Ofwat is calling on water companies to accelerate and optimise water project delivery to support economic growth - 30 major projects planned in the next 15 years, including nine reservoirs.

The regulator is urging the companies urged to deliver the projects more efficiently, effectively and quicker for their customers. In addition, the acceleration and optimisation of major water infrastructure projects can also help deliver on the government’s growth agenda, Ofwat has said.

Ofwat has today published a letter sent to the CEOs of water companies in England and Wales on 14 March by Ofwat Chief Executive David Black. The letter says:

“In our discussions with the Government in response to the 24 December 2024 letter from Sir Keir Starmer - the Prime Minister, Rt Hon Rachel Reeves - the Chancellor of the Exchequer, and Rt Hon Jonathan Reynolds – the Secretary of State for Business and Trade, we committed to oversee and facilitate major project delivery, collaborating with companies, investors and the supply chain, as well as liaising with other regulators for example through RAPID, to drive economic growth, resilience, and environmental benefits.

“We set out that £50bn (whole life totex) of investment in 30 major projects in the water sector is planned over the next 15 years. In support of this commitment, we are now reviewing how we can unlock growth across the portfolio of major projects, support successful delivery and create a lasting legacy for customers, communities and the environment. The water sector can support growth by unlocking opportunities more widely such as house building and other development and also to support water intensive new industries such as hydrogen and data centres.”

Image (source Ofwat): Projects in the RAPID Programme for PR24 as at February 2025

Ofwat expects construction of a significant number of the major water sector projects to commence within the next five years, “an unprecedented ambition for the sector”, David Black added.

He also says that Ofwat wants to work with the companies to “market this programme of major projects and highlight the significant opportunities for new and existing UK and global investors” to the sector and the global supply chain.

The regulator is asking the water company CEOs to review the portfolio of major projects they are involved in and look for opportunities:

• to deliver more efficiently, effectively and achieve earlier completion
• to increase or bring forward the achievement of the benefits of the major projects they are responsible for and optimise synergies across the programme.

David Black has asked them to look at their overall programmes and also the wider programme of all projects to see where there may be opportunities to bring forward work or possibilities for better timing, sequencing and/or coordination across multiple projects which “may result in a more efficient and effective approach to developing, managing and delivering the strategic outcomes for major projects.”

The Ofwat Chief has requested written replies from the water company CEOs by 18 April setting out the strategic benefits of projects and programme of their major projects, “including what societal benefits, environmental benefits and economic benefits will be achieved.”

In addition, David Black has asked them for their thoughts on what tangible steps can be taken to support growth in the UK economy, including their views on:

• What regulatory barriers and obstacles are there to progressing infrastructure projects more quickly;
• Where are the opportunities, within the regulatory framework, to accelerate major project investment to enable economic growth and best value for customers and the environment; and
• What tangible steps can be taken, by whom, and when to support growth in the UK economy through the major projects, over and above changes to the regulatory framework, for example by wider government.

Alongside the letter, Ofwat is also seeking stakeholders’ views on a discussion paper produced by independent experts Baringa on the work Ofwat already does to promote economic growth, and what more the regulator could do to promote sustainable growth, innovation and productivity.

Commenting on Ofwat’s work on growth, David Black said:

“As part of the 2024 price review, we have approved water companies’ investing a record £44bn to improve operational resilience, the environment and to support growth alongside £60bn in operating and maintaining water and sewage networks.

“We are committed to working collaboratively with the water industry to help accelerate the delivery of additional £50bn of investment to protect customers long-term supplies of world class drinking water. We will be seeking to ensure that this investment is delivered as efficiently as possible using our competitive financing model, which has already delivered the Thames Tideway super sewer to keep costs as low as possible for customers”.

Click here to download Baringa’s report How Ofwat’s Regulation Impacts on Economic Growth