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Water (Special Measures) Act 2025

Water (Special Measures) Act 2025

2025 Chapter 5

An Act to make provision about the regulation, governance and special administration of water companies.

Enacted [24th February 2025]
Be it enacted by the King’s most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:—

Remuneration, governance and financial transparency

I11 Rules about remuneration and governance

1 The Water Industry Act 1991 is amended as follows.
Amends Water Industry Act 1991 · 1 change

35A Storm overflows

section 35A unchanged

Italic heading before section 35A: Storm overflowsRemuneration and governance

2 For the italic heading before section 35A substitute “Remuneration and governance”.
3 After section 35A insert—
4 Rules issued for the purposes of section 35B(2)(a) of the Water Industry Act 1991 (as inserted by subsection (3)) may make provision about performance-related pay in respect of the financial year beginning 1 April 2024 (and subsequent financial years).
5 The first rules under section 35B of the Water Industry Act 1991 (inserted by subsection (3)) may not be issued unless—
a the rules have been provided in draft to the Secretary of State, and
b the period of 7 days beginning with the day on which the draft was provided has elapsed.

I22 Financial transparency requirements

In the Water Industry Act 1991, after section 35D (inserted by section 1) insert—

Duties in respect of sewerage and water supply systems

I3I18I203 Pollution incident reduction plans

After section 205 of the Water Industry Act 1991 insert—

I44 Emergency overflows

1 The Water Industry Act 1991 is amended as follows.
2 In Part 4 (sewerage services), after Chapter 4 (storm overflows) insert—
Amends Water Industry Act 1991 · 1 change

213 Powers to make regulations.

1 The powers of the Secretary of State to make regulations under this Act shall be exercisable by statutory instrument subject (except in the case of regulations under section 8(1) or (2), 17D(8), 36A, 87(6A) 96K, 96N, 105A, 141DA or 141DB, 141DB or 141F above) to annulment in pursuance of a resolution of either House of Parliament.

subsections (1A) – (3) unchanged

3 In section 213 (power to make regulations), in subsection (1) for “or 141DB” substitute “, 141DB or 141F”.

I5I19I215 Nature-based solutions

Amends Water Industry Act 1991 · 1 insertion

94A Drainage and sewerage management plans: preparation and review

subsections (1) – (2) unchanged

3 A drainage and sewerage management plan must address in particular—
a the capacity of the undertaker's drainage system and sewerage system,
b an assessment of the current and future demands on the undertaker's drainage system and sewerage system,
c the resilience of the undertaker's drainage system and sewerage system,
d the measures the undertaker intends to take or continue for the purpose in subsection (2),
e the likely sequence and timing for implementing those measures,
ea the use that is to be made of nature-based solutions, technologies and facilities within the undertaker's drainage system and sewerage system,
f relevant environmental risks and how those risks are to be mitigated, and
g any other matters specified by the Minister in directions.

subsections (4) – (7) unchanged

In section 94A(3) of the Water Industry Act 1991 (matters to be addressed in drainage and sewerage management plans), after paragraph (e) insert—
.

Sanctions

I136 Impeding investigations: sentencing and liability

Amends Environment Act 1995 · 2 changes, 4 insertions

110 Offences.

subsections (1) – (3C) unchanged

3D Subsection (3E) applies to an offence under subsection (1) or (2) if the exercise or performance of a power or duty to which the offence relates— (a) was that of a person authorised by the Agency or the Natural Resources Body for Wales, and (b) was in respect of the operations of— (i) a water undertaker or sewerage undertaker, or (ii) a water supply licensee or sewerage licensee within the meaning of the Water Industry Act 1991.
3E The person guilty of the offence is liable— (a) on summary conviction, to imprisonment for a term not exceeding the general limit in a magistrates’ court or to a fine, or both; (b) on conviction on indictment, to imprisonment for a term not exceeding 2 years or to a fine, or both.
4 A person guilty of an offence under subsection (1) above (except one to which subsection (3E) applies) shall be liable…
5 A person guilty of an offence under subsection (2) or (3) above (except one to which subsection (3E) applies) shall be liable on summary conviction to a fine not exceeding level 5 on the standard scale.

