The Department for Environment, Food & Rural Affairs (Defra) has overall responsibility for setting the policy and regulatory framework for England. In the 2023 Plan for Water, it set out the challenges of growing demand for water and the impacts of climate change. It highlighted the need to cut waste, improve water efficiency, and invest in new infrastructure to deliver clean and plentiful water.

The Water Services Regulation Authority (Ofwat) is the independent economic regulator of the water industry. Its duties include:

  • protecting the interests of consumers
  • securing the long-term resilience of water supply and wastewater services
  • ensuring that companies carry out their functions and are able to finance them

The Environment Agency is responsible for securing the proper, efficient use of water resources in England, and for protecting and enhancing the environment including water quality.

This study follows previous NAO reports Water supply and demand management (2020) and The economic regulation of the water sector (2015).


We will examine the effectiveness of regulatory frameworks in incentivising investment in the water sector and achieving the outcomes set for the sector.

The report will look at whether:

  • government and regulators are clear what outcomes the water industry needs to achieve and the investment needed
  • regulation is successfully incentivising investment and meeting desired outcomes and targets
  • regulators can respond to the current investment challenges

NAO team

Director: Anita Shah
Audit Manager: Sarah Pearcey