Excerpts from the latest edition of The UK Water Report.

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Will the WEF win hearts for water efficiency?

By Karma Loveday

The country sweltered at the end of May, and temperature records were broken. What better time to kick off in earnest Ofwat’s £100m Water Efficiency Fund (WEF)? The £75m Water Efficiency Campaign (WEC) is expected to be launched in the coming weeks – a national, mass-market campaign to promote behaviour change that encourages people and businesses to use less water. And winners of the first round of the £25m Water Efficiency Lab (WEL) funding will be announced mid June. Hence we thought it appropriate this month to ask The Water Report Expert Forum for views on the WEF and its prospects for boosting water efficiency.

First, Ofwat’s underpinning rationale for the WEF – that even with AMP8 supply-side and demand-side investment, “the sector is at risk of falling short of its long-term goals for water efficiency” –gained strong support. Almost all respondents felt there is significant risk of this.

There was also strong support (two-thirds) for a central fund in principle. Ofwat’s view is that “a different approach is urgently needed, and a central fund has the potential to kickstart additional collaborative and innovative work necessary to meet our long-term needs”.

But the Expert Forum was not convinced the WEF will achieve its own overarching aim to stimulate a “transformative, sustained, and measurable reduction in water demand across England and Wales”. Only 13% were persuaded of that.

On the positive side, respondents cited the scale of the opportunity, starting as we are from a low base on water efficiency, but with a water-watching public. One said: “The opportunity is that the public is more interested in water than ever before. Real behaviour change is possible.”

However, the vast majority of Expert Forum members were either outright sceptical or unsure. Comments included:

“Not a chance – there is simply no evidence that a national demand campaign of this sort will achieve results.”
“Not on its own. Significant political support is needed.”
“Nice ambition statement, but £100m set against the many multiples of this that water companies spend every year is optimistic. Perhaps ‘raise the visibility of the need for water efficiency’ might be more achievable.”

"The public is more interested in water than ever before. Real behaviour change is possible."

On the look out

We need tools to measure the efficacy of water efficiency interventions as these ramp up. Enter the Water Demand Observatory.

By Karma Loveday

As the country recovers from record-breaking May heat, and in the longer term braces for a 5bn litre a day projected water supply deficit, investment in water efficiency seems an obvious choice. But investment in what exactly? Hard data on how to make the greatest inroads into reducing consumption – perhaps through raising awareness, providing better data, fitting gadgets or nudging behaviours – remains elusive. What’s more, the water sector is under growing pressure to prove that any investment in water efficiency today offers good value for money and will genuinely deliver tomorrow’s savings.

For Tom Andrewartha, principal consultant at Artesia, this exposes a critical gap: the sector lacks the tools to properly understand and measure the efficacy of various water efficiency interventions. His answer is the proposed Water Demand Observatory (WDO) – a national, open, data‑driven platform designed to track water demand in near real time and evaluate the impact of interventions and policies.

The Observatory has two core components:

A national water demand tracker – a longitudinal water demand tracker for England and Wales, built initially from data that already exists including distribution input data and metering data. Over time, as smart metering coverage grows, the tracker will become richer and more granular. Crucially, the tracker doesn’t just plot demand curves – it overlays them with explanatory factors.
A consistent evaluation framework – a structured evaluation framework for water efficiency interventions. Developed with Frontier Economics, this is intended to become a sector-wide standard.

The Observatory would compliment the rapid increase in smart meter data analysis that water companies and regional groups will undertake, shoring up collective confidence in water efficiency activity. That confidence matters on multiple fronts:

To help companies stop endlessly piloting and instead scale what has already been shown to work.
To provide independent, objective evidence that regulators and government can trust and base decisions on.
To disentangle overlapping effects – for instance, a national campaign running at the same time as a hot spell, a cost-of-living shock, or a regulatory change such as mandatory water labelling and tighter building regulations.

"The sector lacks the tools to properly understand and measure the efficacy of various water efficiency interventions."

England’s water security emergency

Affinity Water demands a National Water Security Strategy, as a public poll backs the call for urgent water action.

By Karma Loveday

The public and experts agree that England’s national water security is in jeopardy and requires urgent action. That’s according to polling and a major new policy report from Affinity Water.

Of over 4,000 adults surveyed by Thinks Insight & Strategy, 70% said previous governments of all parties have failed to prioritise national water security; 68% said urgent action is needed; and 86% wanted the Government to do more to raise awareness.

56% are personally concerned about the UK’s water security in future, with rates of concern significantly higher among parents and the under 35s.