subsections (5A) – (5H) unchanged

5I Where an offence to which subsection (3E) applies is committed by a body corporate and— (a) is committed with the consent or connivance of a relevant officer, or (b) is attributable to the neglect of a relevant officer, the relevant officer also commits the offence.
5J In subsection (5I), “relevant officer” means— (a) a director, executive, manager, secretary or other similar officer of the body corporate concerned, (b) if the affairs of the body are managed by its members, a member exercising functions of management, or (c) any person purporting to act in a capacity within paragraph (a) or (b).

subsection (6) unchanged

1 In section 110 of the Environment Act 1995 (offences of impeding investigation by environmental regulator)—
a after subsection (3C) insert—
;
b in subsection (4), after “above” insert “(except one to which subsection (3E) applies)”;
c in subsection (5), after “above” insert “(except one to which subsection (3E) applies)”;
d after subsection (5H) insert—
Amends Water Industry Act 1991 · 2 changes

86 Appointment and functions of inspectors

subsections (1) – (5) unchanged

6 Any water undertaker, water supply licensee or other relevant person which fails without reasonable excuse to comply with the duty imposed on that person by virtue of subsection (3) above shall be guilty of an offence and liable—
a on summary conviction, to imprisonment for a term not exceeding the general limit in a magistrates’ court or to a fine, or both;
b on conviction on indictment, to imprisonment for a term not exceeding 2 years or to a fine, or both.
2 In section 86(6) of the Water Industry Act 1991 (offences of impeding investigation by drinking water inspector)—
a after “fails” insert “without reasonable excuse”;
b for the words from “on summary conviction” to the end substitute
3 The amendments made by this section have effect only in relation to offences committed on or after the day on which this section comes into force.

I67 Civil penalties: modification of standard of proof

1 This section is about the powers to provide for fixed monetary penalties or variable monetary penalties conferred by sections 36 and 62 of the Regulatory Enforcement and Sanctions Act 2008 (“the 2008 Act”).
2 In relation to an offence within subsection (3) that is committed by a water company, the powers may be exercised as if “on the balance of probabilities” appeared instead of “beyond reasonable doubt” in sections 39(2) and 42(2) of the 2008 Act.
3 The offences are those under—
a any of the following provisions of the Water Resources Act 1991
i section 24(4) (unlicensed abstraction or related works or contravening abstraction licence);
ii section 25(2) (unlicensed impounding works or contravening impounding licence);
iii section 25C(1) (contravening abstraction or impounding enforcement notice);
iv section 80 (contravening drought order or permit);
v section 201(3) (contravening water resources information notice);
b regulations under section 2 of the Pollution Prevention and Control Act 1999 (regulation of polluting activities etc);
c regulations under section 61 of the Water Act 2014 (regulation of water resources etc).
4 An order that provides for variable monetary penalties in reliance on subsection (2) must provide for the amount of those penalties not to exceed an amount specified in the order.
5 In this section, “water company” means—
a a water undertaker or sewerage undertaker, or
b a water supply licensee or sewerage licensee within the meaning of the Water Industry Act 1991.
6 But an offence is to be regarded for the purposes of this section as committed by a water supply licensee or sewerage licensee only if it is committed by such a licensee in the course of the activities to which its licence relates.

