Ofwat sets out £1.6bn boost for water company investment

Ofwat is proposing to approve the accelerated delivery of 31 investment schemes to deliver benefits for customers and the environment. The total investment will be around £1.6bn with work beginning in the next two financial years, from 2023 to 2025.  

The investments will deliver benefits in three areas:

• £1.1bn to improve over 250 storm overflows and reduce the annual average of spills by 10,000. This includes work to improve water quality at the bathing water site at Ilkley on the River Wharfe and significantly reduce spills into Lake Windermere;
• £400m for water resilience schemes including installation of 462,000 smart meters, and new water resource and water quality projects. In total these projects will deliver and protect 159Ml/d of water supply, helping to increase drought resilience; and
• £160m to help reduce nutrient pollution and support nutrient neutrality at 14 locations –protecting natural ecosystems while facilitating housing and economic development.

In October 2022, Ofwat and Defra invited companies to propose schemes to accelerate investment in water resilience (supply and demand); storm overflows; and nutrient neutrality. Early approval of schemes will help the sector to gear up for a larger investment programme over the coming years and will help deliver benefits for customers and the environment sooner.

These are Ofwat’s draft decisions for consultation. All projects must be started prior to April 2025 and completed by 2030. Ofwat has also identified a further 37 schemes, totalling £376m of investment in the 2023-25 period and £1.5bn overall, that companies can accelerate if they are included in final company environmental plans and address concerns that Ofwat has raised.

David Black, Chief Executive, Ofwat, said: 

“Substantial investment is needed to address the challenges to our water system of storm overflows, river and bathing water quality and drought resilience. We are pleased that we’ve been able to work with companies and identify significant investments which companies can start well before the next price control period. This will bring substantial benefits for customers and the environment and bring them faster. We want to see companies making more rapid progress in delivering improvements, and will hold them to account if they fall short”.

Water Minister Rebecca Pow said:

“These new schemes will help accelerate the delivery of the urgent improvements we need to protect our environment. It includes £1.1 billion of new investment to stop sewage discharges at sites across the country and will deliver a reduction of 10,000 discharges per year in places like Lake Windermere, the River Wharfe, Falmouth and Sidmouth.

“The investment set out here will also provide an important boost for regional jobs, businesses and local communities.

“It builds on the key commitments in our five-year strategy – our Environmental Improvement Plan – as well as our upcoming Plan for Water to tackle pollution, reduce water consumption and protect our waters”.