Water regulator must toughen up on leakage, say MPs

Ofwat should strengthen its oversight of water companies' performance on water efficiency, the Commons Public Accounts Committee said in a report out today

The parliamentary committee's investigation into Ofwat's role in meeting the future demand for water concluded that the regulator should do more to tackle potential shortages in much of England and Wales.

It should change its regulatory system on water efficiency, data quality and enforcement, says the committee.

Committee chairman Edward Leigh lambasted the regulator for its "passive regulation of the water industry."

"Nowhere is its limp attitude towards the industry demonstrated more clearly than in the case of the serious wastage of water by Thames Water," said Mr Leigh.

"Thames missed its annual leakage targets for six years in a row without so much as a slap on the wrist. In future, such a wanton waste of water by a company must be rewarded with the maximum possible fine."

Ofwat could have fined Thames Water 10% of its turnover last year – £66.4 million –for missing its leakage targets. Instead, the regulator accepted the company’s offer to increase spending on its mains replacement programme by £150 million, at no cost to customers.

But the committee warns that by failing to impose a fine, Ofwat "risks sending a message to the industry that it will not readily use sanctions where appropriate."

The report recommends that Ofwat should require companies to use consistent methods to measure customer consumption, develop sustainable leakage targets and use its enforcement powers to demonstrate its determination to secure compliance.