A new report is warning that the Government risks significant increases in consumer water bills and missing its housebuilding targets unless it launches an Olympic-style national champion for reservoirs and hands new powers to regional Mayors.

The report  - Reservoir Underdogs: Unlocking regulatory challenges to delivering new reservoirs - has been prepared by the Purposeful Finance Commission (PFC). The PFC and its Advisory Board is an independent body made up of leading combined authority figures, local government leads, investors and other regeneration experts.

The report argues that new reservoir projects are repeatedly killed off by an inefficient regulatory and planning system, with oversight split between too many fragmented and siloed regulators, including Ofwat, the Environment Agency, the Drinking Water Inspectorate and local planning departments.

The PFC says the water sector’s “fragmented and unaccountable regulatory landscape” has prevented any reservoirs being built in the UK since 1992 and that it is “plausible to assume” that regulators in the water industry also lack the skills and experience needed to deliver reservoirs.

According to the PFC, misaligned interests are slowing progress and causing lengthy disputes, a lack of coordination which leaves projects in limbo, actively chokes infrastructure investment, and ultimately drives up the price consumers pay for water.

Creating a long-term champion agency for reservoirs with a clear remit to ensure reservoir construction keeps pace with consumer demand and aligns with large-scale housing and other development projects would align interests, the report says.

The PFC is also calling for mayors to be handed new powers to fast-track smaller reservoir planning applications by deeming them Regionally Significant Infrastructure Projects, ensuring the urgent water supply needs of upcoming housing developments are met on time.

However, the UK is stuck in a situation where regulation actively chokes infrastructure delivery.

The report points out that the Havant Thickett reservoir currently being built at Hampshire, is scheduled for completion around 2031 is the first reservoir to built in the UK in almost 40 years. During that time the UK population has grown by 12 million people and the Office for National Statistics has conservatively forecast to rise by an additional five million people by 2032.

UK is “stuck in situation where regulation actively chokes infrastructure delivery”

The PFC is calling for the government “to move at pace” to build the homes to accommodate this growth and the water infrastructure that supplies the homes. However, it warns that the UK is “stuck in a situation where regulation actively chokes infrastructure delivery.”

The report highlights how plans for up to 6,500 homes in Waterbeach, Cambridgeshire, were rejected in 2021 by the Environment Agency on water supply grounds. They were only approved three years later and are now expected to be finished in 2035 - but the Fens Reservoir due to supply them will only be operational a year later. As the plans progress, residents in Cambridge will “not only face usage constraints, but also risk paying 50% more than today’s rate by the time the reservoir comes into supply”, the report says.

It also cites Thames Water's South East Strategic Reservoir Option (SESRO) near Abingdon in Oxfordshire, as one of the most advanced schemes in the Southeast and now a designated NSIP. The PFC says the the Abingdon proposal has faced repeated delays due to “relentless local resistance and environmental objections.”

Originally costed at £2.2 billion, the water company’s Gate Three report submitted to the Regulators’ Alliance for Progressing Infrastructure Development In August 2025 has now been revised to capex costs of £6.6 billion, up from £2.74 billion at gate two (2022/23 cost base), in line with government guidance on major projects in a cost range between £5.5 billion and £7.5 billion.

The PFC report also refers to Bristol Water’s Cheddar Reservoir proposed in the 2014 Price Review, stating:

“The Environment Agency confirmed no objections to Bristol Water’s plan, but Ofwat refused to include the scheme in the price review due to a rejection of ‘the business case’.”

Tracy Blackwell, CEO of Pension Insurance Corporation plc and Chair of the Purposeful Finance Commission, said:

“A major reason for the UK’s economic underperformance and lack of productivity growth is our inability to deliver major infrastructure and housing projects. Experience shows that the best way to fix our broken system is to hand responsibility to dedicated delivery bodies that can overcome vested interests and break down siloes. For example, with a single accountable body coordinating across government, utilities, transport, and construction, the Olympic Delivery Authority delivered one of the UK’s most complex infrastructure programmes on time and within budget.

“This precedent shows that a similarly empowered delivery agency adapted for the water sector could unlock the reservoirs England now urgently needs, by aligning regulation, planning, investment, and support for housing growth in one strategic framework.”

New champion agency will also serve as the sector’s funding engine

The report says the new champion agency will also serve as the sector’s funding engine and should utilise bespoke development-corporation vehicles to deploy patient capital for reservoirs, bridging funding gaps across price-review cycles.

“By borrowing against future regulated revenues, it will ensure the predictable, inflation-linked cashflows investors need, while smoothing short-term pressure on consumer bills. Once assets are commissioned and enter the regulated asset base, these investments are repaid through water bills aligned with local housing growth. This unified funding mechanism bridges capital gaps, accelerates reservoir lifecycles, and tightly aligns housing and water infrastructure planning under a single, accountable body.” the report states.

The PFC makes the following key recommerndations:

Recommendation 1. Empower the new water regulator as the statutory reservoir champion and fund-driver

The creation of a long-term champion agency for reservoirs, similar to how the Olympic Delivery Authority (ODA) was empowered to plan, fund, and deliver the infrastructure of the 2012 Olympic Games. This new champion agency will also serve as the sector’s funding engine.

Recommendation 2. A new Regionally Significant Infrastructure Project Model (RSIP)

Government should develop a new designation of Regionally Significant Infrastructure Project (RSIP) that sits under the jurisdiction of mayors through the expansion of devolution. The new RSIP designation should align reservoir consent processes with local housing targets and water resource plans.

Recommendation 3. Make Price Reviews more flexible to protect customers and investor confidence

Reform the rigid five-year Price Review cycle by granting the new water regulator – acting as the champion agency for reservoirs – with the authority to adjust Asset Management Period (AMP) allowances mid-cycle to match demand, for example, when government-mandated reservoirs emerge, or housing pipelines accelerate.

"Without stronger leadership, decisions on reservoirs will continue to drag on and stall progress"

Stephen Beechey, Group Public Sector Director of Wates Group and a PFC Commissioner, commented:

“Right now, water companies face real difficulty getting clear direction from government on major projects. There is often confusion over which body should take the lead and how to balance competing priorities such as environmental protections versus housing demand. Without stronger, clearer leadership, decisions on reservoirs will continue to drag on and stall progress.”

John Long, Director of Igloo Regeneration and a PFC Commissioner, added:

“The government’s recent announcement to bring the regulators together into one singular body is a major step forward. It could finally deliver the clearer leadership and joined-up approach the sector has been missing, and is important for meeting its target of delivering 1.5 million new homes over this Parliament. But to be effective, this new body must be given the statutory powers needed to drive reservoir projects through planning and delivery.”

The Times newspaper is separately reporting this morning that the report is currently being considered my Ministers.