A new report published today by the House of Commons Public Accounts Committee is warning of a serious risk that some parts of England will run out of water within the next 20 years – and accuses all the bodies responsible for the UK’s water supply – Defra, Ofwat and the Environment Agency –of having “taken their eye off the ball.”

MPs on the Committee are calling on the regulators to take urgent action now to ensure a reliable water supply in the years ahead. The MPs conclude in the report - Water supply and demand management - that the Department for Food, Environment and Rural Affairs (Defra) has shown a lack of leadership in getting to grips with all of the issues threatening the water supply in England.

“We look now to the Department to step up, make up for lost time and ensure all parties act with the urgency required,” the report says.

According to the Committee, the Government has failed to be clear with the water companies, privatised in 1989, on how they should balance investment in infrastructure with reducing customer bills, and says “ponderous” water companies have made “no progress” in reducing leakage over the last 20 years.

Industry action had also failed on promoting water efficiency and delivering an effective campaign for water and the government needs to step in and substantially step up efforts to coordinate increased awareness of the need to save water.

The report levels serious criticisms at all three regulators, saying:

“The responsible bodies – the Department for Environment, Food & Rural Affairs, the Environment Agency and Ofwat – have collectively taken their eye off the ball and urgent action is now required if we are to have a reliable water supply in the years ahead.”

The MPs take aim at the regulators on a number of issues, including

• leakage
• abstraction
• personal consumption
• water efficiency
• infrastructure investment

“A decade of complacency and inaction means leakage is now a hugely pressing problem”

Commenting on leakage, the report says there is a serious risk that some parts of England will run out of water within the next 20 years. Demand for water is about 14 billion litres per day in England and Wales - the Committee says it is “wholly unacceptable” that over 3 billion litres are wasted every day through leakage, with no improvement in the last 20 years.

Due to rising demand and falling supply of water the Environment Agency now estimates that England will need an extra 3.6 billion litres per day by 2050 to avoid shortages.

The report says that daily losses through leakage fell to around 3 billion litres a day around 2020, from a high of over 4.5 billion litres in the early 1990s,commenting:

“However, this reduction was followed by over a decade of complacency and inaction, which has meant water leakage is now a hugely pressing problem. No one organisation has got a thorough grip on dealing with this issue and driving the change necessary.”

Despite Defra urging water companies in 2016 to make tackling leakage a much higher priority, there had however, “still been little progress.”

Appearing as a witness to give evidence to the Public Accounts Committee on 1^st June 2020, Rachel Fletcher, Chief Executive of Ofwat, told the MPs that “everybody took their eye off the ball” on leakage. On Ofwat’s expectation that leakage to fall by 16% between 2020 and 2025 as a result of targets which would result in 561 million litres of water a day being saved, the report says meeting the targets relies on “unknown and untested approaches.”

The report says the Committee “is unconvinced by Ofwat’s hope that water companies will “surprise themselves” at what they can achieve. “

The MPs have recommended that Defra should hold water companies to account by publishing annual league tables showing their performance on tackling leakage against the targets set which should be introduced by 31 December 2020.

Government has failed to be clear on how water companies should balance investment in infrastructure with reducing customer bills

The MPs also conclude that the Government has failed to be clear with water companies on how they should balance investment in infrastructure with reducing customer bills. “Nor has it done enough to resolve the tension that water companies face between needing to invest in infrastructure to improve water supply and the pressure to keep water bills affordable for consumers, particularly where consumers say they are prepared to pay more,” the report says.

“Water companies have had little help from government in how they resolve the tension they face in balancing their plans for investment with the need to keep bills affordable, especially where they feel they have good evidence on their customers’ willingness to pay for long-term resilience. We recognise that infrastructure improvements cannot be achieved overnight, but the rate of progress has been far too ponderous.”

“We asked if the Department is giving Ofwat the right remit given that consumer bills are expected to fall by 12% in the next five years and yet water companies had put forward plans to build vital infrastructure, which would help considerably with the resilience of the water supply, but are prevented by Ofwat from doing so because of the risk of increasing prices for customers.”

