Ofwat has proposed a new licence condition today under which water companies will be required to prove their asset management systems are fit for purpose, covering infrastructure across its full lifecycle from acquisition through to disposal.

The proposed condition would set clear and strengthened expectations on the standards that companies must demonstrate, and the evidence that they must provide to show their asset management processes are fit for purpose.

Companies will be required to show they have a fit-for-purpose asset management system in place, for example via an ISO certification or a qualified independent third‑party assessment, to be compliant with the new condition. Ofwat will hold companies to account where a company does not have the accreditation required and is in breach of the licence condition.

Ofwat’s analysis shows uneven standards across the sector, with the 2021 Asset Management Maturity Assessment (AMMA) showing a big variation between companies. Progress since then has been slower than expected, which is why Ofwat is setting clearer expectations to keep asset management high on the agenda and to support long term resilience. By embedding requirements directly into company licences, Ofwat aims to ensure that good asset management is treated as a fundamental obligation.

Launching its consultation on the proposal, Ofwat explained:

“Good asset management is how the sector prevents today’s challenges of ageing pipes and equipment from becoming tomorrow’s bursts, outages and pollution incidents. It is also about spending money wisely - directing investment to where it counts, reducing the need for reactive repairs and making sure that customers get value for the money they spend on their bills.”

Where a company fails to meet the licence condition, Ofwat will apply a graduated regulatory response. This could range from requesting additional information and requiring a time-bound improvement plan, through to enhanced monitoring and, where serious or persistent non-compliance occurs, formal regulatory action.

Helen Campbell, Executive Delivery Director at Ofwat, said:

"Poor asset management can be invisible and continue for years until the critical moment when an asset fails, at which point the impacts on customers and businesses can be severe. The recent supply outages in Tunbridge Wells are a clear example of the disruption that one failed asset can cause for a whole town.

"The government's recent White Paper emphasised stronger asset maintenance and assurance around asset management capability. This is why we are setting clear expectations and pushing companies to do more to raise the standard across the sector to safeguard a more resilient water system."

There are already examples within the sector of companies improving their asset management processes, Ofwat refers to two specific examples of Affinity Water and United Utilities.

Affinity Water has adopted a more proactive, data-led, and risk-based maintenance approach, which has helped to identify and address issues before they cause water supply interruptions for customers.

This approach includes attaching QR codes to all assets to support faster and more accurate data collection, improving workload planning by developing a criticality framework that prioritises maintenance for assets with the greatest impact to customer service, introducing a digital spares catalogue, and an extensive training programme to ensure consistent delivery of maintenance activities.

These improvements have helped to shift maintenance activity from reactive repairs towards more planned and preventative work, with the proportion of planned work increasing from 84% to 94%. A key highlight has been the introduction of condition-based monitoring on large pump sets, which has seen a decrease in mechanical and pump failures from 1.11% to 0.5% over a 2-year period.

Enhancing asset reliability in this way has played an important role in reducing supply interruptions and improving resilience for customers. Over the last 12 months, there have been no customer supply interruptions lasting longer than three hours as a result of failures at their water production assets.

United Utilities’ Dynamic Network Management programme is another example which has delivered tangible change is The company has integrated data from more than 25,000 sensors across its sewer network, giving early visibility of emerging issues so potential problems for customers and the environment, such as flooding, can be identified and prevented before they occur.

By using Artificial Intelligence to identify patterns and respond quickly, this approach has helped to identify and prevent more than 8,000 blockages – preventing 3,000 flooding incidents and over 400 pollution incidents in the last five years.

This reflects the asset management best practice developed by United Utilities as part of its ISO 55001 compliance, and the company is now installing a further 10,000 sensors across its network.

The licence condition will come into force in 2028 following consultation, policy development and adoption by companies.

Ofwat will run a sector‑wide Asset Management Maturity Assessment (AMMA) in 2026 to assess maturity and support sector learning and monitoring. The AMMA will also help establish a clearer baseline of asset management capability across the sector, enabling Ofwat to target future interventions and support where it can have the greatest impact. Early insights are expected from this in early 2027.

The consultation is open to water companies, their customers, environmental groups and all other interested parties. Anyone wishing to discuss any aspect of the consultation is invited to contact the Engineering and Asset Management team by email at This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Responses to the consultation, which closes at 5pm on Friday 17 July, can be submitted via email to This e-mail address is being protected from spambots. You need JavaScript enabled to view it or posted to:

Asset Management Maturity licence condition response

Ofwat

Centre City Tower

7 Hill Street

Birmingham B5 4UA

Click here to download the consultation paper in full

Click here to download the supporting document Ofwat's draft guidance for water companies demonstrating their asset management competence