People’s Commission Response to the Water White Paper
Radical reform needs to address the web of interests, structures and narratives that sustains the current system, and stands in the way of genuine change.
1. Introduction
On 20th January 2026, the government published its long-awaited White Paper, titled ‘A New Vision for Water, heralded as a ‘once-in-a-generation opportunity’ for reform. But rather than a comprehensive new approach to addressing the real causes of the water crises, the proposals look set to patch things up for a speedy return to business as usual in a system that perpetuates the dominance of private interests over the public good.
While this is disappointing it is not altogether unexpected. The terms of reference for the so-called Independent Water Commission (IWC), on whose recommendations the government White Paper is based, were similarly narrow. In July 2025, following widespread consultation, we drafted an alternative report to the IWC to provide an alternative perspective on the challenges facing the water sector. Much of the discussion below draws on our previous report.
2. Key points of the White Paper
The White Paper proposes retaining the current privatised water system in England and Wales but with adjustments to facilitate delivery of the ‘new vision’. Key elements of the White Paper include proposals for:
A regulatory overhaul – abolishing Ofwat and creating a new, single regulator that combines functions from the Environment Agency, Drinking Water Inspectorate, and Natural England.
Making water more attractive for investors.
Creation of new water ‘ombudsman’ to support water customers
Stronger standards for monitoring pollution
Improved monitoring of assets.
Long term strategic planning cycles to provide stability for investors
Some of the measures are welcome. Plans for greater water reuse are long overdue. Pre-pipe solutions such as rainwater management and sustainable drainage systems are vital to taking the stress off the existing infrastructure. Increased use of smart meters is likely to increase public awareness of water consumption which is a vital first step in reducing our water use, although water charges need to be managed carefully to ensure social equity.[1] Long term planning is of course essential to water management, although this needs to be part of a wider integrated water strategy (see below). But overall, and significantly, the White Paper perpetuates a structure where water is managed in the interests of opaque offshore shareholders rather than local communities, water users and bill payers, and therefore fails to address the real cause of the water sector crisis. This is the failure of the extreme form of privatisation enacted in England and Wales and highlights the inherent limitations of state regulation in this context.
3. Limitations of the White Paper
3.1 Lack of reflection on the causes of the current crisis
A new direction is clearly required in the water system, but this needs to start with an analysis of what has gone wrong, and why. This understanding is vital for informing remedial action. Reading the White Paper, one might conclude that the problems stem from an overly complex regulatory framework and an unpredictable environment for investment.
But at the heart of the crises in the water system – the devastating and on-going sewage dumping and the financial precarity of some water companies – is the water sector owner’s drive for profit, alongside the inevitable failure of regulation in a monopoly private system. The White Paper has some lightly expressed criticism of water companies in terms of their inappropriate financial engineering and their prioritisation of short-term profits over long-term resilience and the environment (pp 20 and 24). But missing is any analysis of the devastation caused by these practices, why they were allowed to happen and a detailed account of how new measures will ensure they do not recur.
The sector is owned by international capital actors who are largely geographically and institutionally far from the water system in question. Control of water companies rests with people who are incentivised to maximise returns for investors and this has taken priority over ensuring a well-functioning and sustainable system. From this perspective polluting is cheaper than investing and regulation is simply a constraint to be worked around. This is to be expected when water is managed for profit.
The tone of the White Paper is that regulation needs to be predictable in order to attract investment. This implies that prior to this, regulation was somehow erratic. But the problem was not with the consistency of regulation but rather with private sector profiteering for which the regulatory framework was ill-prepared. Water companies have devoted considerable resources and effort to bypassing regulation and to evading the consequences when they are found in breach.
The White Paper repeats a much-used phrase that water companies will no longer ‘mark their own homework on pollution incidents’ (p.36), a practice of operator self-monitoring that was introduced by a previous government. Water companies have shown that they are untrustworthy when it comes to adhering to regulation and the White Paper cannot address this lack of probity merely by adjustments to the regulatory framework.