The Committee is recommending that Defra should provide more guidance to water companies on the level of investment needed to ensure resilience by 2050 and how they should balance this in their business plans with pressure to reduce consumer bills.

The MPs have set a deadline of 31 December 2020 for Defra to provide the Committee with an update on progress and how they plan to accelerate the pace of infrastructure improvement.

Government has failed to develop a national message to consumers on the need to reduce water consumption

The MPs have also set the same deadline for Defra to develop a plan, with adequate funding, to increase public awareness of the need to save water, and update the Committee on progress.

The report criticises the Government for its failure to develop a national message to consumers on the need to reduce water consumption and how to do this. Government’s reliance on water companies to promote the importance of reducing water consumption, who each adopt different approaches, means there is no coherent or coordinated national message.

“There is no evidence of the impact on consumer awareness or behaviour of what water companies are doing. This demonstrates that industry action has been insufficient and has failed, and that government now needs to substantially step up its efforts to coordinate increased awareness of the need to reduce water consumption.” the report says.

On water efficiency, the report says that Government has been too slow to implement policies that could improve efficiency such as product labelling and changes to building regulations.

On the Government’s efforts in the non-domestic market, where it has attempted to improve water efficiency by introducing competition to allow customers to choose alternative retailers, the report says “the rate of switching has so far been pitiful.”

The Committee is calling for Defra to publish annual league tables showing water companies’ and retailers’ performance on reducing consumption which should be introduced by 31 December 2020.

“Not convinced” by water sector commitment to net zero carbon by 2030

On the water sector’s commitment to achieve net zero carbon by 2030, the MPs say theyare “not convinced that achieving the net zero target is sufficiently embedded in the oversight and regulation of the water industry.”

The report points out that the process of building the new infrastructure needed is energy-intensive and that each of the different types of infrastructure water companies can invest in will have differing carbon costs as well as financial costs.

“We are told that both water companies and the Environment Agency have committed to net zero by 2030 but it is not clear how this will be achieved or how carbon footprints are taken into account in the planning process and in Ofwat’s methods for assessing options.”

The Committee has recommended that Ofwat should write to it within the next three months setting out how it will ensure water companies take full account of carbon emissions in appraising the options available to them.

MPs call for action on over-abstraction

The report also flags up the danger that abstracting too much water from rivers and other sources, including chalk streams (around 85% of the world’s chalk streams are in the UK) can damage the environment.

The MPs have highlighted particular risks associated with the HS2 programme - in the Chilterns Area of Outstanding Natural Beauty, HS2 needs up to 10 million litres per day to facilitate tunnelling.

The Environment Agency has said that it will not grant approval for HS2’s plans unless the project has both identified and then set out mitigation for impacts to groundwater sources. Defra told the Committee that partnership grants to the value of £882,000 were provided to charities and stakeholder groups in 2020–21 specifically for the improvement of chalk streams and chalk habitat.

The report says that Defra “needs to consider whether this is enough to deal with what the Environment Agency described as a “clear and present danger.”

The MPs are calling for the Agency to write to it within three months setting out clear objectives, planned mitigation actions and associated timescales for eliminating environmental damage from over-abstraction and sewage outflow.

“Empty words on climate commitments and unfunded public information campaigns will get us where we’ve got the last 20 years: nowhere"

Meg Hillier MP, Chair of the Committee, said:

“It is very hard to imagine, in this country, turning the tap and not having enough clean, drinkable water come out - but that is exactly what we now face. Continued inaction by the water industry means we continue to lose one fifth of our daily supply to leaks.

“Empty words on climate commitments and unfunded public information campaigns will get us where we’ve got the last 20 years: nowhere. Defra has failed to lead and water companies have failed to act: we look now to the Department to step up, make up for lost time and see we get action before it’s too late.”

Click here to read the report Water supply and demand management in full