A newly published independent review has proposed the most significant shake-up of England and Wales’ water industry in over 30 years. Led by Sir Jon Cunliffe, the report outlines 88 sweeping recommendations, including scrapping the regulator Ofwat, introducing mandatory smart water meters, and setting up new regional planning authorities. These proposals aim to address long-standing issues in the water sector, such as underinvestment, poor environmental performance, and growing demand.
For businesses, the headline is clear: water bills could rise by around 30% over the next five years, and the way water is priced, monitored, and regulated may change dramatically. Understanding what’s on the table—and planning ahead—could help businesses stay in control of costs and compliance.
Why are these reforms being proposed?
The review highlights that the water sector has struggled with ageing infrastructure, inconsistent regulation, and pollution problems for years. Water companies have paid out billions in dividends while falling short on environmental and service obligations. Meanwhile, climate change, higher regulatory standards, and a population projected to grow by 8 million in England by 2055 are increasing pressure on an already stretched system.
The result is a call for massive investment, with water companies planning to invest over £100 billion in upgrades over the next five years. However, to fund this, bills may need to rise significantly. The report suggests that without intervention, businesses and households will likely face higher charges for years to come.
Key proposals and how they affect businesses
1. Scrapping Ofwat and setting up new regulators
The review recommends replacing Ofwat and other existing bodies (like the Drinking Water Inspectorate and the Environment Agency’s water role) with single integrated regulators — one for England and one for Wales. The aim is to simplify oversight, reduce duplication, and ensure regulators take a joined-up approach to issues like supply resilience, pollution, and customer service.
2. Mandatory smart metering
All businesses and households would be required to have smart meters that track usage in real time. Instead of paying a flat fee, companies would be charged for the exact amount of water they use.
For water-efficient businesses, this could be a positive change. However, for high-usage industries, it means higher bills unless steps are taken to cut usage or improve efficiency.
3. Regional water planning
The review calls for the creation of eight regional water planning authorities in England (and one in Wales). These bodies would assess local needs, direct investment, and work with developers to make sure there’s enough water and sewage capacity before new homes or business parks are built. It gives businesses more say in local water planning – but also means stricter scrutiny on new developments.
4. National social tariff and consumer protections
While mainly aimed at households, small businesses that use water on residential-style tariffs may benefit from a national social tariff that replaces the current patchwork of voluntary schemes. The report also recommends a new water ombudsman to make it easier for customers to resolve complaints.
5. Environmental reforms
The industry would no longer be allowed to self-report pollution. Instead, sewage spills and pollution breaches would be monitored by the regulator. This shift means businesses must expect stricter environmental oversight – especially those near rivers, coasts, or sensitive sites.
6. New rules on water company ownership
To prevent financial instability (as seen recently with some heavily indebted water firms), the report recommends tighter controls on company finances. This includes minimum capital requirements, public benefit clauses in licences, and the power to block ownership changes that aren’t in the public interest.
What does this mean for your business?
Rising costs are on the horizon
The review indicates that water bills may rise by around 30% over the next five years if large-scale investment goes ahead. While not yet confirmed, these increases are seen as necessary to upgrade ageing infrastructure and meet future demand. If mandatory metering is introduced, businesses will pay based on actual usage — making it more important than ever to understand your current consumption and identify areas to reduce waste.
Growth plans could be affected by local infrastructure
If you’re planning to expand or develop new premises, water and wastewater capacity may become a key consideration in planning applications. Under the proposed regional authorities, developers and businesses could face stricter assessments of local infrastructure before approval is granted.
Environmental regulations may tighten
If your business discharges waste, abstracts water, or operates near sensitive environments, you may be subject to stricter regulations in the future. Even if your business isn’t directly regulated, these reforms could affect supply chain partners or trigger new environmental requirements for your sector.
Time to review your water setup
Whether your business relies heavily on water (in manufacturing, food production, retail, or hospitality) or simply uses it for day-to-day operations, these changes could affect how you’re billed and what regulations you must comply with. Reviewing your current water setup now can help you prepare for future reforms.
Black Sheep Utilities – Helping You Prepare for What’s Ahead
With sweeping reforms being considered and water costs likely to increase, it’s vital that businesses get ahead of potential changes. Black Sheep Utilities helps businesses navigate regulatory shifts and make sure they’re not overpaying for essential services.
Our expert team can:
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Analyse your current usage and billing to identify inefficiencies and potential savings
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Support your transition to metering or smart monitoring (if adopted)
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Negotiate better supply contracts as market structures evolve
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Keep you informed of changes to pricing, regulations, and customer protection measures
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Book a callback and future-proof your water setup
While these proposals are not yet set in stone, the direction of travel is clear: reform is coming, and it may bring both challenges and opportunities for UK businesses. Now is the right time to understand your water usage, prepare for possible cost increases, and explore ways to reduce waste.
Book a callback with our team today to review your current water arrangements and see how we can help you stay informed, compliant, and in control.
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What is happening to Ofwat under the proposed UK water reforms?
The recent review has proposed replacing Ofwat with a new, independent regulator for England and another for Wales. The aim is to simplify oversight and improve accountability in the water sector. These changes are not yet confirmed and would require government approval.
Will business water bills increase under the new proposals?
The review suggests water bills could rise by around 30% over the next five years to fund infrastructure upgrades. While not guaranteed, businesses should prepare for the possibility of higher costs and explore ways to reduce water usage.
How could mandatory water metering affect my business?
If the proposal for mandatory smart meters is adopted, businesses would be charged based on actual water consumption. This could lead to increased costs for high-usage operations, but may benefit efficient businesses with low water use.
When will the proposed water reforms come into effect?
At this stage, the reforms are recommendations, not confirmed policy. If the government accepts the proposals, changes could be introduced over the next few years — but no fixed timeline has been set yet.
How can I prepare my business for potential changes in the water industry?
Start by reviewing your current water setup, understanding your usage, and identifying inefficiencies. Speaking with a B2B utility expert, like Black Sheep Utilities, can help you explore smart metering, billing options, and long-term strategies to manage future costs.
