King's Speech 2026: 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:

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.

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.

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 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 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.