Communities Get Stronger Say Over Water Investment
Water infrastructure planning in England is about to change. The government has announced plans to create eight regional water councils that will give local leaders, businesses and communities a direct say in how billions of pounds are spent on sewers, flood defences, treatment works and reservoirs. For businesses that rely on water services, face flood risks or operate in water-sensitive supply chains, these councils could reshape how infrastructure priorities are set across entire regions.
The proposal arrives at a critical moment. Water companies are entering a five-year period in which they will invest nearly £92 billion. Meanwhile, public trust in the sector has declined sharply following poor environmental performance ratings and widespread concern over sewage discharges. The question now is whether giving mayors, councils and local stakeholders a formal planning role can improve both the quality of investment decisions and public confidence in the system.
This matters commercially because water risks vary enormously depending on where you operate. A manufacturing site in the South East may face supply constraints and rising abstraction costs. A food business in the Midlands might be more concerned about treatment capacity and discharge consent. A logistics operator in the North West could be dealing with repeated surface water flooding. The new councils are designed to reflect those regional differences in a way that national policy and company-wide investment plans sometimes struggle to do.
Eight councils to cover England's water systems
The Department for Environment, Food and Rural Affairs announced the initiative on 5 November 2026. Each council will be built around a regional water system, including river basins and supply networks, rather than following the boundaries of individual water companies or local authorities. This approach recognises that water flows across administrative borders and that planning needs to follow the geography of the resource itself.
Each council is expected to include between 10 and 15 representatives. Mayors and local authority leaders will sit alongside water customers, community groups, businesses, farmers and developers. Other stakeholders with interests in water quality, flooding or regional growth will also be invited to participate. The aim is to bring together the people who experience water problems directly with those who can influence investment, land use and drainage policy.
Local leaders have been asked to submit proposals for how the councils should operate by the end of 2026. Once established, each body will prepare a regional plan setting out the area's main water pressures, the choices facing decision-makers and the public and private investment needed to address them. These plans are intended to feed into the next round of water company business planning and the government's 10-year flood investment programme.
The announcement emphasised putting power in local hands. However, the councils will not replace Ofwat or take over the regulatory functions of the Environment Agency. Their role is to shape priorities and coordinate planning, not to regulate companies or approve individual projects. Consequently, their influence will depend on how effectively regional plans are incorporated into regulatory decisions and company investment programmes.
What the councils will focus on
The proposed bodies are designed to address several interconnected challenges. Sewage pollution and river water quality remain high on the public agenda, particularly after recent performance assessments showed that eight of England's nine water companies were rated either poor or requiring improvement. Only Severn Trent received the highest rating in the 2025 assessment. Therefore, councils are expected to press for faster progress on treatment upgrades and storm overflow reductions.
Sewer and surface water flooding is another priority. Between April 2025 and March 2026, companies invested £114.9 million to reduce sewer flooding risks and £260.1 million to maintain public sewers. Despite this, many areas still experience repeated flooding during heavy rainfall. Councils could help identify where drainage capacity is most under strain and where investment should be concentrated.
Drought and water scarcity remain critical in some regions. Climate change is increasing the frequency of dry periods, while population growth and new development are adding to demand. Regional plans will need to balance investment in new reservoirs, water recycling and demand management measures such as leakage reduction. Moreover, councils will have to consider how land use planning affects water availability and whether development is sustainable given local supply constraints.
Flooding from rivers and the coast adds further complexity. England already has Regional Flood and Coastal Committees that help approve Environment Agency investment programmes. The new water councils will need to work alongside these bodies to avoid duplication and ensure that drainage, wastewater and flood defence projects are properly coordinated. This will be particularly important where surface water flooding, sewer capacity and river flooding overlap.
£92 billion investment period creates scope for regional influence
Water and sewerage companies in England have been authorised to spend £91.95 billion between 2025 and 2030. This includes £50.45 billion on wastewater alone. The scale of this programme means that regional priorities could genuinely affect which schemes are brought forward, how projects are sequenced and how investment is balanced between environmental improvements, supply security and flood protection.