Worries go beyond the tap. 68% said future water shortages pose a serious threat to the UK’s economic stability; 64% believe the NHS is unprepared for the health emergencies that future water shortages could cause; 64% said the UK’s rivers and countryside are at risk of being permanently damaged by drought; and 60% said the housing crisis will get worse as a lack of water stops new homes from being built.

The polling accompanied the release by Affinity Water of Running dry: England’s water security crisis – a major policy report warning that the UK lacks a credible national water security strategy. Running dry examined the limitations of the current planning framework, which data centres, energy generation and industrial users remain largely outside of; the evidential weaknesses in demand reduction assumptions, especially given government-promised interventions such as mandatory water-efficiency labelling and tighter building regulations have repeatedly failed to materialise; and the consequences of regulatory fragmentation.

The report set out seven recommendations to address the structural weaknesses in England’s water security framework, including a call for a statutory National Water Security Strategy with binding commitments and clear accountability.

"70% said previous governments of all parties have failed to prioritise national water security; 68% said urgent action is needed."

Will 2026 be water’s Kyoto moment?

Hopes were riding high at the Global Water Summit.

By Verity Mitchell and Karma Loveday

Will 2026 prove to be water’s Kyoto moment? That was the key strand of discussion at May’s Global Water Summit in Madrid. It references the transformative power of 1997’s Kyoto Protocol – the first major international treaty to legally bind industrialised nations to reduce their greenhouse gas emissions. It became the foundation for global climate policy, ushering in trillions of dollars of investment and transforming energy.

The GWS question was whether we can do the same for water security now – transform it through major investment, from an overlooked and underfunded largely public service, into an international priority. The rallying point is the UN Water Conference at the end of the year.

Meanwhile, for UK participants, the Summit was an opportunity for networking across the global water industry. The UK government endorses 30 large-scale water projects and Ofwat has a Major Water Infrastructure Programme. Anglian and South West have agreed plans to build seawater desalination which is outside their experience. Water reuse projects are also in procurement. New entrants and partnerships are needed.

Significant challenges lie ahead. Perhaps the greatest is for the government to avoid an over-prescriptive and time consuming bidding process that stifles innovation, fails to deliver best technical international practice and burdens customers with higher-than-necessary costs. A lengthy over-complicated process will only line the pockets of lawyers, consultants and project finance advisors.

In Madrid, we heard complaints from a number of international contractors and equipment providers that the bid timeframes for projects in procurement are too long, the required documentation too onerous and the technical specifications too narrow.

"Can we transform water security through major investment, from an overlooked and underfunded largely pubic service, into an international priority?"

Reclaim the rain

Peers warn taps could run dry if we don’t store more water and manage it better.

By Karma Loveday

“The taps could run dry.” That’s the stark warning from the House of Lords Environment and Climate Change Committee in a new report, Surviving drought: reclaim the rain, which followed its inquiry into drought preparedness.

The Committee found the UK is not short of rain — but that it must store, manage and reuse rain much better to help prevent both drought and flooding. That is in light of climate change, population growth, leakage and the growth of water intensive industries.

The report urged the Government to:

Understand the problem through better impact data, drought monitoring and conducting a full environmental and economic assessment of drought to weigh the cost of inaction against the value of resilience.
Balance supply and demand by driving a whole of society approach to drought, including through awareness raising campaigns, improving water efficiency standards in homes, and promoting water reuse and rainwater harvesting.
Improve drought resilience for sectors reliant on abstraction by prioritising regulatory changes to make the construction of local resource reservoirs easier for farms, golf courses and other appropriate places, and increasing the flexibility of abstraction licensing to support catchment-based water resource projects.
Strengthen drought planning and response by publishing a prioritisation plan for an emergency drought by no later than autumn 2026 and rolling out nature-based solutions more widely in urban and rural settings.

"The Committee found the UK is not short of rain — but that it must store, manage and reuse rain much better to help prevent both drought and flooding."

Six packed

Ofwat unveils a busy sixth round of Water Breakthrough Challenge winners.

By Karma Loveday

Nineteen projects have won a share of £58m in Ofwat’s sixth Water Breakthrough Challenge competition.

Among the successful bids were schemes exploring water-purifying mushrooms, 3D printed infrastructure and AI-enabled microphones to monitor river life.

Each project sees water companies work in collaboration with a diverse set of partners – from environmental charities and leading universities to technology and engineering companies – with the purpose of changing how the water sector operates to transform its impact for customers, communities and the environment.

"Among the successful bids were schemes exploring water-purifying mushrooms, 3D printed infrastructure and AI-enabled microphones to monitor river life."

Time is money

Lords and financiers seek urgent Government action for growth.

By Karma Loveday

Investment could be driven away from the UK if government and regulators don’t do enough to facilitate growth and innovation.

