Unannounced inspections, regular checks akin to MOTs, and mandatory water efficiency labels on appliances are central to the government’s proposed overhaul of the water industry.
The government is characterizing these measures as the most significant reforms to the water industry in England and Wales since privatization.
Environment Secretary Emma Reynolds asserted that there will be “nowhere to hide” for underperforming water companies.
The proposed changes follow widespread public dissatisfaction with increasing pollution incidents, leaks, and water outages affecting thousands of customers across England and Wales in recent years.
Reynolds told the BBC: “We’ve had a system whereby water companies are marking their own homework.”
“This has been a whole system failure,” she stated. “A failure of regulation, a failure of regulators, of the water companies themselves.”
The Water white paper outlines plans to establish company-specific teams to monitor, supervise, and support individual firms and their unique challenges, moving away from a “desk based, one size fits all” approach.
Smart meters and mandatory water efficiency labels on appliances, including dishwashers and washing machines, will also empower households to monitor their consumption and costs, according to the government.
The reforms also include the creation of a chief engineer role at the regulator that will be established to replace Ofwat.
Government officials have indicated to the BBC that establishing the new regulator could take a year or more, and water companies anticipate that the benefits of new investments will take time to materialize.
The government’s reforms are based on a review by Sir John Cunliffe, who issued 88 recommendations to improve the industry.
However, he was directed not to consider the possibility of nationalizing the sector, which was privatized in the late 1980s.
Campaigners have expressed concerns that the proposed reforms do not go far enough.
River Action chief executive James Wallace stated that the measures indicate the government “recognizes the scale of the freshwater emergency, but lacks the urgency and bold reform to tackle it”.
He cautioned that the new regulator must be “truly independent” and adequately funded, and emphasized that significant gaps remain.
“None of these reforms will make a meaningful difference unless the failed privatised model is confronted head on. Pollution for profit is the root cause of this crisis,” Wallace said.
Surfers Against Sewage chief executive Giles Bristow described the government’s proposed changes as “frankly insulting” and insufficient to address the required structural reform.
“The truth is glaringly obvious to everyone except this government. As long as the industry is structured to prioritize profit, the public will keep paying the price through soaring bills and polluted water,” he stated.
Sir Dieter Helm, professor of economic policy at Oxford University, suggested that the government’s reluctance to explore nationalization stems from self-imposed spending constraints.
“In addition to that, I think there’s a very sensible view around government that the government probably isn’t competent and capable to run these businesses,” he said.
“The government should think really quite carefully about this, because if they’re supervising the companies, and something goes wrong, Whose fault is it?”
Recent problems in the sector have come into sharp focus after tens of thousands of South East Water customers experienced water outages for several days both before and after Christmas.
Mike Keil, chief executive of the Consumer Council for Water (CCW), stated that the “miserable disruption” underscored the importance of “meaningful change” in water regulation.
Keil added that a new, powerful ombudsman service would also be welcome, given CCW has seen a 50% increase in customers seeking assistance with complaints about their water provider.
“One of our key asks of the Independent Water Commission was to make our existing voluntary ombudsman service mandatory, as this is vital to giving customers robust protection,” he said.
The River Pang in Berkshire, considered by some to be an inspiration for Kenneth Grahame’s Wind in the Willows, has seen its environmental status decline from “good” in 2015 to “poor” currently, with campaigners citing regular sewage discharges as the cause.
On the banks of the Pang, Pete Devery from the Angling Trust expressed scepticism about the government’s plans to the BBC.
“I won’t hold my breath” he said.
“The proof will be in the river. Do the rivers across the country improve? That’s the end result. Doesn’t matter what you call that regulator. It doesn’t matter how many regulators there are. If the difference isn’t made in the rivers, they will have failed.”
In 2024, water companies released raw sewage into England’s rivers and seas for a record 3.61 million hours, a slight increase on 2023.
Aging infrastructure, wetter winters and drier springs, and agricultural runoff into rivers and lakes have all contributed to poor water service and quality.
Ofwat currently serves as the water industry’s economic regulator for both England and Wales. In October 2025, the Welsh government announced its intention to establish its own stand-alone economic regulator to replace Ofwat upon its abolishment.
In 2025, water supply interruptions across England and Wales increased by 8%, pollution incidents by 27%, and customer satisfaction fell by 9%.
Average water bills rose by 26%, or £123 per year, starting last April, following years of below-inflation increases that some attribute, alongside high executive pay and shareholder dividends, to under-investment in the sector.
The sharp rise in bills is intended to address this under-investment by funding £104 billion in spending over the next five years, with over 40% earmarked for new infrastructure.
Emma Reynolds identified South East Water as the poorest performing of all water companies.
The local water company asserts that the leak is not sewage and that efforts are underway to fix it.
Thames Water is providing individuals with more time to respond to allow for more comprehensive answers.
Approximately 17,000 properties still lacked water or were experiencing intermittent supplies as of Wednesday.
South East Water reports that around 23,000 properties are still facing supply issues in Kent and Sussex.