How can we tackle the issues facing the water industry?

We need to clean up the water sector

The Environment Agency’s annual water and sewerage company performance assessment for 2021, found that the environmental performance of water companies was at its lowest ever level and most companies’ performance was declining.

The Environment Agency also told us that without serious change, the UK will run out of water within 20 years.

Tackling the issues of water pollution and future supply is a huge task, but it is necessary if the UK is to protect and enhance one of its greatest natural assets. Both the Government and regulators, including Ofwat and the Environment Agency, will play a role in addressing the issues. They must work together if they are to be successful.

We call on the Government, regulators, and water companies to take our recommendations seriously and act now to treat water with the importance it deserves.

These are three key challenges facing the water sector.

There has been recent public outrage at the levels of water pollution in the UK, particularly caused by storm overflows.

Storm overflows release water and sewage into rivers and the sea in times of stress on the sewage system, such as during a period of high rainfall. However, they are now used routinely in a manner that is unacceptable.

We recommend that creative solutions are used to clean up the issue of storm overflow overuse. For example, nature-based solutions to pollution should be encouraged by the Government and regulators, and an outcomes-based approach to regulation pursued.

However, we also recognise that upgrading the sewer network is necessary, and this will require substantial investment in hard infrastructure. The Government has estimated £56 billion over 25 years will be needed. We call for water companies to take the lead in meeting the majority of these costs. Third party companies may also play a role, as was the case with the Thames Tideway Tunnel.

The Environment Agency must be empowered to hold water companies to account when they are responsible for environmental damage. Cuts to the Environment Agency’s grant have hindered this effort in the past.

The Government must ensure adequate funding is available for the Ennvironment Agency.

The UK will run out of water in 20 years unless change is made. Reservoirs allow water to be stored and used in times of stress. Yet under present plans the UK will not have built a single new major reservoir between 1991 and 2029. Planning issues are largely to blame, and it is welcome the Government has indicated it intends to address this.

Alongside improvements in storing water, consumers will need to reduce the amount of water they use in order to ensure future supply. Water meters have been shown to reduce water consumption by providing consumers with greater information about their usage and the costs they are incurring.

We call for the Government to introduce compulsory water metering for all households and businesses where it is possible to do so.

Water companies will also need to do their part to secure future supply through reducing levels of leakage in pipes they own. Ofwat found that in England and Wales, leakage amounts to 51 litres of water per person per day.

Companies will find it far easier to make the case that their customers should reduce their water consumption if they can show that they have already taken similar action.

We recommend Ofwat sets stretching targets to reduce leakage and ensures companies have the finance to do so at the next Price Review.

Effectively reducing water pollution and securing future supply will require the unified effort of a range of sectors, government departments, and regulators. Each of these areas has a range of funding sources, bodies and policies that affect the water environment, but historically there has been a lack of a co-ordinated approach.

We call on the Government to publish a National Water Strategy that approaches water policies in a holistic way – one which cuts across sectors, government departments, and regulators.

There is also a lack of effective collaboration between regulators on issues such as as Environment Agency outputs not aligning with what Ofwat deems financeable, and ineffective information-sharing.

A RAPID-style approach should be used for joint working in areas such as improving water quality, upgrading the wastewater network, and reducing water demand.

We have made our recommendations to the Government and it has two months to respond to our report.

Read the full report on our website.

Find out more about our inquiry and our committee.

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