Image description: Water flowing from a concrete pipe. Photo by Abdullah Wafiyy on Unsplash.

The trade association for the water industry, Water UK, has published its assessment of whether water companies are able to spend enough on maintaining their infrastructure. 

 New analysis presented at a conference of engineers, economists and government policy officials in London last month suggests the answer may be no, and the gap could be significant. 

In Scotland, the water regulator uses a method based on how long assets are expected to last before they need replacing. When the same approach was applied to water companies in England and Wales by consultants Economic Insight, Water UK found the results were striking. Companies appear to be spending less than half of what they would need to sustainably maintain their networks over the long term. 

Water companies’ maintenance budgets could be billions short 

Under the current regulatory system, some pipes and equipment are implicitly assumed to last for centuries, whereas the ‘Scottish approach’ would instead replace them in decades. 

New analysis from Water UK suggests that applying the same average uplift to all water companies in England and Wales of around 120% would require an additional £29 billion of capital maintenance over five years (in 2022-23 prices). 

Water UK warns that if the condition and performance of water company assets (their ‘asset health’) is not sufficiently maintained, then pipes can burst, pumps can break and treatment works can malfunction. This was most visible in Kent at the end of last year, when tens of thousands of customers in the Tunbridge Wells area were left without drinking water. 

Growing consensus the system needs to work differently  

Water UK emphasises that maintaining assets properly should mean fixing things before they break, not after, but warns that the current regulatory approach has not always made it easy to do that. As the UK and Welsh Governments’ independent review of the water sector found, “government and regulator pressure on bills played an important role in what can now be seen as underinvestment” over more than a decade.