For businesses, this creates both opportunities and uncertainties. On one hand, regional councils could ensure that investment reflects local economic needs. A council might prioritise wastewater capacity that supports industrial growth or flood defences that protect commercial areas. On the other hand, if councils lack clear powers or funding, their recommendations could be ignored when companies finalise their business plans.
The government has committed at least £10.5 billion in flood defence investment through 2036. This includes £7.9 billion in capital expenditure over the next decade and £4.2 billion between 2026-27 and 2028-29 for new schemes and maintenance. The programme aims to better protect nearly 900,000 properties. Consequently, how water councils interact with this flood investment will be critical. Effective coordination could deliver schemes that reduce sewer flooding while improving river quality. Poor coordination could create confusion and delay.
Businesses that operate across multiple regions should watch how councils develop their plans. Investment priorities will not be uniform. A council in a water-stressed region may focus on supply resilience and leakage, while another may emphasise pollution reduction and flood management. Understanding these regional differences will help businesses anticipate where infrastructure constraints might affect operations or where new capacity might be created.
How the councils relate to existing planning structures
England's water governance is already fragmented. Water companies plan infrastructure through five-year business cycles regulated by Ofwat. The Environment Agency oversees environmental standards and flood risk. Local authorities manage planning and surface water drainage. Regional Flood and Coastal Committees raise levies and approve flood schemes. Additionally, drainage and wastewater management plans require sewerage companies to plan over a minimum 25-year period, taking account of climate change, network capacity and environmental risks.
The new councils will not replace these structures. Instead, they will add a regional coordinating layer. This could be valuable if it brings together organisations that currently plan in isolation. However, it could also add complexity if responsibilities are not clearly defined. The Institution of Civil Engineers has warned that regional planning bodies must have the powers and funding to deliver, not just to advise.
For businesses, the key issue is whether the councils can turn local priorities into funded, deliverable projects. If a council identifies that industrial areas need better flood protection or that water supply is constraining development, will that translate into regulatory approval and capital allocation? If not, the councils risk becoming another consultative body in a sector where communities are already demanding clearer accountability and faster action.
Furthermore, councils will need to engage with existing regional water resource groups. These groups have different structures and lack consistent statutory support. Some have been more effective than others at coordinating supply planning across company boundaries. The government's approach appears to build on these groups rather than replace them, but the relationship between water councils and resource groups has not been fully clarified.
Commercial implications for businesses operating in England
Several commercial factors will be affected by how these councils develop. First, businesses that depend on reliable water supply should engage with their regional council early. If a council prioritises supply resilience, that could bring forward investment in reservoirs, transfers or water recycling. Conversely, if a council focuses mainly on environmental improvements, supply constraints might persist longer than anticipated.
Second, businesses in flood-prone areas could benefit from better coordination between surface water, sewer and river flood management. Many commercial properties experience flooding from multiple sources, and separate planning by different organisations has sometimes resulted in piecemeal solutions. Regional councils could identify schemes that tackle several risks at once, reducing disruption and protecting assets more effectively.
Third, businesses tendering for public sector contracts should be aware that procurement frameworks increasingly include environmental and social value criteria. Carbon reporting requirements and sustainability commitments are becoming standard in major tenders. If regional councils develop plans that emphasise river quality, biodiversity or natural flood management, suppliers that can demonstrate alignment with those priorities may gain an advantage.
Fourth, businesses involved in development, construction or infrastructure will need to understand how regional plans affect planning policy. If a council identifies that water supply is constrained, local authorities may tighten conditions on new developments. Developers and their supply chains will need to factor in requirements for water efficiency, sustainable drainage and contributions to regional infrastructure.
Fifth, businesses that discharge to sewers or abstract water will face continued scrutiny. Regional plans are likely to highlight pollution hotspots and capacity constraints. Companies with trade effluent consents or abstraction licences should anticipate closer attention from regulators and possible pressure to reduce loads or improve treatment. Engaging with councils could provide early warning of where regulatory standards might tighten.
