Bill payers to curb costs of £100m water use campaign

A £100m campaign encouraging households and businesses to use less water will be funded from customers’ bills, Ofwat has said.

The regulator’s chief executive David Black told MPs that if the measures worked, it would be cheaper than building further large new sources of supply.

Companies are under increasing pressure to both reduce demand and cut down on leaks amid concerns that pressures from climate change and a growing population will put increasing pressure on reserves in the coming years.

Homes and businesses use an estimated 14 billion liters of water every day in England and Wales, and this figure is expected to rise by at least four billion liters by 2050.

Ofwat first announced in July that it planned to launch the fund – which will run alongside other infrastructure projects – but confirmed on Monday who would pay for it.

Black told MPs on the public accounts committee: “We are setting up a £100m fund for the next price review period, which will come from customers, to help the sector get to a much better place in terms of water demand.

“We have not seen progress from the sector in the current period nor in the previous period. The government set challenging targets, we believe the sector must rise to the challenge of delivering on it.”

He added: “It is cheaper, if it works, than the alternatives of building large new sources of supply.

“A major new reservoir is expensive, we’re talking maybe £2 billion or more, so it’s only right that we look at the demand side as well.”

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Ofwat said reducing water use could save households as much as £500 a year.

However, some committee members expressed skepticism about whether companies would be successful in persuading the public and whether the £100m would be enough.

Critics also questioned why clients covered the fund’s costs.

Environmental campaigner Feargal Sharkey wrote on X, formerly Twitter: “Bill payers have funded reduction campaigns for 34 years, why have we been asked to give even more money directly as a result of their incompetence?”

It comes after companies said they would increase household annual bills by up to £156 in the second half of the decade to finance new investment in the water system, including by building new reservoirs to help meet extra demand.

Campaigners have hit out at water firms for turning to customers to fund such measures when they pay out billions of pounds in shareholder dividends and interest every year, which makes up about 20% of the cost of bills each year.

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The government estimates that households use 144 liters of water per person per day – which it wants to cut to 122 liters by 2038 and 110 liters by 2050.

It also wants water companies to reduce the 20% of supplies lost through leaking pipes.

Ofwat has not yet decided exactly how it will spend the money.

But it could involve measures such as a “wide-scale” public information campaign, along with targeted interventions to identify “large water users” and then suggest ways in which they could be more efficient with their use.

A consultation will be launched early next year, with the fund due to be operational by April 2025.

An Ofwat spokesman said it was “part of our twin-track approach to developing new sources of supply and managing demand.”

They added: “Our water resources are precious and water companies must continue to work with industry to be more efficient. This benefits the environment and will help reduce costs for everyone.”

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