Recommendation 11

Ofwat told us that it is challenging to understand asset health for a sector where so many of the assets are below ground and can only be measured indirectly.24 Ofwat illustrated this problem when it told us about the challenge of making sure companies replace mains which are in a poor condition.25 But Ofwat currently uses retrospective measures which record asset failure – such as sewer collapses and mains repairs. External commentators, including the Competition and Markets Authority, and the National Infrastructure Commission, have called for more forward- looking measures.26 Ofwat is still working on getting standards in place 17 C&AG’s Report, Figures 3-6 18 Q 8 19 C&AG’s Report, para 1.8 20 Q 23 21 Q 61 22 C&AG Report, paras 2.45, 2.47-2.48 23 Q 42 24 Q 37 25 Q 41 26 C&AG’s Report, para 2.46 11 to consistently understand asset health, and told us that it will still take 2-3 years to get the right information for companies to be able to make the case for funding.27It should be possible to collate this information in a shorter timescale.