I78 Automatic penalties for certain offences

1 Subsection (2) applies if the Environment Agency or the Natural Resources Body for Wales (“the relevant agency”) is satisfied that it has the power to impose a fixed monetary penalty on a water company in respect of a specified offence committed by the company.
2 The relevant agency must impose the penalty unless—
a the relevant agency considers that there are exceptional circumstances that mitigate the culpability of the company, or
b alternative enforcement action (see subsection (6)) is in contemplation or in progress.
3 A “specified offence” is an offence specified in regulations made by statutory instrument by—
a the Secretary of State, in relation to the duty of the Environment Agency, or
b the Welsh Ministers, in relation to the duty of the Natural Resources Body for Wales.
4 The only offences that may be specified are those within section 7(3) (offences to do with pollution control, abstraction, impounding, drought etc).
5 The specification of such an offence may be limited to cases of a particular description.
6 In subsection (2)(b), “alternative enforcement action” means—
a criminal proceedings, or
b the imposition of a variable monetary penalty.
7 Regulations made under or by virtue of Part 3 of the 2008 Act may provide for the grounds of appeal referred to in section 40(6)(c) of that Act not to extend to the relevant agency’s decision to impose a fixed monetary penalty so far as that decision concerns the application of subsection (2)(a).
8 The procedure required by section 40 of the 2008 Act (procedure for imposing fixed monetary penalties) is otherwise to be followed, in respect of a penalty proposed or imposed further to the duty in subsection (2), in a way that is consistent with that duty.
9 A statutory instrument containing regulations under subsection (3) may not be made unless a draft of the instrument has been laid before and approved by a resolution of—
a both Houses of Parliament, in the case of regulations made by the Secretary of State;
b Senedd Cymru, in the case of regulations made by the Welsh Ministers.
10 In this section
  • the 2008 Act” means the Regulatory Enforcement and Sanctions Act 2008;
  • fixed monetary penalty” means a fixed monetary penalty provided for under or by virtue of Part 3 of the 2008 Act (see section 39 of that Act);
  • variable monetary penalty” means a variable monetary penalty so provided for (see section 42 of the 2008 Act);
  • water company” has the meaning given by section 7(5).
11 Section 7(6) also applies for the purposes of this section.

Regulation of abstraction and impounding

I89 Abstraction and impounding: power to impose general conditions

In the Water Resources Act 1991, after section 46A insert—

Regulatory functions and charges

I910 Requirement for Ofwat to have regard to climate change etc

Amends Water Industry Act 1991 · 3 changes, 2 insertions

2 General duties with respect to water industry.

subsections (1) – (4) unchanged

4A In exercising or performing any such power or duty in accordance with those provisions, the Authority must also have regard to the need to contribute towards achieving compliance by the Secretary of State with the relevant environmental target duties, where the Authority considers that exercise or performance to be relevant to the making of such a contribution.
4B The “relevant environmental target duties” means— (a) the duty in section 1 of the Climate Change Act 2008 (UK net zero emissions target), and (b) so far as the exercise or performance concerned relates to appointment areas wholly or mainly in England, the duty in section 5 of the Environment Act 2021 (other environmental targets); and for that purpose an “appointment area” is an area for which an appointment is held under Chapter 1 of Part 2.

subsections (5) – (5A) unchanged

6A Subsections (2A) to (4)(4A) above and sections 2A and 2B below do not apply in relation to anything done by the Authority in the exercise of functions assigned to it by section 31(3) below (“Competition Act functions”).
6B The Authority may nevertheless, when exercising any Competition Act function, have regard to any matter in respect of which a duty is imposed by any of subsections (2A) to (4)(4A) above and sections 2A and 2B below, if it is a matter to which the CMA could have regard when exercising that function.
7 The duties imposed by subsections (2A) to (4)(4A) above and sections 2A and 2B below do not affect the obligation of the Authority or, as the case may be, the Secretary of State to perform or comply with any other duty or requirement (whether arising under this Act or another enactment, by virtue of any assimilated obligation or otherwise).
In section 2 of the Water Industry Act 1991
a after subsection (4) insert—
;
b in each of subsections (6A), (6B) and (7), for “(4)” substitute (4A).

