Ofwat has published its annual Water Company Performance Report today, which shows disappointing results. This demonstrates that record investment alone in the next five-year period will not deliver the sustained improvements to services and the environment needed to rebuild public trust.
The report shows overall poor performance, with several companies falling short of key targets, including pollution reduction. As a result, Ofwat has imposed a total sector underperformance penalty of £157.6m on water companies. This means that customer water bills will be lower than they otherwise would have been in 2025-26, with the exact amount to be finalised in December 2024.
Ofwat’s report rates water companies based on 12 metrics covering three broad areas: environmental performance, customer services, and drinking water. It categorises companies as ‘leading’, ‘average’, and ‘lagging’.
Two of the 15 English companies have been categorised this year as ‘lagging’. For the second year in a row, no company has achieved the top rating, although four companies have improved their overall classification, moving from ‘lagging’ to ‘average’.
Ofwat’s Chief Executive has warned companies that investment alone will not be enough to achieve a long-term improvement in performance, calling for changes in company culture and leadership.
The Secretary of State for the Environment, Food and Rural Affairs, Steve Reed said: “Our waterways should be a source of national pride, but years of pollution and underinvestment have left them in a perilous state.
“The public deserves better. That’s why we are placing water companies under special measures through the Water Bill, which will strengthen regulation including new powers to ban the payment of bonuses for polluting water bosses and bring criminal charges against persistent law breakers.
“We will be carrying out a full review of the water sector to shape further legislation that will fundamentally transform how our entire water system works and clean up our rivers, lakes and seas for good.”
This latest report follows an Environment Agency report released yesterday (October 7, 2024). It reveals that water companies are losing almost a fifth of water before it reaches consumers and calls for urgent action on leakage and drought preparedness.
The report evaluates water companies’ progress against their Water Resources Management Plans (WRMPs), which address issues such as reducing leakage, installing water meters, and developing new water supplies. Although some strides have been made, the report highlights areas of underperformance and urges water companies to step up efforts to manage water resources more efficiently.
“While we’ve seen some progress by companies, it’s clear that more planning, resources and investment are needed, particularly on leakage,” said Alan Lovell, Chair of the Environment Agency. “We expect water companies to accelerate their plans to increase water efficiency, reduce leakage and prepare for future droughts. We will continue to work closely with Ofwat and Defra to hold water companies accountable and ensure they deliver on their commitments to protect our environment and secure our water supply for future generations.”
Water Minister Emma Hardy condemned the findings, describing the water wastage as “a damning indictment” of the water industry’s performance. She added, “As the climate crisis worsens and more pressure is placed on our water systems, we must fix our broken water infrastructure to ensure we have a resilient future water supply.”
Water companies across England are being urged to prioritise reducing leakage, improving drought preparedness, and cutting household water use. The Environment Agency and Ofwat will send formal letters outlining specific failings and necessary actions for improvement to underperforming companies, including Anglian Water, Bristol Water, Cambridge Water, Portsmouth Water, South East Water, South Staffordshire Water, South West Water, Southern Water, Thames Water, and Albion Water.