UK’s ageing water network would take 700 years to replace at current rate
Britain’s ageing water network would take 700 years to replace if work continues at the rate seen since privatisation, according to Whitehall’s spending watchdog.
The National Audit Office (NAO) on Friday released an extensive investigation into the performance of the the three water regulators, Ofwat, the Drinking Water Inspectorate and the Environment Agency, and Defra.
It found the bodies had failed to drive enough investment into the UK’s struggling water industry, which now faces significant environmental, supply and infrastructure challenges that will require unprecedented levels of funding to resolve.
Water companies have faced fierce backlash for presiding over a massive increase in sewage dumping into British rivers. Significant bill hikes for consumers have been unveiled to provide the investment needed to fix the sector’s creaking infrastructure.
But the NAO said none of the regulators had a good understanding of the current condition of infrastructure assets and had no metric to properly assess their condition.
The 700-year figure pours cold water on claims from water firms it will be able to turnaround the infrastructure issues by increasing bills, which are set to rise by more than a third over the next five years after a ruling from Ofwat in December.
Challenges over the next century include an anticipated daily shortfall of 5bn litres of water by 2050, with Ofwat expecting water companies to increase infrastructure spending by 70 per cent to £47bn over the next five years, the NAO said.
It warned the increasing need for investment had coincided with a “period of weakening financial performance, declining public trust and falling investor confidence.” Ofwat was concerned about the performance of 10 of the 16 major water companies in 2023/24.
The issues are epitomised by the UK’s biggest water supplier, Thames Water, which had to receive a £3bn emergency loan from creditors earlier this year to stay afloat and now looks set to be taken over by US private equity.
“Given the unprecedented situation facing the sector, Defra and the regulators need to act urgently to address industry performance and resilience to ensure the sector can meet government targets and achieve value for money over the long term for bill payers,” Gareth Davies, head of the NAO, said.
Sir Geoffrey Clifton-Brown, chair of the Public Accounts Committee, said: “The regulators do not have a good understanding on the condition of infrastructure assets, as they do not have a set of metrics to assess their condition.
“On the work water companies have done, they have overspent for the last four years (some of these costs will be added to consumers bills) and moved slowly. At the current rate, it would take 700 years to replace the entire existing water network.”
The government on Thursday evening announced new powers that could see water bosses face a possible two-year prison sentence for covering up sewage spills.
An Ofwat spokesperson: “The NAO’s report is an important contribution to the debate about the future of the water industry, which the Independent Water Commission (IWC) is currently looking at.
“We agree with the NAO’s recommendations for Ofwat and we continue to progress our work in these areas, and to contribute to the IWC’s wider review of the regulatory framework. We also look forward to the IWC’s recommendations and to working with government and other regulators to better deliver for customers and the environment.
“As the report sets out, the water sector faces significant challenges. To meet these, it is necessary to attract investment for the improvements needed to ensure that customers continue to benefit from one of the highest standards of drinking water in the world and that water companies improve their record on pollution.
“Ofwat has already approved an unprecedented £104bn expenditure package for the next five years though our price control. This will improve our water supply resilience with 30 new major projects including nine reservoirs, and cut sewage pollution by 45 per cent by 2030 by investing £6m a day in prevention measures.”
A Defra spokesperson said: “The government has taken urgent action to fix the water industry – but change will not happen overnight.
“We have put water companies under tough special measures through our landmark Water Act, with new powers to ban the payment of bonuses to polluting water bosses and bring tougher criminal charges against them if they break the law.
“The government has secured a record £104bn of private sector investment to upgrade and build new sewage pipes to clean up our waterways for good.”