Decoding the water reform white paper: the impacts for agriculture and rural landowners

The UK Government has now published its hotly anticipated white paper, A New Vision for Water. It focuses primarily on water companies, but also includes commitments for agricultural regulation and whole-sector governance of water. This blog analyses what the white paper means for land managers and rural businesses.

White papers set out the government’s intention for future legislation, in this case a Water Reform Bill which is expected – but not guaranteed – to be included in the 2026-2027 year of lawmaking following the King’s Speech in the spring. This week’s white paper is the government’s substantive response to the 88 recommendations from the Independent Water Commission (IWC), also known as the Cunliffe Review. It describes which actions government has chosen to advance from the commission’s longlist, and begins to set out a programme of works. (You can read more of the CLA’s reaction to the IWC’s final report here and its initial diagnosis here.)

Last summer, Defra announced several changes it would commit to implement via the white paper, most prominently a new regulator for water in England. This included the attention-grabbing commitment to abolish the economic regulator, Ofwat, and combine its functions with the Drinking Water Inspectorate and the water-related functions of the Environment Agency and Natural England. While the new regulator represents one of the bigger and more complex actions in the white paper, it is now ‘old news’.

As a note for Welsh readers: many of the white paper’s commitments could cover Wales as well as England, but it does not specify which of the proposals will apply to Wales. This is because some environmental regulation is devolved, but most water industry regulation is not, and government has not yet sorted out how it will operationalise the various commitments. The white paper explains instead that “The Welsh Government’s position on water reform for Wales will be set out in more detail in their forthcoming Green Paper”, with both governments committing to work collaboratively.

A major win for a coalition of organisations, including the CLA, is that the government will reform water company regulation so that it is focused more on outcomes and ‘pre-pipe’ solutions. This is instead of the overly prescriptive requirements that lead to heavily engineered options, despite more sustainable alternatives being suitable. The white paper commits to “ensure legislation, funding streams, and regulatory mechanisms support the delivery of pre-pipe solutions” – for example, Sustainable Drainage Systems, nature-based wastewater treatment options like reedbeds and investment in land management to reduce the risk of sewers overflowing from floodwaters.

To support pre-pipe solutions, the government will give the new regulator constrained discretion and powers to use sandboxing, which is where the regulator agrees to suspend some rules to trial an innovative new approach. In setting up the new regulator, the government will also seek to overcome existing cultural challenges in regulators like excessive risk aversion.

The government will replace the more than 20 plans and processes that water companies have to publish or follow with two consolidated planning frameworks – one covering water supply, the other the water environment. The major benefit of this for CLA members is that water companies can more easily plan solutions that deliver for multiple statutory objectives at once, avoiding the current predicament where competing regulatory processes with misaligned timescales frustrate joined-up solutions.

Collectively, these proposals should allow water companies to invest more in land management, restrengthening an important income stream for rural businesses which has proved mutually beneficial over the last two decades, but which regulators have recently curtailed.

Based on word count, it might appear that agriculture received short thrift in the white paper, but this belies the consequences of some seemingly throwaway lines. For example, the white paper commits to “continue to support farmers to improve their water supply planning and to develop local resource options, to store more water and make better use of water availability”. This is exciting because it means government is explicitly committing to support farm reservoirs and rainwater harvesting, improve the responsiveness of abstraction licencing to high flows, and support capacity building for agricultural water planning, which should include Water Abstractor Groups – all things the sector has been asking Defra to deliver for many years.

The highest-profile action for farming is that the government will “consolidate the existing regulatory framework [on agricultural water pollution] into a single set of stronger and clearer national standards. Where necessary, the standards will also be strengthened and extended to bring best practices into regulations to deliver improvements in the water environment and ensure sufficient protections for air quality and soil health."

The CLA has advocated for these reforms to occur because the current regulations in England overlap, are ambiguous, create perverse incentives, have not delivered the necessary outcomes for water quality, and do not provide certainty for the sector to support investment. We welcome the white paper’s commitment, which closely matches what we have pitched to Defra as a good outcome from these reforms. We are seeking clarity on when these changes will be introduced and what package of non-regulatory support (such as grants, soft loans, advice, planning reform, transition periods, etc) will accompany the reformed regulations. We will continue to be at the forefront of shaping them for members.

