The Environment Agency is warning that despite some progress made by the water companies in England in reducing leakage and managing water demand, both remain unacceptably high and exceed national forecasts.

The warning comes in the Environment Agency's (EA) detailed analysis of the wholesale water companies’ annual water resources performance across England for financial year April 2024 to March 2025 based on their water resources management plan annual review submissions

According to the EA, England needs at least 100% of average rainfall this winter to largely recover from drought by the end of March next year. Without sustained and widespread precipitation, drought conditions will likely persist into 2026.

This report reviews water resources performance during 2024 to 2025 before the impacts of dry weather and drought took hold.

According to the EA, while some progress has been made in reducing leakage and managing demand, both remain unacceptably high and exceed national forecasts - despite the wetter conditions during the 2024 to 2025 reporting year. Key metrics include:

• Elevated water demand is placing additional pressure on the environment, with more water being abstracted than expected.
• Around 19% of water entering distribution is still being lost to leakage before it reaches properties.
• Average household water consumption remains over 136 litres per person per day.

The report summarises key water demand and supply metrics across water companies in England for the period April 2024 to March 2025 i.e. immediately before widespread dry weather and drought impacts during 2025. These factors will be reflected in the water industry’s 2025 to 2026 annual review data and the Agency’s report next year.

Performance is assessed against the water companies 2024 water resources management plans (WRMP24) where published, or 2019 water resources management plans (WRMP19) where plans are pending - annual reviews track progress against WRMP forecasts.

The report covers the final year of the WRMP19, which also allows the EA to conclude where companies have underdelivered against WRMP19 commitments. Escalation of WRMP non-delivery could include investigations and enforcement by the relevant regulators.

The report highlights priority areas of focus for the water industry to ensure companies meet the starting point of their new plans and can achieve effective delivery.

Environment Agency key findings

Average daily water use per capita consumption (PCC) in England was 136.5 litres in 2024 to 2025 - a slight decrease from the previous year and reflective of continued post-COVID-19 pandemic recovery. However, when adjusted for dry-year conditions, this rises to 140.3 litres per person per day (l/p/d), which is far above the starting points set out in water companies’ WRMPs.

Around 12% of households in England are now equipped with smart water meters, using advanced metering infrastructure (AMI) technology. Most of these households are concentrated in areas served by Thames Water, Anglian Water, Severn Trent Water, and Essex and Suffolk Water. The EA expects to see a substantial shift in activity during 2025 to 2026 to increase smart water meter installations across England.

There has been a national reduction in water leakage but performance varies across the industry, with most companies still exceeding their WRMP forecasts. Currently, nearly 19% of water supplied in England is lost through leakage, which remains unacceptably high. The water industry’s 2050 commitment to halve leakage would reduce the overall rate of leakage to around 13% by 2050.

Timely delivery of water supply schemes is essential for growth and protecting the environment. Despite most supply schemes being scheduled for later this decade or during the 2030s, there are growing risks of delays that could undermine water supply resilience. We expect water companies to act to mitigate delivery risks.

Water companies supplied more water in 2024 to 2025 than would typically be expected under the average weather conditions experienced. The excess puts avoidable pressure on the environment and highlights the need for more effective demand management across the sector.

Building resilience is more important as the risk of drought in England becomes more real. Achieving greater water efficiency must be a national priority, requiring coordinated efforts from government, water companies and consumers.

Next steps for water companies

The report says that early planning for the next price review period is essential to ensuring the successful delivery of updated WRMP24s. The latest WRMPs show that many large supply options have been selected, with several schemes progressing through the Regulators Alliance for Progressing Infrastructure Development (RAPID) gated process.

However, the EA is emphasising that while progress is being made in some areas, a stronger and sustained focus on reducing leakage and PCC is essential throughout 2025 to 2026 and over the next 5 years. The industry must closely monitor performance to ensure targets are met.

Water companies should also be progressing their smart water metering programme, ensuring they have robust data infrastructure in place to support customers from meter installation onwards.

The Agency is recommending that the water industry:

• strengthen efforts to reduce water consumption – by promoting water efficiency across households and businesses, especially during drought conditions
• accelerate its smart water meter rollout in 2025 to 2026 – ensuring robust data systems and processes are in place to support customer engagement and enable water efficiency
• reduce leakage further and improve infrastructure delivery – by increasing efforts to meet WRMP forecasts and mitigating emerging scheme risks

Key conclusions

The 2024 to 2025 annual review reveals mixed progress and ongoing challenges in water resource management delivery across England, and sets out a number of conclusions, including:

• Smart metering has emerged as a critical tool for progress on both improving water efficiency and helping to tackle leakage. Currently, only 12% of households are equipped with smart meters. The beginning of AMP8 presents a key opportunity for water companies to accelerate the rollout and ensure that the necessary data infrastructure is in place to support it.
• Environmental delivery also requires urgent attention. Delays in the implementation of schemes and reduced drought resilience in many zones highlight the importance of timely implementation of both supply and demand initiatives.

Looking ahead, the Agency says 2025 to 2026 will be a critical year for the sector and that as PR24 business plans and WRMP24s come into effect, companies must show measurable progress, commenting:

“Ultimately, the sector must now focus on delivering its commitments with urgency, transparency and collaboration. Efficient water use is a shared responsibility, essential for securing resilient supplies, protecting the environment and supporting future growth, especially in the face of increasing drought conditions.”

Photo:Helen Wakeham, EA Director of Water

Commenting in the Foreword to the report, Helen Wakeham, Director of Water at the Environment Agency says:

“We are seeing more frequent extreme weather events, with new temperature and rainfall records set almost annually. These trends are placing increasing strain on our water resilience, and we must act with urgency, assuming this will continue as climate change impacts intensify.

“Despite these pressures, there are reasons for optimism. We welcome water companies’ enhanced action on leakage and demand reduction during the current drought, but we shouldn’t need to wait for dry weather to act. We can ensure water security, provided the water industry focuses on delivering new water supplies, rolling out smart water meters and reducing water demand…..

“We expect water companies to maintain the intensity of their drought response year-round and learn from past challenges in delivering their water resources management plans. Success will depend on building on what has worked, addressing delivery barriers and prioritising both supply and demand schemes.”

Click here to access the report online Water resources 2024 to 2025: analysis of the water industry’s annual water resources performance