Recommendation 2

Over many years, the Environment Agency and Ofwat have failed to ensure water companies maintain vital infrastructure. Ofwat and the Environment Agency (EA) have not done enough to ensure companies actively manage their infrastructure. At the current rate of replacement, it would take companies 700 years to replace the entire water mains network. This is far below the rate Ofwat views as sustainable and below what the water companies have been funded to do. Ofwat does not understand how to fund maintenance effectively. There are no common standards to assess the condition of infrastructure, and Ofwat’s current measures, such as sewer collapses and leakage, are backwards-looking and only measure failure. Ofwat has been looking at asset health since 2017, and work to get the right information will still take “two to three years”. This information could be collected much quicker and then acted on, ready to inform key decisions by the next price review. The Drinking Water 3 Inspectorate (DWI) inspects water supply assets, but no regulator inspects wastewater assets, nor do they have the engineering expertise to oversee company work. Failure to maintain assets has led to environmental pollution. Prevention is better than cure, but the regulators are not actively taking a preventative approach. They should do much more. recommendation Ofwat and the Environment Agency, working with the sector, should develop survey standards and collate information to assess the health of infrastructure in good time for companies to use the results to inform business plans which are likely to be submitted in autumn 2028 and implemented shortly thereafter, and a programme of inspection to ensure infrastructure projects funded in PR25 are completed to satisfaction and deliver value for money.