Key details about the regional water councils
- Eight regional councils will be established across England, organised around river basins and water supply networks rather than company or local authority boundaries.
- Each council will include approximately 10 to 15 representatives from local government, businesses, farmers, customers and community groups.
- Local leaders must submit proposals for how councils should operate by the end of 2026, with regional plans to follow.
- Water companies are authorised to invest £91.95 billion between 2025 and 2030, including £50.45 billion on wastewater, creating significant scope for regional influence.
- The government has committed £10.5 billion in flood defence investment through 2036, with £4.2 billion allocated between 2026-27 and 2028-29.
- Eight of England's nine water companies were rated poor or requiring improvement in the 2025 environmental performance assessment, intensifying pressure for reform.
- The councils will not replace Ofwat or the Environment Agency but are intended to coordinate planning across water supply, wastewater, drainage and flood management.
- Councils are expected to feed regional plans into the next round of water company business planning and the 10-year flood investment programme.
What businesses should consider now
The councils are still being designed, but businesses can take steps to prepare. First, identify which regional water system your operations fall within. Water risks and investment priorities will vary significantly between regions. Understanding your council's likely focus will help you anticipate where infrastructure improvements might occur or where constraints could tighten.
Second, consider engaging with the council development process if your business has significant water use, flood exposure or supply chain dependencies. Local leaders are being asked to submit proposals by the end of 2026. Businesses that contribute early could help shape how councils prioritise commercial resilience alongside environmental and community concerns.
Third, review your water and flood risk management. If your business relies on vulnerable supply infrastructure, faces repeated flooding or has consents that depend on treatment capacity, regional plans could affect your operations. Assessing these risks now will help you respond more effectively when councils publish their priorities.
Fourth, track how your water company incorporates regional plans into its business planning. The next price review will determine investment from 2030 onwards. If regional priorities align with your business needs, supporting them through the regulatory process could help ensure that relevant schemes receive funding. If priorities conflict with your needs, early engagement may allow you to influence the balance.
Fifth, consider how regional water planning intersects with your environmental compliance obligations. Businesses with environmental reporting requirements or sustainability commitments may find that aligning with regional priorities strengthens their credentials. Councils are likely to highlight projects that deliver multiple benefits, such as reduced flood risk, improved water quality and enhanced biodiversity. Supporting or participating in such schemes could demonstrate tangible environmental action.
Sixth, businesses that operate nationally should monitor whether councils adopt consistent approaches or diverge significantly. If councils develop very different priorities, companies with sites across England may face varied regulatory expectations, infrastructure timelines and cost pressures. Planning for regional variation now will reduce future disruption.
Finally, remember that the councils' effectiveness will depend on their legal status, funding and influence over regulatory decisions. If they remain purely advisory, their impact may be limited. If they gain statutory powers or direct funding, they could become central to infrastructure planning. Therefore, businesses should watch how the model evolves over the next year.
Where to find further information
The Department for Environment, Food and Rural Affairs will publish detailed guidance on how councils should be structured and what their regional plans should contain. Businesses can monitor Defra announcements and consultations for updates on the development process and timelines.
Ofwat regulates water companies' business plans and investment programmes. The regulator's website provides information on price reviews, performance assessments and how regional priorities might be incorporated into company planning. Businesses can review Ofwat's publications to understand how councils might influence future investment cycles.
The Environment Agency oversees flood risk management and environmental standards. The agency's guidance on drainage and wastewater management planning, flood risk and abstraction licensing is relevant for businesses assessing how regional councils might affect their operations. Further detail is available on the Environment Agency website.
Regional Flood and Coastal Committees already play a role in approving flood investment. Understanding how these committees operate may provide insight into how water councils might function. Information on committee boundaries, funding and priorities is available through the Environment Agency's regional flood committee pages.
Businesses concerned about how regional water planning affects their operations, supply chains or compliance obligations can contact us for tailored advice. We support companies across England with environmental compliance, carbon reporting and sustainability planning that aligns with emerging regulatory and infrastructure developments.