Water services - investing in and paying from 2027-2033: business and regulatory impact assessment

Section 6: Implementation and Review

6. Implementation plans

The Ministerial Objectives have been issued in a Ministerial direction to Scottish Water and the Principles of Charging issued to Scottish Water and WICS as a policy statement. WICS will issue its final determination in November 2026.

The Ministerial Objectives and Principles of Charging will come into force on 1 April 2027, from which point Scottish Water must comply with the Ministerial Objectives and Scottish Water and WICS must ensure the annual Scheme of Charges is consistent with the Principles of Charging. Enforcement will align with existing governance arrangements from this date. There are no WTO notification requirements, as there are no measures affecting international trade.

6.1 Post implementation review

The effectiveness of the Ministerial Objectives and Principles of Charging will be monitored through established governance arrangements. Delivery of the Ministerial Objectives will be tracked via the Water Industry Investment Group, Scottish Water’s Delivery Plan, and the annual performance report published by WICS. WICS will also assess Scottish Water’s annual Scheme of Charges for consistency with the Principles of Charging.

The ideal outcome is that the Ministerial Objectives and Principles of Charging are set at a level that enables Scottish Water to make substantial progress towards the Water Sector Vision in the 2027-33 regulatory period, while continuing to deliver high-quality services, adapting to climate challenges, supporting economic growth, and maintaining affordability. The necessary minimum acceptable outcome is that Scottish Water is, in general, able to maintain current service levels and statutory compliance, while making incremental progress in priority areas without placing undue financial burden on customers.

Outcomes will be measured through a robust governance framework. WICS’ methodology and draft determination have established outcome measures linked to the Ministerial Objectives, and set performance targets Scottish Water is expected to deliver. Progress will be monitored by water industry stakeholders through the Water Industry Investment Group, which will evaluate delivery against targets and other performance indicators. This ensures accountability and enables timely intervention if progress deviates from expectations. Furthermore, WICS’ annual reports on Scottish Water’s performance will comment on its progress towards the Ministerial Objectives and delivery of the investment programme in line with the final determination.

Scottish Water’s investment programme is not fixed at the start of the regulatory period and is able to flex (i.e. projects or programmes can be added or removed) in response to emerging priorities. Scottish Water uses the Investment Planning and Prioritisation Framework, which was co-created by water industry stakeholders ahead of the current regulatory period 2021-27, to identify investment needs and then plan, prepare, and deliver them. As requested by Ministers in the Commissioning Letter^[7], WICS and Scottish Water have led work with water industry stakeholders to produce an updated framework,^[8] consistent with WICS’ methodology, which will be used in the next regulatory period in 2027-33.

The 2027-33 regulatory period will run for six years, ending on 31 March 2033, at which point the Ministerial Objectives and Principles of Charging will expire. Before this date Ministers will commission a review to inform arrangements for the subsequent period. This review will compare outcomes against expectations set out in policy documentation, including this BRIA, consider how the challenges the water industry currently faces have been addressed during the regulatory period, progress in delivering the Water Sector Vision, and identify any adjustments required based on evidence.