UK spending watchdog censures water firms and regulators over sewage failings
Water companies have been getting away with failures to improve sewage works and overspending because of regulatory problems, a damning report by the government’s spending watchdog has found.Firms have overspent on infrastructure building, the National Audit Office (NAO) found, with some of these costs being added to consumers’ bills. The Guardian this week reported Ofwat and the independent water commission are investigating water firms for spending up to 10 times as much on their sewage works and piping as comparable countries.Bills in England and Wales are rising by £123 on average this year, and will go up further over the next five years, so that companies can fix ageing sewage infrastructure and stop spills of human waste from contaminating rivers and seas. Several water firms have complained to the Competition and Markets Authority because they want the regulator to allow them to increase bills even further.Only 1% of water companies’ actions to improve environmental performance, such as improving sewer overflows, have been inspected by the Environment Agency, the authors of the NAO report said. They also found there was no regulator responsible for proactively inspecting wastewater assets to prevent further environmental harm.The report, which audited the three water regulators, Ofwat, the Environment Agency, and the Drinking Water Inspectorate, as well as the Department for Environment Food and Rural Affairs, also found the regulators did not have a good understanding of the condition of infrastructure assets such as leaking sewers and ageing sewage treatment facilities as they do not have a set of metrics to assess their condition.Gareth Davies, the head of the NAO, said: “Given the unprecedented situation facing the sector, Defra and the regulators need to act urgently to address industry performance and resilience to ensure the sector can meet government targets and achieve value for money over the long term for bill payers.”Despite the huge costs of infrastructure, the water companies have moved slowly meaning that at the current rate, it would take 700 years to replace the entire existing water network, the report found. Regulatory gaps and a lack of urgency about replacing old and malfunctioning infrastructure has caused a “rising tide of risk” in the sector, which is contributing to increasing bills for customers, the report warned.It also criticised the lack of a national plan for water supply and recommended that Defra must understand the costs and deliverability of its plans, alongside the impact they would have on customers’ bills.Several of the issues raised by the NAO, including concerns about weak infrastructure, have come to the fore in the debate over the future of Thames Water, the country’s largest water company with 16 million customers. Thames, which is under significant financial pressure with almost £20bn in debt, needs to secure fresh investment within months. Questions over the state of Thames’s infrastructure and regulatory punishment it could face for its failures have dogged the process of winning fresh funds. Meanwhile, Ofwat has also rejected its requests to raise bills by as much as 59%, instead allowing a 35% increase over the next five years.The government set up the independent water commission (IWC) last year to investigate how the water industry operated and whether regulation was fit for purpose.Sir Geoffrey Clifton-Brown, the Tory chair of the Commons public accounts committee, said: “Today’s NAO report lays bare the scale of the challenges facing the water sector – not least the real prospect of water shortfall without urgent action.“The consequences of government’s failure to regulate this sector properly are now landing squarely on bill payers who are being left to pick up the tab. After years of under-investment, pollution incidents and water supply issues, it is no surprise that consumer trust is at an all-time low. Having not built any reservoirs in the last 30 years, we now need 10.skip past newsletter promotionSign up to Business TodayGet set for the working day – we'll point you to all the business news and analysis you need every morningPrivacy Notice: Newsletters may contain info about charities, online ads, and content funded by outside parties. For more information see our Privacy Policy. We use Google reCaptcha to protect our website and the Google Privacy Policy and Terms of Service apply.after newsletter promotion“Consumers rightly expect a water sector that is robust, resilient and fit for the future. Defra and the regulators must focus on rebuilding public confidence and ensure the sector can attract the long-term investment it desperately needs.”An Environment Agency spokesperson said: “We recognise the significant challenges facing the water industry. That is why we will be working with Defra and other water regulators to implement the report’s recommendations and update our frameworks to reflect its findings.”An Ofwat spokesperson added: “We agree with the NAO’s recommendations for Ofwat and we continue to progress our work in these areas, and to contribute to the IWC wider review of the regulatory framework. We also look forward to the IWC’s recommendations and to working with government and other regulators to better deliver for customers and the environment.”A Defra spokesperson said: “The government has taken urgent action to fix the water industry – but change will not happen overnight. We have put water companies under tough special measures through our landmark Water Act.”Water UK, which represents the water companies, has been contacted for comment.
