Image description: Water splashing up against a wall. Photo by Ben Wicks on Unsplash
Progress towards England’s statutory water targets remains “largely off-track”, according to evidence in the National Audit Office’s (NAO) latest overview of the Department for Environment, Food and Rural Affairs (Defra). The overview, published on 10 November, cites the Office for Environmental Protection’s (OEP) 2026 assessment. The OEP found that pollution from sewage treatment works has fallen, but that pollution incidents from sewage and other sources have increased and diffuse pollution risks are rising. It put this mainly down to failures of implementation rather than gaps in regulation. In 2024 the OEP projected that only 21% of surface waters would be in good ecological condition by 2027, against a target of 77%.
Reform at the top of the agenda
Reforming the water system so that it “drives growth, protects consumers and enhances the environment” is one of Defra’s four priority outcomes for 2025-26. The NAO overview traces the programme from the Water (Special Measures) Act in February 2025, through the Independent Water Commission’s recommendations in July 2025 and the January 2026 white paper, A new vision for water, to the Clean Water Bill announced in May 2026. The Bill is in the 2026-27 legislative programme. It proposes a single regulator to replace Ofwat, a new Water Ombudsman, stronger financial resilience requirements and long-term planning frameworks. Defra reports that £29 million from water company fines has funded more than 100 local projects improving 450km of river, and that inspections rose above 10,000 in 2025-26.
Investment and financial resilience
The overview summarises the NAO’s 2025 finding that Defra and the water regulators had “not sufficiently encouraged investment” to tackle major environmental and supply challenges. That earlier report concluded that they “have not encouraged water companies to spend what they need”. The overview also notes Thames Water’s high debt and the closer oversight Ofwat placed on the company in 2024 over its long-term financial resilience. Defra expects some of its efficiency savings to come from implementing the Independent Water Commission’s recommendations.
Spending and capacity
Defra spent £6.67 billion in 2025-26, up 19.9% on the year before. The Environment Agency spent £1.56 billion, up from £1.45 billion. Defra’s flood spending was £1.84 billion and is planned to rise to £2.14 billion in 2026-27. In March 2026, 93% of the Environment Agency’s flood and coastal assets were at or above the required condition, against a long-term target of 98%. The OEP has pointed to outdated IT, fragmented data and limited capacity as constraints on delivery, and the NAO’s 2026 report on environmental regulation found an overly risk-averse culture in Defra and its regulators.
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