Ofwat’s investment programme to transform the water sector

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Ofwat has confirmed a major investment programme to improve water services for customers and the environment in its finalised price review for 2020-25

Ofwat has revealed a spending package of £51bn for the next five years. A quarter of this, around £13bn, will be invested in providing resilient services and a better environment in the face of climate change and a growing population.

Customers will also see a reduction in average bills of about £50 before inflation. The regulator has secured this by demanding greater efficiency, passing through lower financing costs and promoting more innovation.

Ofwat has set new levels of service so water companies transform their performance over the next five years. These include:

  • Cutting leakage by 16% saving enough water to meet the needs of everyone in Birmingham, Bristol, Cardiff, Leeds, Liverpool and Sheffield
  • Identifying and helping an additional two million customers who need extra support
  • Reducing pollution into rivers and streams by almost a third
  • Investing over £1bn to protect communities at risk of flooding
  • Preparing for drier weather by providing £450m to explore new water resources such as reservoirs or moving water from where there is lots to places with less

The £13bn of additional investment – equivalent to £6m every day for five years – will see a new reservoir built in Hampshire, the construction of a pipeline connecting water supplies from North Lincolnshire to Essex amongst other things.

Ofwat recognises that Londoners deserve a better level of service. Therefore, the regulator is stepping in to protect customers by allowing Thames Water to bid for up to an additional £480m to deliver improved service resilience. To access this, they will need to pass a series of tests and Thames’ investors will also need to provide substantial additional funding.

Ofwat chief executive, Rachel Fletcher, said: “Today we’re firing the starting gun on the transformation of the water industry backed by a major investment programme to deliver new, improved services for customers and the environment and resilience for generations to come.

“Now water companies need to crack on, turn this into a reality and transform their performance for everyone.

“They will be investing the equivalent of an extra £6m each and every day to overhaul services, strengthen their infrastructure and improve our natural environment.”

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