An aerial view of the sewage treatment works on the banks of the River Thames in East London. Tom Falcon Harding/Adobe Stock

The UK government is set to introduce legislation to overhaul the beleaguered water sector, which has long been characterised by pollution scandals and underperformance of private companies. The Clean Water Bill was first announced in the King’s speech in May. It aims to restore public trust and raise standards by introducing a new regulatory framework. The current regulator – Ofwat – will be abolished and a ‘super regulator’ created by merging its functions with the water oversight responsibilities of other public bodies.

Experts say the water sector has been poorly regulated for decades and allowed water companies to underinvest in critical infrastructure while paying out huge dividends to shareholders.

Emma Dearnaley, Head of Legal at River Action, says the Bill is an ‘once-in-a-generation opportunity to address the structural causes of failure in the water sector.’ As a result of chronic underinvestment and high levels of sewage pollution, nearly all UK rivers are polluted. Only 14 per cent have a ‘good’ ecological status. ‘After decades of underinvestment, weak accountability and environmental decline, the legislation should establish a long-term legal framework that restores public confidence and ensures the sector operates in the public interest going forward,’ she says.

Dearnaley suggests the government should use its special administrative powers under the Water Industry Act 1991. This would allow it to bring failing water companies under public control and explore alternative models of ownership, ensuring they operate for the public benefit and protect the environment above shareholder profit.

England and Wales are the only countries in the world with a fully privatised water system. Alternative models of ownership, including nationalisation, which many environmental campaigners have called for, were not considered as part of the Cunliffe review. ‘The Bill is also an opportunity to provide much-needed clarity about when and how the Government and Ofwat will use the special administration regime, providing greater certainty for the sector, investors and the public, while demonstrating that serious or persistent failure has consequences,’ says Dearnaley.

The French government recently introduced the Emergency Bill for Agricultural Protection and Sovereignty, which has triggered intense national debate. It proposes to double agricultural water storage capacity by 2035 and reauthorise the use of certain pesticides considered to be harmful to the environment and to increase the risk of water pollution. Marie-Benedicte Desvallon is an officer of the IBA Water Law Committee and partner at Wat & Law in Paris. She says that in addition to the conflict over water use between consumers and the agricultural sector, France’s huge investments in AI and the building of data centres will lead to increased disputes over the allocation of water resources. ‘The water war has begun in France,’ she says.

Gordon McCreath, a partner at Pinsent Masons in Glasgow, says that while the Clean Water Bill has the potential to deliver ‘significant improvements’ to water sector regulation the key to its success will be in its implementation. The upcoming Transition Plan on water reform will be vital for understanding how the reforms will be implemented in a way that also enables the day-to-day delivery of water services.

McCreath says the new super regulator will need to ensure it fosters a culture of collaboration and regulation that supports long term improvement goals. ‘The culture needs to come from the top and there needs to be a careful selection of who the senior people are and precisely how they are going to achieve the outcomes-focused regulatory culture required,’ he says.

Between July 2024 and May 2025, the UK government opened 81 criminal investigations into water companies over sewage dumping practices. In 2025, Ofwat fined Thames Water a record-breaking £123m for failures resulting in significant sewage spills and inappropriate dividend payments to shareholders. The water company is nearly £20bn in debt and on the brink of financial collapse.

Thames Water told Global Insight it is delivering ‘the biggest upgrade to its network in 150 years’, focused on ‘maintaining safe, high-quality drinking water, fixing leaks, and upgrading sewage treatment works and network to protect our rivers.’

‘We continue to work with all parties to reach an agreement that supports Thames Water’s long-term financial stability,’ the company said.

Dearnaley highlights that clean water is vital to growth and that high levels of river pollution destabilise the UK economy and society. ‘The legal framework must ensure that investment in infrastructure is not treated as optional and that sustained regulatory failure carries meaningful consequences,’ she says.