Water supply and the management of waste and surface water are increasingly critical considerations for developers. Water scarcity, aging infrastructure, and environmental requirements need to be anticipated and addressed in good time. Planning and regulatory rules also need to be navigated.
It is encouraging to see that reform is finally being mapped out and is now on our doorstep, but as always, challenges remain.
A new vision for water: the White Paper
In 2024 the Conservative Government commissioned Sir Jon Cunliffe to take a “hard, honest” look at what had gone wrong with the water sector and how to put it right. In July 2025, after significant engagement across the whole system, he set out his 88 recommendations for reform in the Independent Water Commission’s final 464-page report.
In January 2026 the Labour Government has published its long awaited White Paper in response to the Cunliffe Report. The White Paper sets out the Government’s action plan for reform of the water sector to make sure it delivers the most critical outcomes – “safe and secure supplies of water, a protected and enhanced environment, a fair deal for customers and investors – in a way that is more efficient and integrated”.
The overhaul of the sector outlined in the White Paper is far reaching. In particular the White Paper outlines plans for the creation of a new regulator to take the place of Ofwat and the DWI and take on the water and waste water responsibilities of the Environment Agency and Natural England, the creation of a new Water Ombudsman, and the condensing of 20 fragmented planning processes into two core frameworks: one for water supply and one for the water environment.
In the first of a series of articles covering this critical sector for developers, the key themes in the White Paper of relevance to developers are outlined below.
Key themes and reforms of relevance to developers
Plan-making and mandatory consultation: In November 2025, the Government confirmed details of a new local plan-making system. Under this new system, the Government intends to specify that water and sewerage companies will be made aware of key consultations and obliged to assist with plan-making, where reasonably requested.
The question of whether water and sewerage companies should become mandatory consultees in planning applications is currently under consultation. Given there are already concerns over bottlenecks in the system caused by the statutory consultee process, developers will be watching this consultation with interest.
Competition and NAVs: smaller, statutory water companies that operate in place of the regional incumbents for specific sites (NAVs) have grown rapidly in recent years, from around 100 sites in 2018 to more than 2,000 in 2025. The Government intends to make the framework for regulating the NAV market more “proportionate”. This may mean reducing elements of unnecessary burden, given their relative size and risk to customers, while still ensuring statutory duties are fulfilled.
These plans will be welcome to developers in view of an increasing reliance on the NAV market and the welcome competition which it creates.
Right to Connect: the Government are working together with MHCLG to review the “right to connect” to a water supply and to the sewerage system. The Cunliffe Report recommended that the right to connect should be reviewed to address concerns over new developments adding disproportionate and unexpected pressure to water supply and sewerage systems. Instead, it recommended that focus should be placed on water companies being involved at an earlier stage in the planning system so that any required infrastructure can be planned and delivered in a timely way.
Developers should be mindful of the direction of travel. The current near-automatic “right to connect” may become diluted and subject to capacity being available in the system.
Tighter water efficiency standards and reuse models: Even with action to deliver critical new infrastructure and improve resilience, the UK’s current water consumption is not sustainable. Improvements in water efficiency are integral to the reforms proposed in the White Paper and are already being consulted on by DEFRA in September 2025.
Themes identified in the White Paper of relevance to developers include:
- Household water reuse and rainwater management. Whilst the principle of water reuse is promoted, current interpretation of Regulation 4 of the Water Supply (Water Quality) Regulations 2016/2018 requires supplied water to be “wholesome” (potable), which prevents the supply of lower-quality, recycled water to homes. A reappraisal of this interpretation and potentially new legislation will be required to enable non-potable, recycled water to be supplied in residential settings. The White Paper does not address this.
- The roll out of smart metering. Water companies are currently undergoing a major rollout of smart water meters, with plans to install over 10 million devices by 2030. The aim is to reduce leakage, manage water scarcity, and provide accurate, real-time consumption data to customers.
- Incentives for businesses and homes to adopt water efficiency. Already Ofwat’s Environmental Incentives Common Framework (EICF) requires water companies to provide financial incentives to developers for building water-efficient properties.
Sustainable Drainage (SuDS): the White Paper outlines a shift towards managing waste and surface water at source by prioritising “pre-pipe” solutions. These are strategies to reduce the volume of waste and surface water entering the sewerage system in the first place, rather than treating it at the end of the pipe. SuDS are an example of a pre-pipe approach. The Government intends to ensure legislation, funding streams, and regulatory mechanisms support the delivery of pre-pipe solutions.
This will be generally welcome to developers. The key issue is how management and maintenance of SuDS is to be achieved, which we will cover in a later article in this series.
Conclusion
For developers, while the reforms indicate stricter environmental requirements, and a push for better water efficiency, they also introduce a significant expansion to modernize sewers, secure supplies against climate change and improve water quality. These investment plans aim to unlock housing development across England and Wales by addressing water scarcity and upgrading network capacity and will be welcome to developers.
Our cross-firm expertise in this area is considerable. We regularly advise on these issues across many different development scenarios and for a range of stakeholders. If you have any questions or would welcome a discussion please do contact Lucy Smallwood, Fergus Charlton, Noel Beale or your usual Michelmores contact in the first instance.
