Consumer trust is at an all-time low and confidence in water companies to act in the interest of the environment and provide a reliable service has fallen
Meanwhilr Government and the regulators have failed to drive sufficient investment in the water sector which now needs to build 30 new projects at a cost of £52bn to meet future water demand says the National Audit Office in s report out this morning
To tackle the challenges, including an anticipated daily shortfall of 5 billion litres of water by 2050, the sector now needs to attract an unprecedented amount of investment. Ofwat anticipates a 70% increase in infrastructure spending, totalling £47 billion in the next five years. This is part of £290 billion required to meet government targets over the next 25 years.
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 poor performance has led to a record low in consumer trust. The highest-profile cause of environmental harm is the use of storm overflows, where companies release untreated sewage into rivers and seas.
The Environment Agency and Ofwat are taking enforcement action against every wastewater company over their management of sewage. There is no regulator responsible for proactively inspecting wastewater assets to prevent further environmental harm.
The NAO report recommends that Defra must understand the costs and deliverability of its plans, alongside the impact they will have on customers’ bills. Defra needs to address the gaps in regulatory responsibilities, and Ofwat and the other regulators need to work together to improve investor confidence and build consumer trust.
“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.” says Gareth Davies, head of the NAO
