Ofwat challenges water companies to spend £13bn on infrastructure over next five years

The Environment Agency has welcomed Ofwat’s challenge to the UK’s water companies to spend £13bn on infrastructure investment and improve their performance and customer service over the next five years.

Ofwat has revealed a spending package of £51bn for the next five years. A quarter of this, around £13bn, will be investment dedicated to providing resilient services and a better environment in the face of a growing population and climate change.

Customers will also see a reduction in average bills of about £50 before inflation. The regulator has secured this by demanding greater efficiency, passing through lower financing costs and promoting more innovation.

Ofwat has set new levels of service so water companies transform their performance over the next five years. These include:

• Cutting leakage by 16% – saving enough water to meet the needs of everyone in Birmingham, Bristol, Cardiff, Leeds, Liverpool and Sheffield;
• Identifying and helping an additional two million customers who need extra support;
• Investing over £1bn to protect communities at risk of flooding;
• Reducing pollution into rivers and streams by almost a third;

Preparing for drier weather by providing £450m to explore new water resources such as reservoirs or moving water from where there is lots to places with less.

The £13bn of additional investment – equivalent to £6m every day for five years – will, among other things, see a new reservoir built in Hampshire and the construction of a pipeline connecting water supplies from North Lincolnshire to Essex.

Ofwat also recognises that Londoners deserve a better level of service. The regulator is stepping in to protect customers by allowing Thames Water to bid for up to an additional £480m to deliver improved service resilience. To access this, they will need to pass a series of tests and Thames’ investors will also need to provide substantial additional funding.

Ofwat chief executive, Rachel Fletcher, said: “Today we’re firing the starting gun on the transformation of the water industry backed by a major investment programme to deliver new, improved services for customers and the environment and resilience for generations to come. Now water companies need to crack on, turn this into a reality and transform their performance for everyone.

“They will be investing the equivalent of an extra £6m each and every day to overhaul services, strengthen their infrastructure and improve our natural environment. And at the same time, customers’ bills will fall by an average of £50 before inflation.”

Emma Howard Boyd, chair of the Environment Agency said: “I welcome Ofwat’s new price determinations which will challenge all water companies to improve their performance and resilience to flooding and drought, while delivering for their customers and the environment.

“The climate emergency and a growing population mean that we all have our part to play in protecting our water environment – every drop we save will help sustain and protect our precious rivers, lakes and bathing waters for future generations.”