Water geeks such as myself have long made the point that water strategy should be on boardroom agendas. Its low price (relative to other utilities) does not reflect the critical value it has to most organisations’ operations. Too little or too much water can be devastating. And the risk of too little or too much water is increasing: 2025’s widespread drought has given way in 2026 to persistent rain and widespread flooding.
The reality of this now seems to be making headway in the wider world. The Economist held its first ever Water Summit in February, on the theme ‘Making water strategy a boardroom priority’. Leaders from a wide range of sectors operating globally – food and drink, tourism, pharmaceuticals, insurance, manufacturing and others – took to the stage to say ‘yes, the world has changed’ and ‘no, water can no longer be taken for granted,’ many having learned the hard way. There were stories of flooded premises halting operations, droughts curtailing production, and even corporates orchestrating the management of whole water catchments to preserve the essential ingredient on which they rely.
The UK is not on the frontline of such trends, but global patterns hold true. We have more extreme weather, a growing population, and brand new users like data centres and hydrogen producers on the scene. This all increases competition for a finite supply, coming from an increasingly degraded water environment.
Once-in-a-generation water reform
In that context, it is logical that the water reform underway in England and Wales – insofar as it considers business users specifically – does so most prominently through the lens of water efficiency.
To take a step back, the UK Government is in the process of preparing a Water Reform Bill. This will make what have been called ‘once in a generation’ alterations to how water in England is regulated, governed and managed. There are many changes afoot, with the headlines summarised in the box.
The Bill will draw from the Water White Paper published in January, setting out the Government’s high-level policy positions, and a still-awaited Transition Plan, which will set out the details. All of this follows 2025 recommendations from an Independent Water Commission, which urged root and branch reform be made to the water sector, given it is struggling with higher societal demands, ageing assets, and keeping bills affordable.
But what does all of this mean for businesses? The policy choices relevant for non-household customers fall into three camps: retail market measures, consumer measures, and water efficiency measures. The last of these very much takes centre stage.
Retail market measures
The Independent Water Commission didn’t put a huge amount of focus on the business retail market, but it identified four central issues that need consideration in England:
- A lack of engagement by smaller users – and whether these customers should be removed from the market and the cost implications of doing so.
- The impact of Ofwat’s price protections on the retail market.
- The efficacy of the retail market – the metrics by which this should be judged and what the implications are.
- Regulatory gaps in the retail market – including concerning tariff structures, metering, retailer exit and price appeals.
The Water White Paper picks up only one part of one of these issues. The only commitment is to create a new Supplier of Last Resort regime, to better safeguard customer interests should their retailer fail or abruptly exit the market.
Consumer measures
The Government is mindful of water customers’ lot. It has already more than doubled the statutory compensation water wholesalers must pay to users (household and non-household) that are affected by service failures.
This spring, new Water Voice customer panels – one for each wholesale water company – will convene for the first time, as part of Government plans to strengthen accountability through ensuring water companies listen and respond to their customers.
The White Paper added a few further provisions. The Government pledged to keep future cost rises smooth so customers can budget for them, ending sudden cost shocks like the April 2025 hikes. It also championed further consumer advocacy and vowed to provide access for customers to legally binding resolutions to complaints via a ‘new, independent, impartial, strong, and accredited Water Ombudsman’. There will be a bespoke model for water, ‘applying best practices from other sectors’.
Water efficiency measures
The most prominent set of measures relating to businesses in the White Paper concerned water use and water efficiency. The Independent Water Commission had recommended:
- Tariff structures should be changed to incentivise water efficiency. This could involve the regulator directing companies to remove falling block tariffs for businesses.
- Standards should be issued for the roll-out of smart meters in the non-household market.
- A new policy and regulatory framework should be developed to drive the adoption of water re-use infrastructure in household and non-household markets.
- Falling block tariffs (where unit prices get cheaper as volumes used get greater) will be phased out between now and 2030, to support water efficiency.
- The Government will look at ways of helping drive reuse and rainwater management uptake for large non-household developments and large water users.
Takeaway message
Beyond all of these high-level policy positions, there is nothing in the White Paper to flesh out exactly how or when changes will be implemented. That detail is to follow. However, for business customers, the direction of travel seems clear. To accommodate growth and adapt to a changing environment, businesses – especially large users – are going to be expected to waste less and pay more.
Hopefully we will see businesses provided with the right tools, incentives, and support mechanisms to make it attractive to make the shift. The MEUC will certainly be pressing for that. Potentially we will see mandated actions. Price will definitely be used as a motivator. Wholesale charges will continue to creep up, and tariffs will be honed to drive action – be that to use water outside of peak times, to reuse more on site or discharge less to sewer.
Large users would be wise to get ahead of these trends rather than be caught out by them down the line.