3.2 Faith placed in regulation (but inevitable tensions and inconsistencies)
The flagship of the White Paper reforms is a new regulator that will have ‘the proper powers to oversee water companies’ (p.17), combining the four separate bodies that have been in place over the past decades into a single regulator. A supervisory approach is proposed with regulation that is company-specific and outcomes-focused and based on the regulator’s ‘contextual judgement’ (p.19). The supervisory approach, with regulation specific to each company, may overcome some elements of information asymmetry, but it raises other issues of revolving doors, corporate capture not to mention the higher costs of such a regulatory structure.
The narrative around the White Paper, is of a tough stance on regulation where water companies will have ‘nowhere to hide from poor performance’. The Secretary of State in her opening comments to the White Paper cites the 2025 Water (Special Measures) Bill which promises to ban director bonuses and the make the cover-up of pollution a criminal offence.
But the measures proposed are extremely gentle on the very companies that have caused the destruction of our waterways. Rather than applying sanctions, the White Paper approach is instead to introduce a Performance Improvement Regime for ‘poorly performing companies’. The idea is to prevent companies ‘falling into a “cycle of decline”’ (p21). The supposed aim is also to ‘send a clear signal that poor performance will not be tolerated or rewarded’ and yet this seems to be doing just that. The companies that created instability in the landscape through underinvestment and financial engineering are now to be supported to improve rather than facing the appropriate regulatory measure of special administration. There is a sharp inconsistency between the tough rhetoric and the lenient practice.
3.3 Focus on investability (which will perpetuate prioritisation of private over public interest)
Rather than introducing a tough regulatory stance, we are concerned that the new framework will be more lenient towards firms. In a subtle shift from the duties of Ofwat, the new regulator is tasked with strengthening ‘the water sector’s financial resilience and ability to attract the long-term investment required to meet its ambitions, ensuring that the sector supports economic growth’ (p18). The emphasis is on creating attractive conditions for investors with stability and transparency. Rather than making sure firms earn an adequate return (see the duties of Ofwat[2]), the new regulator will be required to ensure that the whole sector is attractive to private capital. This new approach puts greater pressure on the regulator to ‘improve the creditworthiness of the industry so it can provide long term investors with the lower risk environment they seek’ (p.12). But the decline in creditworthiness in the past has stemmed from regulatory intervention to curb the actions of water companies. Putting this new wide-ranging responsibility on the regulator risks that the regulatory body may be deterred from restraining private capital to protect consumers in the future.
A close reading of the White Paper shows that multiple and conflicting demands are to be imposed on the new single regulator. Anticipated tasks include ( amongst many others) ensuring good customer experience, revised guidance on water quality, bespoke supervision of companies and their operations, developing data for better monitoring, securing the financial resilience of companies and their attractiveness to investors, emergency planning.
While much is made of the need for predictability in the investment context, the WP envisages embedding ‘the concept of “constrained discretion” into the reset of water regulation’ (p.20). This apparent shift from a set of rules to a more ad hoc and subjective approach seems to contradict the need for predictability which is central to much of the discussion of investor needs. If investor predictability is really a strong priority, far better to consider a public ownership system and alternative financing mechanism which is managed through a public financial institution such as a public bank as happens in other countries such as The Netherlands.
3.4 Lack of concrete pathways – from policy to implementation
The White paper does not show how the measures to be introduced will lead to the sustainable and equitable water system that we need to serve future generations and to be able to cope with demands from climate change.
Instead, the WP presents outcomes with no analysis as to how they will be achieved. For example, the diagram on page 9 leaps from the creation of a new regulator and new legislation to outcomes which include cleaner rivers, lakes and seas as well as water security. But there no detail on how the proposed institutional shifts will create these outcomes.