A contentious commitment in this section is to extend environmental permitting from pigs and poultry to some dairy and beef farms. This is not new as Defra pledged to extend permitting in the 2023 and 2025 versions of the Environmental Improvement Plan, and before that the Clean Air Plan 2019. The CLA is currently developing a position through branch committee discussions. There is strong evidence that permitting could successfully reduce pollution from housed cattle (particularly ammonia pollution), but this must be weighed against its considerable cost burden and how it might restructure the cattle sector.

We will also carefully monitor risks from the white paper’s commitment to move water abstraction into the same Environmental Permitting Regulations. Again, this is not new; Defra consulted on it in 2021, but has not yet issued a response. Our concern is that permitting would allow the regulator to review licenced volumes more frequently than current time-limited licences, which would reduce water security for farmers and growers, and therefore make it harder for them to invest in farm reservoirs and other infrastructure. We are keen to work with Defra on a solution so the sector can harness other benefits from including abstraction within a more flexible, digital-first licencing system.

One of the thornier challenges that the white paper tackles is governance of water. The current system lacks a formal mechanism for cross-sector planning above the local catchment partnership level. The CLA, and many other stakeholders, have advocated for a regional planning function to coordinate investments and help make trade-offs. This would not be a regulator, but a decision-making forum to deliver regional and local priorities alongside national statutory targets. The white paper does not commit to a specific form for the regional planner, but it is good to receive commitment that each regional board will include agricultural representation, as will the co-design group for actioning this, the Regional Water Planning Steering Group.

The local tier of governance will also be supported with a doubling in funding for each catchment partnership. While this should fund a part-time officer, it is not nearly enough to leverage each partnership’s full potential or to provide stipends to allow unsalaried participants in the catchment to give their time to the partnership, as we recommended. Defra has separately explained that this funding comes from water company fines, which is not a stable or long-term funding source, given we hope fines will reduce as water companies become more compliant.

The white paper includes a rather ambiguous statement that government will be “acting to address long-standing issues caused by private sewerage”. This presumably encompasses leaking septic tanks, which need to be tackled from an environmental perspective. However, the paper offers no detail on the actions government will take, or the balance between grant support and regulation. We will be seeking clarity on this point.

Falling block commercial tariffs – i.e, where mains water becomes cheaper the more a business uses – will be phased out from April 2026. If you use a lot of mains water, running a dairy for example, you may wish to check if you have received any information about this from your supplier.

The UK Government will consult on bringing spreading of sewage sludge on agricultural land into the environmental permitting regime in ‘early 2026’. The CLA welcomes this consultation, as it should lead to much tighter regulation of contaminants in sludge. Conversely, we were disappointed, like many stakeholders, to see government exclude extended producer responsibility for manufacturers of chemicals from the white paper, which the IWC recommended, and which would have mirrored countries like Switzerland. It would have required manufacturers to pay a levy to fund micropollutant treatment at wastewater treatment works, in turn reducing contamination of land via sludge spreading. We wonder if this reflects a resourcing decision at Defra given the policy has such cross-sector support.

CLA members are customers of mains water, and lots of the water-company-specific changes should improve the service customers receive – and if not, there will be a new water ombudsman to handle complaints. Land managers with water mains crossing their land will be particularly interested to hear of policies on new statutory resilience standards for water company assets, MOT-style health checks, and ringfenced budgets for capital maintenance.

Finally, the white paper includes a commitment to “drive reuse and rainwater management uptake for large non-household developments and large water users”. Farm buildings and light industrial roofs should be prime targets for this rainwater harvesting. We will be keen to work with the government’s ‘non-household customer journey group’ to determine what this support should look like.

The government will determine the legislative agenda for the next sitting of Parliament via the King’s Speech which will take place in the spring. We will then have a better understanding of timescales for the Water Reform Bill.

In the meantime, there is a huge amount of work for Defra – and for stakeholders, in co-design – to flesh out the paper’s policies, and to begin delivering those that do not require primary legislation. We will be working as collaboratively as we can to make Defra’s commitments work for members.