I1011 Charges in respect of Environment Agency and NRBW functions

Amends Environment Act 1995 · 2 insertions

41 Power to make schemes imposing charges.

1 Subject to the following provisions of this section and sections 41B, 41C and 4 below—

paragraphs (a) – (s) unchanged

t as a means of recovering costs incurred by it in performing water industry enforcement functions, the Agency or the Natural Resources Body for Wales may require the payment to it by water companies of such charges as may from time to time be prescribed;

subsection (1A) unchanged

1B In paragraph (t) of subsection (1)— “water companies” means— water undertakers and sewerage undertakers, and water supply licensees and sewerage licensees within the meaning of the Water Industry Act 1991; “water industry enforcement functions” means functions performed for the purpose of assessing or securing compliance by water companies (within the above meaning), or responding to failures on their part to comply, with any provision made by— sections 205A and 205B of the Water Industry Act 1991 (pollution incident reduction plans and implementation reports), Chapter 2 of Part 2 of the Water Resources Act 1991 (water abstraction and impounding), Chapter 3 of that Part (drought orders and drought permits), or the Environmental Permitting (England and Wales) Regulations 2016 (regulation of certain facilities and activities).

subsections (2) – (11) unchanged

In section 41 of the Environment Act 1995 (powers of environmental regulators to make charging schemes)—
a in subsection (1), after paragraph (s) insert—
;
b after subsection (1A) insert—

I1112 Drinking Water Inspectorate: functions and fees

1 The Water Industry Act 1991 is amended as follows.
2 For the italic heading before section 86, substitute “Drinking Water Inspectorate”.
Amends Water Industry Act 1991 · 1 insertion

86 Appointment and functions of inspectors

1 The Secretary of State may for the purposes of this section appoint persons to act on his behalf in relation to some or all of—
a the powers and duties conferred or imposed on him by or under sections 67 to 70 and 77 to 82 above;
b such other powers and duties in relation to the quality and sufficiency of water supplied using a water undertaker's supply system as are conferred or imposed on him by or under any other enactments; and
c arrangements for assessing and securing compliance, and responding to failures to comply, with directions (or any particular direction) under section 208.

subsections (1A) – (6) unchanged

3 In section 86 (appointment and functions of inspectors)—
a for the heading substitute “Appointment and functions of inspectors”;
b in subsection (1)
i omit the “and” after paragraph (a);
ii after paragraph (b) insert
Amends Water Industry Act 1991 · 1 insertion

86ZA Charging of fees

subsections (1) – (3) unchanged

3A A fee may be made chargeable under this section in relation to— (a) a specific instance in which the function is exercised, or (b) the exercise of the function more generally during a particular period of time (which need not be limited to its exercise in relation to the person charged with the fee).

subsections (4) – (8) unchanged

4 In section 86ZA (charging of fees by inspectors), after subsection (3) insert—

Consumer charges

I1413 Special provision in charges schemes

1 The Water Industry Act 1991 is amended as set out in subsections (2) and (3).
Amends Water Industry Act 1991 · 1 insertion

143A Regulations as to provisions to be included in charges schemes.

subsections (1) – (2) unchanged

3 Regulations under this section imposing requirements for the purpose mentioned in subsection (2)(d) may—
a prescribe the classes of persons for whom special provision is to be made…
b make provision as to the method by which a person may establish his entitlement to assistance under the regulations, or, in the case of regulations made by the Secretary of State (rather than the Welsh Ministers), by which that entitlement is otherwise to be established; and
c make provision as to responsibility for costs incurred for the purpose of establishing that entitlement.

subsection (4) unchanged

2 In section 143A(3)(b), after “regulations” insert “or, in the case of regulations made by the Secretary of State (rather than the Welsh Ministers), by which that entitlement is otherwise to be established”.
3 After section 143A insert—
4 The Digital Economy Act 2017 is amended as set out in subsections (5) and (6).
Amends Digital Economy Act 2017 · 1 change, 1 insertion

