Government and regulators slammed over water industry failings

(Sharecast News) - The public spending watchdog has slammed both government and the UK's water regulators, claiming they have failed to drive sufficient investment in the ailing sector. In a damning report published on Friday, the National Audit Office said the Department for Environment, Food and Rural Affairs, along with regulators Ofwat, the Environment Agency and the Drinking Water Inspectorate, had been unable to deliver a "trusted and resilient" water sector.

In particular, it said both Defra and regulators had failed ensure necessary investment for the sector, which requires £290bn to meet government targets over the next 25 years.

The report continued: "The regulators do not have a good understanding on the infrastructure assets, as they do not have a set of metrics to assess their condition.

"On the work water companies have done, they have overspent for the last four years...and moved slowly. At the current ratee, it would take 700 years to replace the entire existing water network."

The UK's privatised water sector has been highly criticised in recent years, as its owners - many of which are overseas investors - built up debt and paid out dividends while failing to invest in crumbling infrastructure.

As a result, leaks, pollution and sewage spills are now commonplace.

The NAO said that while the UK had one of the highest standards of drinking water in the world, in other areas performance had not improved for nearly a decade. As a result, consumer trust was at an "all-time low".

The NAO has called on Defra to better understand the costs and deliverability of its plans, and the impact they will have on consumer bills. It also wants regulators to work together to improve investor confidence and rebuild consumer trust.

Gareth Davies, head of the NAO, said: "Given the unprecedented situation facing the sector, Defra and the regulators need to act urgently to address industry performance and resilience to ensure the sector can meet government targets and achieve value for money over the long term for bill payers."

Defra said the government was taking "urgent action to fix the water industry" but change "would not happen overnight".

Both Ofwat and the EA said they backed the report's recommendations.