A New Consenting Landscape for Major Water Infrastructure Projects

Introduction

The water industry in England faces an unprecedented investment challenge. Strategic resource schemes such as major new reservoirs, large-scale water transfers and desalination plants are central to securing resilient supplies for a growing population. Yet the consenting system for these nationally significant infrastructure projects (“NSIPs”) has long been criticised as too slow, too uncertain, and too vulnerable to legal challenge.

A suite of reforms will materially change this landscape. The Planning and Infrastructure Act 2025 (“PIA 2025”) together with recently published statutory guidance and regulations, the updated National Policy Statement for Water Resources Infrastructure (July 2025), (“NPSWRI”) and the Government’s acceptance of the Fingleton Review recommendations (Building Our Nuclear Nation, 2025) together create a streamlined, more predictable regime. This article summarises the key changes and their implications for water companies and their delivery partners.

Expanded Promoter Powers

PIA 2025 broadens the class of persons who may promote water NSIPs. Now, water undertaker appointees, not only statutory water undertakers, can apply for Development Consent Orders (“DCOs”) for major water projects. This opens the door for special-purpose vehicles and joint ventures to promote schemes directly.

Prior to the PIA 2025, sections 27, 28 and 28A of the Planning Act 2008 required that the construction or alteration of a reservoir, development relating to water transfers, or the construction of a desalination plant had to be carried out by a water undertaker to qualify as an NSIP.  This meant that only the incumbent regional water company could be the applicant for a DCO for such projects.

This created a practical difficulty. The water industry is increasingly moving towards delivery models where major infrastructure is not built by the incumbent water company itself, but by third-party providers competitively procured by the incumbent. The two principal models are:

1. Specified Infrastructure Project Regulations (SIPRs), under which an infrastructure provider is designated to finance, build and maintain a project after a competitive tender.
2. Direct Procurement for Customers (DPC), under which a competitively appointed provider delivers the project under the incumbent's licence conditions, and which Ofwat requires to be considered for all discrete projects with total expenditure exceeding £200 million.

Allowing the appointed delivery vehicle, whether a SIPR infrastructure provider or a DPC competitively appointed provider, to apply for the DCO in its own name offers several advantages:

1. It aligns the planning applicant with the entity that has actual control over design, financing and construction, avoiding the incumbent water company acting as a nominal applicant for a project it is not itself delivering.
2. It facilitates a cleaner allocation of risk and responsibility between the incumbent and the infrastructure provider, which is particularly important for the bankability of competitively procured projects. 

National Policy Statement Review and Strengthened Need Case

National Policy Statements are the primary policy framework against which the relevant Secretary of State (SoS) is required to determine an application for a DCO to deliver an NSIP. Key to an effective NSIP regime is therefore ensuring that NPSs are, and remain, up to date and fit for purpose.

The PIA 2025 has introduced a requirement for five-yearly reviews of NPSs, including the NPSWRI (last updated in 2025) ensuring that the policy framework remains current and responsive to evolving priorities. This is a welcome development that addresses longstanding concerns about the ossification of national policy in a rapidly changing energy landscape.

The NPSWRI also reinforces urgency. Projects in approved Water Resources Management Plans (“WRMPs”) benefit from a strengthened presumption of need: where a scheme appears in an approved WRMP, further evidence of need is not required. The NPSWI characterises water resource schemes as “critical and urgent” and confirms the strategic importance of new reservoir capacity. NSIP thresholds remain at 30 million cubic metres hold-back capacity for reservoirs, and 80 million litres per day deployable output for transfers and desalination.

Streamlined Pre-Application and Examination

Perhaps the most immediately practical reform is the removal of statutory pre-application consultation requirements, which took up significant resources and could result in a disproportionate volume of documentation. Under PIA 2025, the prescriptive duties are replaced by guidance from the SoS on proportionate engagement, giving promoters flexibility to tailor consultation to scale and complexity rather than following a rigid statutory process.

The acceptance test (as to whether the DCO application is fit to enter into the examination stage) and 28-day decision window are retained, but pre-application consultation is no longer assessed as part of the acceptance decision. There is also scope for minor inconsistencies to be corrected and further targeted or confirmatory environmental information to be submitted after acceptance, again introducing more flexibility into the process. Guidance also directs the Planning Inspectorate to minimise refusals of acceptance. For water companies with well-developed WRMP schemes, this removes a significant source of programme risk i.e. where a project is 99% ready for submission. The Examination stage also benefits from a strengthened Initial Assessment of Principal Issues process, designed to front-load engagement and reduce late-emerging issues within the statutory six-month examination window.

Fingleton-Derived Reforms Applied to Water

Although commissioned in the nuclear context, the Government has confirmed that several Fingleton recommendations will apply across all NSIP sectors including water:

• Lead Environmental Regulator (LIR) Model.  To avoid applicants being required to communicate independently with various environmental regulators, DCO projects are now able benefit from a LIR being appointed which coordinates the input from a range of regulators making the process more responsive, quicker and avoiding duplication.
• HRA Reform. DEFRA is consulting on updated guidance clarifying that absolute certainty of no adverse effect is not required. Competent authorities need only consider “real, not hypothetical risks” and there “does not need to be zero probability of an effect for it to be ruled out” a proportionality shift benefiting reservoir and transfer schemes.
• Model Provisions and Secondary Consents. Updated model provisions will promote DCO drafting consistency. Strengthened guidance encourages incorporation of secondary consents, environmental permits and abstraction licences, directly into DCOs, reducing post-consent regulatory processes.
• Post-Consent Discharge. A new unit within DESNZ for post-consent discharge functions (initially nuclear/electricity networks) may in time extend to water.

Judicial Review Reform and the Challenge Window

PIA 2025 provisions now in force abolished the paper permission stage for NSIP judicial reviews and blocked “totally without merit” cases from appeal. All judicial reviews will be dealt with at a hearing. In May 2026, the Government also proposed  a new mechanism for all NSIPs, including water, where there would bea fixed window for legal challenges based on a draft SoS DCO decision with scope to address challenge grounds prior to finalising the DCO decision.

Flexibility: Directing Projects In and Out of the NSIP Regime

Section 35B of the Planning Act (inserted by PIA 2025) empowers the Secretary of State to direct that NSIP projects can be dealt with under alternative consenting systems such as under the Town and Country Planning Act 1990, while the power to direct projects into the regime is retained. The new statutory guidance details how these powers will operate. For water companies, a scheme narrowly above or below threshold can be directed to the regime best suited to its characteristics.

Biodiversity Net Gain (BNG)

Mandatory BNG for NSIPs came into force in May 2026 under a streamlined framework. The revised NPSWRI amends biodiversity policy to reflect the incoming biodiversity gain statement with clear and unambiguous guidance. BNG obligations are now a standard feature of future DCO applications.

Conclusion

Taken together, these reforms represent the most significant overhaul of the water NSIP consenting regime since the Planning Act 2008. The direction of travel is clear: faster, more proportionate consenting; a stronger presumption of need for WRMP schemes; reduced vulnerability to legal challenge; greater flexibility in regime selection; and a more coordinated regulatory landscape.

Water companies and their advisers should now be reviewing project programmes in light of these changes. The removal of statutory pre-application requirements, acceptance test reforms, and the challenge window mechanism together have potential to reduce consenting timescales materially. The broadening of promoter powers opens new delivery models. And the lead environmental regulator model should reduce the regulatory friction that has characterised major water scheme consenting to date.

The coming months will reveal how these reforms work in practice. But the legislative and policy framework is now firmly in place for a step change in the speed and predictability of major water infrastructure consenting in England.