38 Disclosure of information to water and sewerage undertakers etc

subsection (1) unchanged

2 The first condition is that the disclosure is for the purpose of assisting people living in water povertyeligible people by—
a reducing their water or sewerage costs,
b improving efficiency in their use of water, or
c improving their health or financial well-being.

subsections (3) – (9) unchanged

9A A person is “eligible” for the purposes of this section and section 39— (a) if the person is living in water poverty, or (b) in the application of the sections to a water or sewerage undertaker for an area which is wholly or mainly in England, if the person is among those for whom special provision is required to be made by regulations within subsection (3)(a).

subsections (10) – (11) unchanged

5 In section 38 (disclosure of information to water and sewerage undertakers)—
a in subsection (2), for “people living in water poverty” substitute “eligible people”;
b after subsection (9) insert—
Amends Digital Economy Act 2017 · 1 change

39 Disclosure of information by water and sewerage undertakers etc

1 If the condition in subsection (2) is met, a person to whom information may be disclosed under section 38 may disclose information held by that person to a specified person.
2 That condition is that the disclosure is for the purpose of assisting people living in water povertyeligible people (see section 38(9A)) in England and Wales by—
a reducing their water or sewerage costs,
b improving efficiency in their use of water, or
c improving their health or financial well-being.
6 In section 39 (disclosure of information by water and sewerage undertakers), in subsection (2), for “people living in water poverty” substitute “eligible people (see section 38(9A))”.

Special administration orders

I1514 Modification by Secretary of State of water company’s appointment conditions etc to recover losses

After section 12I of the Water Industry Act 1991 insert—

I1615 Modification by Welsh Ministers of water company’s appointment conditions etc to recover losses

After section 16B of the Water Industry Act 1991 insert—

I1716 Winding-up petitions

Amends Water Industry Act 1991 · 1 change, 3 insertions

25 Power to make special administration order on winding-up petition.

1 On an applicationa petition made to any court for the winding up of a company which holds an appointment under Chapter I of this Part or is a qualifying water supply licensee or a qualifying sewerage licensee—
a the court shall not make a winding-up order in relation to the company; but
b if the court is satisfied that it would be appropriate to make such an order if the company were not a company holding such an appointment or a qualifying water supply licensee or qualifying sewerage licensee, it shall, instead, make a special administration order in relation to the company.
2 But the court may not exercise its powers on the petition unless— (a) notice of the petition has been served on the relevant persons, and (b) a period of at least 14 days has passed starting with the day on which those notices were served (or, if served on different days, the later of those days).
3 The relevant persons are entitled to be heard— (a) at the hearing of the petition, and (b) at any other hearing of the court in relation to the company under or by virtue of Part 4 of the Insolvency Act 1986.
4 In this section “relevant person” means the Authority and— (a) in the case of a petition that relates to a relevant undertaker whose area is wholly or mainly in Wales, the Welsh Ministers; (b) in any other case, the Secretary of State.
In section 25 of the Water Industry Act 1991 (power to make special administration order on winding-up petition)—
a the existing text becomes subsection (1);
b in that subsection for “an application” substitute “a petition”;
c after that subsection insert—

