Ofwat to approve £1.6bn for 31 water companies investment schemes


Ofwat to approve £1.6bn for 31 water companies investment schemes

The investments will deliver benefits in three areas:


  • £1.1 billion 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;
  • £400 million 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
  • £160 million 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.


The water sector regulator said the 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.


Ofwat explained that when requesting proposals Defra set out several criteria, which “given the accelerated nature of the process, included schemes had to be clear and uncontroversial.” Other criteria included that projects needed to start the AMP7 price control period (2020-25) and be finished by the end of the upcoming AMP8 price control period (2025-30)


Ofwat has today published details of the draft decisions for consultation. The regulator has also identified a further 37 schemes, totalling £376 million of investment in the 2023-25 period and £1.5 billion 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 commented:


“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”. 


The consultation document sets out Ofwat’s draft decisions to allow PR24 transition expenditure for schemes in the accelerated infrastructure delivery project. With the exception of SES Water, all English water companies submitted proposals for acceleration. Ofwat commented:


“After careful consideration, we propose to approve 31 schemes for acceleration, valued at around £500 million over the 2023-2025 period and over £1.6 billion overall. In addition to this, we have identified a further 37 schemes, totalling potentially £376 million of investment, in the 2023-25 period and £1.5 billion in total, that companies can progress through the 2024 price review (PR24) transition expenditure programme at their own risk.”


The regulator is proposing to approve schemes for the accelerated scheme process that 'in the round' meet its required criteria. According to Ofwat, this gives companies certainty that the schemes will qualify for funding through the transition expenditure programme as part of PR24.


Water UK- investment  "represents a down-payment on what will be one of the largest infrastructure programmes ever"


In response to the announcement from Ofwat & Defra, of £1.6 billion of investment brought forward to speed up vital water infrastructure projects, a Water UK spokesperson said:


“Water companies are taking comprehensive action to improve the nation’s rivers and now, with this approval by Ofwat, we will be able to accelerate our efforts further.


“Today’s announcement recognises the need to move faster. It represents a down-payment on what will be one of the largest infrastructure programmes ever to improve our waterways and help protect against climate change.” 


CCW warns “pollution from storm overflows has already seriously damaged the way people view the sector - we need more than just immediate investment"


Commenting in response to Ofwat’s announcement on the accelerated delivery of 31 investment schemes, Emma Clancy, Chief Executive of the Consumer Council for Water (CCW), said: “


The sector faces huge challenges and needs sustained investment to improve its performance. We saw during last year’s drought that many people struggled to understand their water use and that’s where the roll out of smart meters can provide households with the information they need.”


“Pollution from storm overflows has already seriously damaged the way people view the sector but we need more than just immediate investment. There needs to be sustained action to put people and the environment first, including providing fairer and more consistent support for customers struggling to afford their water bill.”


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