Ofwat chief defends water companies over lack of new reservoirs |  Water

Ofwat chief defends water companies over lack of new reservoirs | Water

The head of England and Wales’s water regulator has defended water companies against criticism for not building new reservoirs despite high levels of executive bonuses and shareholder dividends.

David Black, chief executive of Ofwat, also said that old pipes were not to blame for the leaks and that most companies were reaching their leak targets.

Water companies have come under fire as England faces water shortages. Some houses have run out of water, rivers have dried up and farmers face crop failures. Many are outraged at companies for not investing in reservoirs, fixing leaks, and stopping sewage pollution from their pipes.

The bosses of England’s water companies have been criticized for racking up £58m in wages and benefits over the last five years. Since privatisation, shareholders have received £72bn in dividends. The cash came from big debt, with companies borrowing £56bn, and big bills, with prices rising 40%.

However, Black said critics were not giving companies enough credit for actions being taken to reduce leaks and improve water supply, and suggested they did not understand the “complex” problem.

He told the BBC’s Today programme: “You don’t realize enough what’s going on in the industry; we appreciate that it is complex and difficult to understand.”

Ofwat has the power to fine companies 10% of their turnover if they do not meet targets. Despite high levels of leakage, many companies are meeting these targets, which has led campaigners to question whether they are stringent enough. For example, Thames Water has 11,000 leaks in its system but is not below the regulator’s standards.

Black said: “Thames Water is not in breach of performance to the best of my knowledge. There are risks of leaks through networks. Some of the biggest problems we face in networks are in modern infrastructure, it’s just not the case that this is due to old pipes.”

Many have also criticized the water companies for not having built a major new reservoir since privatization in the 1980s, but Black said they were not needed. He said: “The reason there were no reservoirs is that demand had actually fallen during that period.”

He also defended that the bosses and shareholders of the big water companies have been given a fee, saying it made them more competitive in the global market.

The activists said they disagreed with Black’s assessment and were surprised that he suggested they didn’t understand the issue.

Stuart Singleton-White, campaign manager for the Angling Trust, said: “It is painful to hear Ofwat, who is complicit in our broken water sector, acting as an apologist for that system and the water companies. Ofwat has prevented much of the necessary investment and has allowed companies to make huge profits and ruin our rivers.”

Christine Colvin, Director of Advocacy and Engagement at the Rivers Trust, said: “This drought highlights that the targets and timelines agreed with the water sector are not enough to ensure we are climate resilient in the long term. Why are we now talking about costly inter-basin transfers when we are losing a fifth of our water supply?

Some MPs also believe that Ofwat should take stronger action against the water companies. Philip Dunne, a Conservative MP and chairman of the environmental audit committee, said the regulator needed to do more to restore public confidence in water companies.

He told The Guardian: “The performance of water companies is under the spotlight now more than ever. Sewage pollution incidents and leaks that waste 20% of our main water supply every day are eroding public trust. It is clear that much remains to be done to make our water sector fit for purpose, especially as the effects of climate change are likely to worsen water scarcity for decades to come.

“To lead to meaningful improvements, water company boards should be encouraged to develop plans to manage water resources and treatment, and work with regulators to ensure these can be met.”

Ofwat declined to comment further.

Leave a Reply

Your email address will not be published.