Insights ¦ Water company performance report 2024-25

Key Take Aways

1. The 2024-25 water performance report marks the culmination of the 2020-25 investment period, highlighting both sector-wide achievements and areas needing urgent improvement.
2. Overall sector performance is mixed, with notable successes in drinking water quality, sewer flooding reduction, leakage decline, and expanding support for vulnerable customers.
3. Pollution incidents remain alarmingly high, with a 27% increase over five years despite a 30% reduction commitment; only two companies reported reductions.
4. Customer satisfaction has declined annually since 2020-21, now at its lowest since recording began, signalling a critical gap in service delivery.
5. Water supply interruptions have improved, but some companies still experience unacceptable durations, especially for outages exceeding 12 hours.
6. Asset management maturity levels are under scrutiny, with ongoing efforts to optimise investment and long-term asset resilience.
7. Enforcement and redress actions have led to over £700m returned to customers in redress payments over the period, reflecting regulatory accountability.
8. Investment in environment-specific schemes, including pollution management and storm overflow controls, is under strategic review with targeted future investments.
9. The sector overspent expenditure allowances by 17% on base costs and 23% on wholesale water and 12% on wholesale wastewater services, driven largely by unforeseen costs.
10. The £104bn investment plan for 2025-30 is a record funding allocation, demanding enhanced oversight and delivery performance.
11. Sector commitments extend into operational decarbonisation, with policies aimed at reducing greenhouse gas emissions and meeting net-zero targets by 2050.
12. Transparency initiatives, including open data publishing and improved stakeholder engagement, form a core part of sector reform and consumer trust rebuilding.

Key Statistics

• 99.97% compliance with drinking water standards, ranked among the best globally.
• Leakage reduced by 43% since privatisation; sector-wide reduction of 9% over 2020-25.
• Customer satisfaction scores declined by 9%, from a median of 82.35 to 74.74.
• Pollution incidents per 10,000 km of sewer increased by 27%, from 36.29 to 45.91.
• Over £700m in redress paid to customers for poor performance across the period.
• 15 of 17 companies met their performance commitments for water supply interruptions in 2024.
• Sector overspent on wholesale water by 23% and on wholesale wastewater by 12% cumulatively over 2020-25.
• Household arrears increased by 199,000 to over 2.85 million households, although the value of arrears decreased slightly.
• Investment in smart meters planning to install over 10 million units by 2030, with £1.7bn dedicated in the sector.
• Total sector greenhouse gas emissions remained broadly consistent with 2023-24, with a focus on operational decarbonisation.
• 71% of companies achieved ‘green’ embedded emissions reporting; 29% at ‘amber’.
• Over 50% of pollution incidents are linked to sewer blockages, with some companies reporting deterioration in performance.

Key Discussion Points

• The sector’s struggle to meet pollution reduction commitments highlights industrial and operational challenges.
• Customer experience and trust are deteriorating, with satisfaction scores at their lowest, demanding urgent service improvements.
• Although leakage has significantly declined, future reductions of 20% by 2030 require accelerated efforts and innovative detection.
• Asset health management remains a focal point, with an emphasis on proactively maintaining sewer and water network integrity.
• Enforcement measures, including financial redress and fines, have been substantial, underlining regulatory seriousness.
• Sector overspending on both capital and operational expenditure reflects unforeseen costs and inflationary pressures.
• Future investment plans of £104bn and detailed delivery monitoring indicate a shift towards outcome-based regulation.
• Decarbonisation and environmental sustainability are central, with regulatory incentives aligning sector actions with net-zero pathways.
• Transparency through open data is being reinforced, promoting innovation, greater accountability, and stakeholder engagement.
• Lessons from underperforming companies, especially in pollution and service resilience, are shaping tighter future performance commitments.
• The ongoing risk to service continuity due to extreme weather events underscores the need for resilient infrastructure.
• Cross-sector collaboration and comprehensive oversight intend to drive sector-wide operational excellence and environmental stewardship.

Document Description

This article provides a detailed review of the water sector’s performance against its 2020-25 commitments, including operational, environmental, financial, and customer service metrics. It reflects on achievements, ongoing challenges, enforcement actions, and future strategic investments, particularly the £104bn allocated for 2025-30. Emphasising transparency and accountability, the article outlines regulatory responses aimed at improving performance, resilience, and sustainability across water and wastewater companies in England and Wales. It serves as a comprehensive assessment for senior managers in financial services seeking insight into sector health, risk management, and long-term investment strategies.