Final

I1217 Extent, commencement, transitional provision and short title

1 This Act extends to England and Wales.
2 The following provisions come into force on the day on which this Act is passed—
a this section;
b section 1 (rules about remuneration and governance);
c section 2 (financial transparency requirements);
d section 7 (civil penalties: modification of standard of proof);
e section 8 (automatic penalties for certain offences);
f section 9 (abstraction and impounding: power to impose general conditions);
g section 11 (charges in respect of Environment Agency and NRBW functions);
h section 12 (Drinking Water Inspectorate: functions and fees).
3 The following provisions come into force on such day as the Secretary of State may by regulations appoint—
a section 3 (pollution incident reduction plans), so far as relating to undertakers whose areas are wholly or mainly in England;
b section 4 (emergency overflows), so far as relating to undertakers whose areas are wholly or mainly in England;
c section 5 (nature-based solutions), so far as relating to undertakers whose areas are wholly or mainly in England;
d section 10 (requirement for Ofwat to have regard to climate change etc), so far as relating to powers or duties exercised or performed in relation to appointment areas (within the meaning of the subsection (4B) inserted by the section) wholly or mainly in England.
4 The following provisions come into force on such day as the Welsh Ministers may by regulations appoint—
a section 3 (pollution incident reduction plans), so far as relating to undertakers whose areas are wholly or mainly in Wales;
b section 4 (emergency overflows), so far as relating to undertakers whose areas are wholly or mainly in Wales;
c section 5 (nature-based solutions), so far as relating to undertakers whose areas are wholly or mainly in Wales;
d section 10 (requirement for Ofwat to have regard to climate change etc), so far as relating to powers or duties exercised or performed in relation to appointment areas (within the meaning of the subsection (4B) inserted by the section) wholly or mainly in Wales.
5 The following provisions come into force two months after the day on which this Act is passed—
a section 6 (impeding investigations: sentencing and liability);
b section 13 (special provision in charges schemes);
c section 14 (modifications by Secretary of State of water company’s appointment conditions etc to recover losses);
d section 15 (modifications by Welsh Ministers of water company’s appointment conditions etc to recover losses);
e section 16 (winding-up petitions).
6 The power to make regulations under this section includes power to make—
a different provision for different purposes or areas;
b transitional or saving provision.
7 In relation to the coming into force of section 4, regulations under this section may make provision by reference to matters determined by—
a the Environment Agency, so far as relating to undertakers whose areas are wholly or mainly in England;
b the Natural Resources Body for Wales, so far as relating to undertakers whose areas are wholly or mainly in Wales.
8 Regulations under this section are to be made by statutory instrument.
9 A duty to consult under or by virtue of this Act may be satisfied by consultation that took place wholly or partly before the passing of this Act.
10 This Act may be cited as the Water (Special Measures) Act 2025.

Footnotes

  1. I1
    S. 1 in force at Royal Assent, see s. 17(2)(b)
  2. I2
    S. 2 in force at Royal Assent, see s. 17(2)(c)
  3. I3
    S. 3 not in force at Royal Assent, see s. 17(3)(a)(4)(a)
  4. I4
    S. 4 not in force at Royal Assent, see s. 17(3)(b)(4)(b)
  5. I5
    S. 5 not in force at Royal Assent, see s. 17(3)(c)(4)(c)
  6. I6
    S. 7 in force at Royal Assent, see s. 17(2)(d)
  7. I7
    S. 8 in force at Royal Assent, see s. 17(2)(e)
  8. I8
    S. 9 in force at Royal Assent, see s. 17(2)(f)
  9. I9
    S. 10 not in force at Royal Assent, see s. 17(3)(d)(4)(d)
  10. I10
    S. 11 in force at Royal Assent, see s. 17(2)(g)
  11. I11
    S. 12 in force at Royal Assent, see s. 17(2)(h)
  12. I12
    S. 17 in force at Royal Assent, see s. 17(2)(a)
  13. I13
    S. 6 in force at 24.4.2025, see s. 17(5)(a)
  14. I14
    S. 13 in force at 24.4.2025, see s. 17(5)(b)
  15. I15
    S. 14 in force at 24.4.2025, see s. 17(5)(c)
  16. I16
    S. 15 in force at 24.4.2025, see s. 17(5)(d)
  17. I17
    S. 16 in force at 24.4.2025, see s. 17(5)(e)
  18. I18
    S. 3 in force at 23.6.2025 for E. by S.I. 2025/726, reg. 2(a)
  19. I19
    S. 5 in force at 23.6.2025 for E. by S.I. 2025/726, reg. 2(b)
  20. I20
    S. 3 in force at 1.9.2025 for W. by S.I. 2025/936, reg. 2(a)
  21. I21
    S. 5 in force at 1.9.2025 for W. by S.I. 2025/936, reg. 2(b)