CEO BLOG: The Government’s Water White Paper: A Defining Moment for Sector Reform

CEO Blog – Paul Horton

The Government published its long-awaited Water Sector White Paper - a major milestone that signals the start of the most significant transformation of the water industry in a generation.

This is not a consultation document. The direction is clear: reform is coming quickly, with primary legislation expected this year and a new regulatory system targeted to be operational by the end of 2029.

A New Era of Regulation

At the heart of the White Paper is the proposal for a single integrated regulator, bringing together the water functions of Ofwat, the Drinking Water Inspectorate, the Environment Agency and Natural England.

This move represents a fundamental shift away from fragmented oversight and towards a more unified, delivery-focused model.

The paper also introduces a supervisory approach described as “constrained discretion,” drawing parallels with financial regulation post-2008. The emphasis will increasingly be on operational resilience, capability, and delivery assurance - not just economic incentives.

The Rise of the “MOT” Model

One of the most striking proposals is an MOT-style assessment framework for water companies, focused on:

- Asset health

- Operational performance

- Financial resilience

- Company-specific delivery expectations

This company-by-company model is a significant change - and aligns closely with Future Water’s own work through our sector report card framework, which could provide a useful early foundation for such an approach.

Key Questions Still to Answer

While the intent is clear, major details remain unresolved, including:

- How pricing reform will evolve

- Whether AMP cycles will move to longer planning horizons

- The role of competition through NAVs

- The sector’s growing cyber and infrastructure resilience obligations

Notably, workforce and skills shortages - arguably one of the sector’s most critical challenges - receive very little attention.

Managing Transition Risk

The timeline is ambitious, with significant policy change landing mid-way through the current AMP period. With delivery pressures mounting and an election cycle approaching, the Government’s promised transition plan later this year will be crucial.

Future Water’s Commitment

Future Water Association will play an active role in supporting the sector through this transition. In the coming weeks we will:

- Publish guidance on the evolving standards landscape

- Launch Report Card Version 2 next month

- Engage directly with DEFRA on transition planning

- Continue positioning our work as a starting point for future MOT-style regulation

This White Paper marks more than institutional reform. It is an opportunity to rebuild confidence, strengthen delivery, and secure a resilient water system for the decades ahead.

Future Water stands ready to help shape that future.

‍