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National Audit Office report: Water supply and demand management

Water supply and demand management

This report sets out the challenges facing the water industry in England and assesses how Defra is tackling them.

Background

Water shortages are an impending risk for the UK. Parts of the country face a significant risk from drought, while neighbouring regions have surplus water. In its 2017 climate change risk assessment, the Committee on Climate Change highlighted shortages in water supply as one of five priority climate change risks that needed stronger policies and urgent action. Research commissioned by the Committee estimated the demand for water in England will exceed supply by between 1.1 billion and 3.1 billion litres per day by the 2050s, depending on the extent of climate change and population growth.

The Department for Environment, Food & Rural Affairs (Defra) has overall responsibility for setting the policy and regulatory framework for water in England. Its policy has one overarching objective: “to ensure clean and plentiful water”. It expects water companies to provide resilient water supplies supported by robust water resource management plans.

 

Content and scope

In this report, we set out the challenges facing the water industry in England and assess how Defra is tackling them through its oversight of water regulators and the water companies. The report is both retrospective, looking at how effectively the government has achieved its objectives up to now, and forward-looking, examining how prepared it is for the greater challenges it faces in the future as a result of climate change and population growth.

In Part One, we set out the policy and delivery landscape that governs how water is delivered in England and assess how effectively Defra uses its influence to deliver its strategic policy objectives. In the following parts, we assess how well the government is delivering its key objective of improving the resilience of the water supply by setting the framework for water companies to increase supply (Part Two) and reduce demand (Part Three).

 

Conclusion

Tackling water resource issues is one of the five priority risks the Committee on Climate Change identified in its 2017 climate change risk assessment. If more concerted action is not taken now, parts of the south and south-east of England will run out of water within the next 20 years. Reducing demand is essential to prevent water shortages as water companies are running out of low-cost options for increasing water supply. Defra has left it to water companies to promote the need to reduce household water consumption, and yet it continues to increase. Defra committed to announcing a personal water consumption target by the end of 2018 but has not yet done so, while the introduction of the business retail market has not led to the expected reductions in non-household water usage.

Water companies’ long-term progress on tackling leakage and reducing water consumption has stalled over the past five years, and companies are only now starting to develop bulk water transfer solutions at the scale required. The government has been grappling with these issues for more than a decade but rapid progress is now vital for Defra to deliver on its objective of a resilient water supply. Defra has taken positive steps to give a more strategic focus to water resource planning. But it must make sure that its new national framework and Ofwat’s new funding for companies to develop strategic solutions produce the collaboration and prompt action from water companies that is now needed. Defra will not be able to achieve value for money unless it provides stronger leadership across government, and a much clearer sense of direction to water companies, the water regulators and water consumers.

 

Publication details:

ISBN: 9781786043108 [Buy a hard copy of this report]

HC: 107, 2019-21

Published date: March 25, 2020