for more information on the storm overflows discharge reduction plan, see here). 

Second, the White Paper commits to consulting on reforms to how the sewage sludge, the residual solid waste generated from wastewater treatment. that is used in agriculture is regulated including whether it should be included in the environmental permitting regime. The spreading of sewage sludge on land is regulated by Sludge (Use in Agriculture) Regulations 1989. Regulation 3 prohibits the use of sewage sludge unless certain requirements are met, including testing of the sludge and the land. The Independent Water Commission – Final Report found that in England the overwhelming majority of sewage sludge is being reused in agriculture as organic fertiliser and that this is contributing to excessive nutrient run off into water ways (i.e. diffuse agricultural pollution). It was also noted that sludge can contain chemicals (including forever chemicals/PFAS) and microplastics which can be harmful to the environment. The White Paper indicates that the regulation of sewage sludge may be brought within the scope of the environmental permitting regime which is currently regulated by the Environment Agency.

The impact of diffuse agriculture pollution on waterways has been in the spotlight over the last few years with an increasing number of legal challenges being brought concerning agricultural pollution. For example, in 2024 River Action brought a judicial review challenging the application of the Environment Agency’s enforcement of ‘The Reduction and Prevention of Agricultural Diffuse Pollution (England) Regulations 2018’ – also known as the ‘Farming Rules for Water’. These rules were introduced to reduce and prevent diffuse pollution from agricultural sources. The High Court dismissed the judicial review on the basis that the Environment Agency had a discretion as to how to enforce the regulations (see here).

Similar issues provided the backdrop to the case of National Farmers’ Union v Herefordshire Council & Ors in which the National Farmers’ Union challenged Herefordshire’s new minerals and waste local plan, and in particular policy W3 which sought to require new agricultural development to show at least nutrient neutrality if they fell within the River Wye or River Clun Special Areas of Conservation. See here for a blog post by Jeffrey Chu on the case.

Planning and Infrastructure regime

The White Paper also indicates that Defra will work with MHCLG to implement a new plan-led system with the aim of ensuring more consistency between the water and development planning processes. This includes adding water and sewage companies as statutory consultees in the plan-making system in order to keep them involved in developmental planning.

The government has also committed to reviewing the permitted development rights for water companies in England to allow them to speed up projects that are needed to bring forward new development. In light of the difficulties in bringing forward new housing development in areas where nutrient neutrality is currently required, enabling swift water and sewage infrastructure to be brought forward can be seen as part of the Government’s broader strategy to bring forward new development.

Conclusion

A new vision for water: a White Paper sets an agenda for potentially radical reform of how the water sector is governed with the creation of a single regulator. This may lead to more joined up thinking and avoid duplication within the sector. However, as in many things, the devil is in the detail. Until more detailed proposals are set out, it is hard to predict whether the proposed reforms will achieve their intended outcomes.

Emma Rowland is a barrister at Francis Taylor Building.