That was a warning from the House of Lords Industry and Regulators Committee in Time is money: how regulators can support growth, published last month. The report argued that a combination of unclear guidance from government, legislative restrictions and the need to balance growth with their other duties might result in regulators failing to meet the Government’s call for them to facilitate innovation and growth.

The Committee urged the Government to:

Give clear guidance to regulators on trade-offs between supporting economic growth and their other responsibilities, such as consumer and environmental protections.
Provide political cover where it wants a regulator to be more open to risk.
Legislate to ensure the regulatory framework can adapt to new technologies, products and services, if necessary through a Regulatory Reform Bill.
Estimate the extent to which the Government’s Action Plan will reduce the actual cost of compliance with regulation, rather than just the administrative costs of regulation.
Work with regulators to identify where lead regulator models could be implemented more broadly and speedily, including across departmental boundaries.
Ensure sponsoring departments have suitable metrics to hold regulators to account for their pace and the outcomes of their work.
The Committee also called on regulators to:
Speed up their internal processes to reduce delays that make the UK a less attractive prospect for investment.
Proactively engage with industry to ensure companies know what is required of them.
Make use of tools such as regulatory sandboxes to test innovative products, services and technologies.

"A combination of unclear guidance from government, legislative restrictions and the need to balance growth with their other duties might result in regulators failing to meet the Government’s call for them to facilitate innovation and growth."

At ease

Credit arrangements for retailers are set to ease.

By Karma Loveday

Ofwat is consulting until 3 July on revising the credit and collateral arrangements in the business retail market. It reasoned that the current arrangements were largely developed ahead of market opening, and now there is nine years’ worth of evidence on which to make revised decisions.

The proposed changes involve:

Backstop credit security and risk sharing – Ofwat proposed reducing the current requirement for a retailer paying wholesalers in arrears to post credit security equivalent to 50 days of its monthly wholesale payment, by ten days to 40 days.
Backstop Unsecured Credit Allowance (UCA) – Ofwat plans to produce a new UCA framework that retailers could use without the need for bilateral negotiations with wholesalers. This would have two components: a credit score aspect, under which UCA entitlement is linked to each retailer’s credit score; and a payment history aspect, under which UCA increases in tiers with good payment history. The regulator noted that UCA agreements – where a portion of credit support is uncollatoralised by agreement – are widely used in the market. But these are currently inconsistent and administratively burdensome.
Monitoring Parent Company Guarantee (PCG) arrangements – To enhance transparency of PCG arrangements (these are supposed to be arm’s length and reflect the retailer’s specific risk, but sometimes are priced below true economic costs causing potential competitive distortion), Ofwat has proposed requiring retailers relying on PCGs to provide more information related to how they determined the arm's length nature of their PCG arrangement and requiring the guarantor to co-sign this declaration.

"Ofwat proposed reducing the current requirement for a retailer paying wholesalers in arrears to post credit security equivalent to 50 days of its monthly wholesale payment, by ten days to 40 days."

This month's articles

Expert Forum

Prospects for the Water Efficiency Fund

Feature

The Water Demand Observatory plans to track the efficacy of water efficiency interventions

Report

Reflections from the Global Water Summit

Report

Ofwat plans an AMP8 delivery assessment and asset management licence condition

News Review

DWI designates Welsh lab for Reg 31 testing

Report

Peers warn taps could run dry and call on us to 'reclaim the rain'

Analysis

Deeper dive into the 2025 storm overflow data

News Review

Credit arrangement for retailers set to ease

Report

Affinity declares a water security crisis and calls for a National Water Security Strategy

Report

Credit downgrade and outage woes for South East Water

News Review

Strategic recruitment warning on AMP8

News Review

Labour leadership unrest could stall Thames deal

Report

Water Breakthrough Challenge 6 winners

Report

CCW tracks record lows in customer sentiment

Report

Lords and financiers want action to support growth

Expert analysis of the UK water sector

Buy me love?

Will the WEF win hearts for water efficiency?

On the look out

We need tools to measure the efficacy of water efficiency interventions as these ramp up. Enter the Water Demand Observatory.

England’s water security emergency

Affinity Water demands a National Water Security Strategy, as a public poll backs the call for urgent water action.

Will 2026 be water’s Kyoto moment?

Hopes were riding high at the Global Water Summit.

Reclaim the rain

Peers warn taps could run dry if we don’t store more water and manage it better.

Six packed

Ofwat unveils a busy sixth round of Water Breakthrough Challenge winners.

Time is money

Lords and financiers seek urgent Government action for growth.

At ease

Credit arrangements for retailers are set to ease.

CONTENTS

This month's articles