Overview of the Act
The Water (Special Measures) Act 2025 delivers on the Government’s manifesto to put failing water companies under special measures and seeks to ensure water companies are better held to account where they have failed to deliver for the environment and customers.
	The Water (Special Measures) Act 2025 enables government and the regulators to achieve the commitments outlined in the 2024 Labour manifesto:
To block the payment of bonuses to executives who pollute waterways;
To ensure independent monitoring of every outlet;
To bring criminal charges against persistent law breakers; and
To impose automatic and severe fines for wrongdoing.
	The Water (Special Measures) Act 2025 includes provisions to:
ban bonuses for persons holding senior roles where water companies fail to meet required standards relating to consumer matters, the environment, financial resilience or criminal liability;
introduce a fit and proper person test for water company executives;
ensure consumer representation in water company decision-making;
require Ofwat to ensure that water companies publish a concise and intelligible overview of their financial position at least once a year in a prominent place on their websites to enable easy public access;
require water companies to produce annual pollution incident reduction plans and report on the implementation of these plans each year. The Chief Executive will be required to approve these plans prior to publication and will be held liable for this duty. The environmental regulators will consider companies’ record implementing these plans when carrying out its regulatory functions;
require publication of near real-time data on discharges from emergency overflows;
require sewerage undertakers to set out in their drainage and sewerage management plans, the use that is to be made of nature-based solutions, technologies and facilities within their drainage and sewerage systems;
in respect of the operations of water companies, extend the sentencing power of the Courts to include imprisonment in all cases where the Environment Agency, Natural Resources Body for Wales and Drinking Water Inspectorate investigations have been obstructed by individuals;
in relation to specified offences committed by a water company, enable the Environment Agency and Natural Resources Body for Wales to impose monetary penalties to the civil standard of proof;
enable automatic penalties to be issued by the Environment Agency and Natural Resources Body for Wales for a defined list of offences committed by a water company;
confer powers to impose conditions or general rules into abstraction and impounding water industry licences;
require Ofwat to have regard to the Environment Act 2021 and Climate Change 2008 targets when carrying out their functions;
introduce a new power for the Environment Agency and Natural Resources Body for Wales to recover costs from water companies for enforcement activities;
allow for improved cost recovery for the Drinking Water Inspectorate;
supplement existing powers to require water companies to make special provision to support customers in need;
modify water company licences to recover shortfall in the event of insolvency or serious breach by a water company; and
ensure His Majesty’s Government (HMG) and Ofwat are notified ahead of any winding up petitions.