The Government Publishes A New Vision For Water: What does this mean for Business?

In January 2026, the UK Government published its response to the Cunliffe review of the water sector. The main output is the creation of a single water regulator, to replace Ofwat, DWI and the water functions of both the Environment Agency and Natural England. There is also a lot of discussion about resilience, water security and infrastructure, and ensuring the water sector supports economic growth, with the new regulator taking an engineering viewpoint, rather than just a financial one. There is also mention of augmenting the five-year Periodic Review with long-term strategic plans which is welcome, but it’s hard to see how this differs from the water companies existing twenty-five-year plans. Other than that, the outcomes are fairly vague.

So, what does this new document that will likely lead to a new water bill in the Spring, mean for business water customers? The short answer is, not much really. It seems that there won’t be many changes to the water market. Two things that do stand out are the creation of a retail supplier of last resort, which means if a retailer goes bankrupt there will be continuity of supply for businesses, although it will be interesting to see the detail of who this supplier of last resort will be. Secondly, the Government reiterated the phasing out of block tariffs by April 2026, this means that previously high users paid less the more they used, but now it’s likely this will be reversed with higher prices for increased use. The Governments view is that this will drive water efficiency. Whilst we support this, we do have concerns for businesses where water is an essential input to manufacturing and production, and in our view rising block tariffs should be based on an assessment of how efficiently a business is using water.

This Government report is timely, as our water infrastructure urgently needs attention, so any activity is welcome. The recent supply interruptions in the South of England show that businesses cannot take water supply for granted. At the same time, there will be pressure for even greater price rises in future and water companies are already restricting supply in some areas. Businesses need to be prepared and need to ensure they are using water efficiently to keep costs down and protect the environment.

If you want help with your water, please get in touch and we can schedule a call or even a water audit for your business. Give one of our experts a call on 020 3808 6608 or contact us via the website.

Link to White Paper: https://assets.publishing.service.gov.uk/media/696f52d7c0f4afaa9536a071/Defra_Water_White_Paper_2026_print.pdf