By Nicola Pitts, Executive Director, Independent Networks Association (INA)
Today, the Social Market Foundation (SMF) has published a new report that sets out a compelling case for reforming how independent water companies—known as NAVs (New Appointments and Variations)—are regulated. The report, Piping Up: Unlocking the potential of independent water companies, rightly acknowledges the growing role of NAVs in delivering vital water and sewerage infrastructure to new housing and commercial developments across England and Wales.
At the Independent Networks Association (INA), we are proud to have supported the production of this work. The report reflects many of the issues our members have long raised—issues that, if addressed, would lead to faster delivery of homes, better service for customers, and more proportionate, efficient regulation.
As the UK continues to fall short of its housing targets and new developments are increasingly expected to meet high environmental and delivery standards, it is essential that every part of the infrastructure system is able to operate at its full potential. NAVs are a critical part of this picture, but they are currently being held back by a system designed for a different era.
The SMF’s report does more than diagnose these problems; it offers a set of practical, well-judged recommendations to update the framework, reduce inefficiency, and unlock a smarter future for the sector.
Delivering Faster Connections
NAVs are independent companies licensed by Ofwat to provide water and/or wastewater services to new developments. Their specialism lies in delivering high-quality, timely infrastructure for new homes and commercial spaces—something that traditional incumbent water companies, often operating at capacity, can struggle to do as quickly or as efficiently.
Independent data has shown that NAVs install water connections between 25% and 50% faster than incumbents. This is not by chance. It is because NAVs are purpose-built to respond to the needs of modern development—agile, responsive, and customer-focused by design. For developers, this means fewer delays. For households, it means getting the services they need, when they need them.
And yet, despite this proven track record, NAVs face an uneven playing field. From the way they are licensed to the way they are charged for bulk water supply, the regulatory environment has failed to evolve in line with the growth of the sector. The result is a system that limits competition, creates continuous duplication, and ultimately slows down progress.
The Case for Smarter Regulation
The most fundamental of these barriers is the outdated site-specific licensing regime. Unlike other utilities, NAVs must apply for a new licence for each individual site they intend to serve. This process takes months, draining resources from both companies and the regulator, and delaying essential infrastructure, without adding value.
In contrast, the energy sector, where independent networks are equally active, operates under a national licensing regime. This provides clarity, efficiency, and greater capacity for oversight. A similar model in the water sector would be entirely consistent with Ofwat’s wider ambition to foster markets and deliver better outcomes for customers.
The SMF recommends a consultation on amending the Water Industry Act 1991 to allow for such a regime. This is a long-overdue step. A single national licence for NAVs would not remove regulatory scrutiny—it would refocus it, allowing Ofwat to spend less time re-approving competent operators, and more time ensuring service quality and customer protection across the market.
Creating a Level Playing Field
Another major constraint identified in the report is the lack of a consistent, industry-wide methodology for bulk supply charging. Bulk charges are the prices NAVs pay to incumbents to access upstream water and wastewater services, before distributing them to their own customers on new sites.
Without a clear pricing framework, these charges vary significantly between regions and incumbents. In some cases, NAVs are priced out of operating in certain areas altogether—not because they cannot provide a good service, but because the cost structure makes it unviable. This distorts the market and denies developers the opportunity to choose the most efficient provider.
We support the SMF’s call for Ofwat to develop and enforce a common methodology for setting bulk supply charges. This would improve transparency, encourage healthy competition, and allow NAVs to plan with confidence across England and Wales.
Proportionate, Risk-Based Water Quality Regulation
Public confidence in water quality is vital. NAVs are fully committed to meeting all statutory requirements and upholding the highest standards of service.
However, the current requirement that each NAV site be treated as a separate water quality zone, even when drawing from the same source, creates unnecessary duplication. The Drinking Water Inspectorate (DWI) mandates that NAVs must sample and monitor each site individually, leading to inefficiencies without improving public safety.
A more proportionate approach, based on shared water sources and risk profiles, would allow different NAV sites to be regulated as part of a single water zone where appropriate. This would reduce administrative burden for regulators and providers, while maintaining robust standards for consumers.
We believe this change is both logical and achievable, and we welcome the report’s recommendation to amend the Water Supply (Water Quality) Regulations 2016 accordingly.
A Fair Social Tariff for All
One of the most important and timely points raised by the SMF is the need to address inequality in access to social tariffs. With water bills rising and the cost-of-living pressures mounting, it is more important than ever that customers who need support are able to receive it—regardless of where they live or who supplies their water.
Currently, support varies significantly across regions. A household in Yorkshire might receive more than double the bill reduction that a household in the South of England receives under a social tariff. This postcode lottery is clearly unjust, and it risks undermining public confidence in the water sector. The INA has long called for better transparency and consistency through the introduction of a single, inclusive, national social tariff. The SMF’s report strongly supports this view. We agree that NAVs must be fully integrated into any such scheme, ensuring that all customers benefit from the same level of support and that no one is left behind.
We also support the principle that NAVs should be obliged to mirror the relevant incumbent’s social tariff where a national scheme is not yet in place. This is consistent with the long-standing “no-worse-off” commitment, which all NAVs are required to meet.
Unlocking Growth, Responsibly
The regulatory changes proposed in this report are not about reducing oversight. They are about making it fit for purpose—ensuring that regulation keeps pace with a changing market, and that it supports, rather than hinders, sustainable growth. As NAVs continue to serve more households and developments, it is right that their responsibilities grow in turn. But so too must their ability to operate fairly and efficiently.
We believe the SMF’s recommendations are balanced, evidence-based, and aligned with the wider policy objectives of government and regulators. Implementing them will not only help to accelerate housing delivery—it will improve regulatory efficiency, strengthen customer protection, and support environmental sustainability.
Next Steps
Over the coming weeks, the INA will be engaging closely with Ofwat, Defra, the DWI and other stakeholders to promote the recommendations set out in this report. We will also be working with our members to support consistent messaging across the sector.
NAVs have already shown that they can deliver high-quality services more quickly and flexibly than traditional incumbents. With the right reforms, they can do even more—supporting communities, protecting consumers, and contributing to a stronger, fairer, more resilient water system.
It is time to modernise the framework. We look forward to working with policymakers to make it happen.
Nicola Pitts
Executive Director, Independent Networks Association
