Crumbling water industry is damaging Britain's economy, MPs warn

Telegraph

7 days ago

Britain's crumbling water industry is hitting housebuilding and slowing the country's economic growth, MPs have warned.
On Friday, MPs on the public accounts committee (Pac) said the sector's failure to build new reservoirs had delayed the construction of thousands of new homes and offices that were urgently needed to boost the UK economy.
This includes 7,000 new houses being built in Oxford as well as 50,000 new homes in Cambridge which have been delayed because of a major shortfall in the water supply, the MPs said.
Crucially, they added that neither the Government or the Environment Agency (EA) were able to say how many homes had been denied planning permission because of a lack of water pipes and that customers were footing the bill for the failures.
Sir Geoffrey Clifton-Brown, the Pac chairman, said: 'The monumental scale of work required to reverse the fortunes of failing water companies is rivalled only in difficulty by the efforts needed to repair customers' faith in the sector.
'Customers are being expected to shoulder the burden of water companies' failings, without being told why or on what their money will be spent.'
Water companies are under intense scrutiny after the debt crisis at Thames Water put renewed focus on how much companies are spending on fixing creaking water infrastructure.
According to the Pac, 10 out of Britain's 16 water companies failed to generate enough income last year to cover the interest payments on their debts – leaving them unable to invest more.
In two cases over the past two decades, water companies paid out dividends worth more than 100pc of the entire value of company assets, according to the MPs.
Ofwat is also blamed for failing to prevent water companies from taking excessive dividends – even as it has flagged concerns about the payouts. The regulator signalled concerns about 10 water companies last year.
The water industry must spend nearly £300bn on new infrastructure to avoid looming water shortages – including building 10 new reservoirs – and boost UK economic growth.
The investment is urgently required because the UK has failed to build a single new reservoir since the Carsington Water reservoir in Derbyshire – which was opened more than 30 years ago in 1992.
The report placed a portion of the blame on the Environment Department's failure to ensure water companies had been building and maintaining the infrastructure needed to avoid looming shortfalls, which are expected to hit 5bn litres a day by 2050.
By the end of the year, the MPs recommended that the EA should publish a list of all housing and commercial developments being delayed or blocked.
The report comes as Southern Water announced it had doubled the pay of chief executive Lawrence Gosden to £1.4m at the same time as announcing a hosepipe ban for 1m customers.
Southern Water, which servers 4.7m customers across Kent, Sussex, Hampshire and the Isle of Wight, is now the fourth water company to announce a hosepipe ban, alongside Thames Water, Yorkshire Water and South East Water.