Ofwat Approves Landmark £104bn Investment to Overhaul Water Sector

The UK water regulator, Ofwat, has announced an ambitious £104bn investment package for the water sector as part of its final determinations under the PR24 process. This transformative plan outlines funding, service commitments, and billing strategies for water companies in England and Wales over the 2025–2030 period, aiming to secure cleaner rivers, better water resilience, and enhanced customer services.

The PR24 determinations signal a quadrupling of investment, with nearly 90% of funds allocated to meet new statutory standards from the Environment Agency, Natural Resources Wales, and the Drinking Water Inspectorate. Key components include:

1. Storm Overflow Reduction

   • £12bn allocated to reduce storm overflow spills by 45% by 2030 (compared to 2021 levels).

   • Equivalent to over £6.5m invested daily during the PR24 period.

2. Water Supply Resilience

   • £2bn in development funding to initiate £50bn worth of projects, including nine new reservoirs and nine large-scale water transfer schemes.

   • Projects aim to meet the daily water needs of nearly one-third of the population in England and Wales.

3. Nutrient Pollution Upgrades

   • £6bn earmarked to tackle nutrient pollution across 1,000 sites and catchments.

4. Nature-Based Solutions

   • £3.3bn dedicated to biodiversity and nature-based approaches to water management.

5. Water Mains Improvements

   • £456m additional funding to replace 8,445km of water mains over five years.

To finance this essential programme, water bills in England and Wales will rise by an average of £31 per year (before inflation) over the next five years, equating to a 36% increase by 2030. This adjustment is lower than the £39 annual increase proposed by companies earlier in 2024.

The plan includes a clawback mechanism ensuring that any unspent funds are returned to customers through lower bills, alongside a doubling of financial support for those in need.

The investment responds to government priorities and regulatory requirements, addressing pressing issues such as:

• Reducing storm overflow spills.

• Enhancing wastewater treatment.

• Improving drinking water quality.

The package underscores a commitment to achieving cleaner rivers and seas while building water supply resilience for future generations.

With its largest-ever funding package, Ofwat’s £104bn plan represents a monumental step forward for the water sector. It combines infrastructure upgrades, environmental sustainability, and customer protection to deliver long-term benefits for communities across England and Wales.