The principles for the transition to the reformed system are set out on p 46 but missing is an indication of pathways by which they will achieve the desired outcomes. The shift in our water system requires both investment in infrastructure and substantial behavioural and cultural change. The White Paper does not show how proposed reforms will achieve this.
4. An alternative approach – a sustainable water system
4.1 A new strategy needed rather than patching up existing systems
In formulating new water policy, we need to start with the overall objectives and work out a plan to get there rather than patching up the failed model. The strategy should be the starting point, as we said in our 2025 report (p. 33), diverse economic and social activities intersect in the waterways with new building developments, agriculture, micro plastics and other waste products alongside human consumption. Radical reform needs to address the web of interests, structures and narratives that sustains the current system, and stands in the way of genuine change.
We need a strategy that works with a variety of stakeholders at multiple levels to work out the best model for a sustainable water system. Key to devising a new strategy and any new system devised should an expansion of participation and democratic accountability. Current public debate about water is limited by the reluctance of both water companies and government to reveal relevant information and yet we urgently need to develop a new collective commitment to enacting sustainable water management.
More action is needed to hold polluters accountable. The polluter pays principle is widely applied in Europe, requiring polluters to bear the cost of the pollution they cause. Learning from this, the government should pursue a polluter pays model, rather than landing all the costs of industrial, agricultural and building sector pollution at the bill-payer’s door. More is needed, not just to hold polluters to account but also to devise imaginative ways of reducing the pollution entering the system. Innovation could be promoted in pollution so that prevention, rather than treatment is the priority.
4.2 Feasibility study on alternative forms of ownership
The White Paper is based on the recommendations of the government’s ‘Independent Commission’ ( the Cunliffe Commission) which was explicitly barred from considering public ownership as an option for reform. And yet public ownership might offer considerable advantages over the current system. Costs could be reduced if dividends were reinvested rather than paid to shareholders. Borrowing costs could be lowered if debt was managed by the public sector rather than through commercial borrowing. Publicly owned water companies could be operated transparently through democratic bodies. The public good and the environment would take priority over the interests of financiers. There are numerous international examples on which we could draw to design a bespoke public system for England and Wales.
The government has ruled out even considering a transition to public ownership of water on the grounds that it is too expensive, will result in extensive legal wranglings and hence will not achieve the desired results. Yet these arguments are untested and based on spurious claims rather than any evidence.
We propose that a detailed feasibility study is needed for genuine consideration of the benefits and costs of a transition to public ownership. There may well be transactions costs up front. But these need to be compared with the costs of continuing with the failed privatisation model in a comprehensive feasibility that evaluates all the possible policy options for our water future.
4.4 Meanwhile…Regulators and government need to enforce the law as set out by the OEP
On the 8 January 2026 the Office for Environmental Protection confirmed that DEFRA and the Environment Agency had potentially failed to comply with the rules of England and Wales’s 2017 Water Framework Directive put in place on leaving the EU. The concern was not with the rules but how they are being applied.[3] The issue is not with regulation per se but its application. It is not that the rules are not in place but that they are not used to curb the actions of water companies.
Failing water companies need to be put into a Special Administration Regime in accordance with the law. Thames Water should lose its licence and transferred to government administration with public ownership explored as part of the company’s recovery plan (see our 2025 report for more on this).
5. Conclusion
We need a new strategy for the water sector that prioritises people and the environment rather than profit. The White Paper presents a programme to move forward for water as a business but not as a precious ecosystem to be managed with care for future generations.
Dr Kate Bayliss, Prof Frances Cleaver, Prof Becky Malby.
[1] See Calafati,L., Froud, J., Haslam, C., Johal, S., Williams, K. (2025) Murky Water: Challenging an unsustainable system Manchester University Press.
[2] https://www.ofwat.gov.uk/about-us/our-duties/
[3] https://www.theoep.org.uk/report/oep-finds-deeply-concerning-issues-how-laws-place-protect-englands-rivers-lakes-and-coastal