NAO finds regulatory gaps have enabled overspending on infrastructure building while not improving sewage worksWater companies have been getting away with failures to improve sewage works and overspending because of regulatory problems, a damning report by the government’s spending watchdog has found.Firms have overspent on infrastructure building, the National Audit Office (NAO) found, with some of these costs being added to consumers’ bills. The Guardian this week reported Ofwat and the independent water commission are investigating water firms for spending up to 10 times as much on their sewage works and piping as comparable countries. Continue reading...
Water companies have been getting away with failures to improve sewage works and overspending because of regulatory problems, a damning report by the government’s spending watchdog has found.
Firms have overspent on infrastructure building, the National Audit Office (NAO) found, with some of these costs being added to consumers’ bills. The Guardian this week reported Ofwat and the independent water commission are investigating water firms for spending up to 10 times as much on their sewage works and piping as comparable countries.
Bills in England and Wales are rising by £123 on average this year, and will go up further over the next five years, so that companies can fix ageing sewage infrastructure and stop spills of human waste from contaminating rivers and seas. Several water firms have complained to the Competition and Markets Authority because they want the regulator to allow them to increase bills even further.
Only 1% of water companies’ actions to improve environmental performance, such as improving sewer overflows, have been inspected by the Environment Agency, the authors of the NAO report said. They also found there was no regulator responsible for proactively inspecting wastewater assets to prevent further environmental harm.
The report, which audited the three water regulators, Ofwat, the Environment Agency, and the Drinking Water Inspectorate, as well as the Department for Environment Food and Rural Affairs, also found the regulators did not have a good understanding of the condition of infrastructure assets such as leaking sewers and ageing sewage treatment facilities as they do not have a set of metrics to assess their condition.
Gareth Davies, the head of the NAO, said: “Given the unprecedented situation facing the sector, Defra and the regulators need to act urgently to address industry performance and resilience to ensure the sector can meet government targets and achieve value for money over the long term for bill payers.”
Despite the huge costs of infrastructure, the water companies have moved slowly meaning that at the current rate, it would take 700 years to replace the entire existing water network, the report found. Regulatory gaps and a lack of urgency about replacing old and malfunctioning infrastructure has caused a “rising tide of risk” in the sector, which is contributing to increasing bills for customers, the report warned.
It also criticised the lack of a national plan for water supply and recommended that Defra must understand the costs and deliverability of its plans, alongside the impact they would have on customers’ bills.
Several of the issues raised by the NAO, including concerns about weak infrastructure, have come to the fore in the debate over the future of Thames Water, the country’s largest water company with 16 million customers. Thames, which is under significant financial pressure with almost £20bn in debt, needs to secure fresh investment within months.
Questions over the state of Thames’s infrastructure and regulatory punishment it could face for its failures have dogged the process of winning fresh funds. Meanwhile, Ofwat has also rejected its requests to raise bills by as much as 59%, instead allowing a 35% increase over the next five years.
The government set up the independent water commission (IWC) last year to investigate how the water industry operated and whether regulation was fit for purpose.
Sir Geoffrey Clifton-Brown, the Tory chair of the Commons public accounts committee, said: “Today’s NAO report lays bare the scale of the challenges facing the water sector – not least the real prospect of water shortfall without urgent action.
“The consequences of government’s failure to regulate this sector properly are now landing squarely on bill payers who are being left to pick up the tab. After years of under-investment, pollution incidents and water supply issues, it is no surprise that consumer trust is at an all-time low. Having not built any reservoirs in the last 30 years, we now need 10.
after newsletter promotion
“Consumers rightly expect a water sector that is robust, resilient and fit for the future. Defra and the regulators must focus on rebuilding public confidence and ensure the sector can attract the long-term investment it desperately needs.”
An Environment Agency spokesperson said: “We recognise the significant challenges facing the water industry. That is why we will be working with Defra and other water regulators to implement the report’s recommendations and update our frameworks to reflect its findings.”
An Ofwat spokesperson added: “We agree with the NAO’s recommendations for Ofwat and we continue to progress our work in these areas, and to contribute to the IWC wider review of the regulatory framework. We also look forward to the IWC’s recommendations and to working with government and other regulators to better deliver for customers and the environment.”
A Defra spokesperson said: “The government has taken urgent action to fix the water industry – but change will not happen overnight. We have put water companies under tough special measures through our landmark Water Act.”
Water UK, which represents the water companies, has been contacted for comment.