PN 21/21: Water sector given green light to invest £2.7 billion on building back greener


The water sector will invest £2.7 billion to deliver lasting environmental improvements for current and future generations.

Ofwat, in collaboration with Defra, the Environment Agency, the Drinking Water Inspectorate, and CCW, has given the go ahead on delivering a broad range of proposals to offer a more resilient, greener and healthier future.

Five water companies – Severn Trent Water, South Staffs Water, South West Water, Thames Water, and United Utilities will invest an extra £793 million, on top of their existing five-year PR19 packages, to help the green economic recovery. These companies, along with seven others in England, are also bringing forward £1.9 billion worth of investment in additional statutory environment schemes into the 2020-25 period.

The final decision to give the green light on the additional investment will allow water companies to take extra action on the most pressing environmental issues. Severn Trent Water will invest £169 million to make improvements to water quality in 500km of rivers – equivalent to the distance between London and Carlisle.

Severn Trent Water, South West Water and United Utilities will invest £158 million to reduce harm from storm overflows and trial the creation of two new bathing rivers. In addition, United Utilities and South West Water will deliver a range of nature-based solutions in partnership with local stakeholders. Severn Trent Water will work closely with local authorities to reduce flooding – developing natural flood management and green urban landscape solutions which will prevent rainwater entering the system in the first place.

Companies will be taking steps towards reducing their greenhouse gas emissions and towards the goal of net zero. For example, Severn Trent Water and South Staffs Water will both introduce innovative low-carbon ways of treating drinking water, which also have the potential to reduce the use of chemicals.

Two companies are carrying out pilot trials to replace customer-owned supply pipes, including those that are made of lead or are leaking – with benefits of better health outcomes for their customers and potential for reduction in phosphate dosing. The learning from these schemes will be crucial in informing approaches to deliver water quality improvements and reduce leakage in the future.

Customers will also see significant benefits from the schemes as Thames Water, Severn Trent Water and South West Water expand their smart metering programmes – helping up to 450,000 customers to manage their water use.

David Black, Interim Chief Executive at Ofwat said:

“This huge package of investment will help the environment while providing a significant economic stimulus and offer thousands of extra jobs and training opportunities – delivering a boost when it’s needed most. I look forward to seeing the companies delivering on this ambition and bringing forward lasting environmental improvements for current and future generations.”

Environment Minister Rebecca Pow said:

“This package of investment will be vital in driving forward our green recovery. Water companies must step up and deliver on the most pressing issues facing our environment – including water quality.

“I am particularly pleased to see the increase in funding to reduce sewage discharges from storm overflows following a call to action from the Storm Overflows Taskforce.

“I look forward to seeing these schemes bring about lasting improvements, alongside the measures being taken by Government through a range of vehicles including the Environment Bill, as we build back greener from the pandemic.”

Environment Agency chair Emma Howard Boyd said:

“This investment, which includes £158 million to help eliminate harm caused by storm overflows and trial the creation of two new bathing rivers, demonstrates a renewed commitment to reduce pollution incidents and improve water quality, but it is vital this translates into delivery.

“If it does the water sector will help the country move closer to a net zero and nature positive future that is more resilient to climate shocks like flood and drought. I look forward to seeing the results.”

Marcus Rink, Chief Inspector of Drinking Water in England, said:

“It is good to see water companies playing their part in the green economic recovery.  These schemes will help reduce energy and chemical usage while improving quality for consumers.

Emma Clancy, Chief Executive of the Consumer Council for Water (CCW), said:

“This investment will give fresh impetus to these water companies’ efforts to tackle many of the environmental issues customers see as a priority – from reducing pollution in our precious rivers and coastal waters to protecting our water resources.”

“It’s up to each of these companies to now deliver on their commitments and prove to customers that are funding this investment that they are getting value for money.”


Notes to editors:

  1. Green Recovery – Overview
  2. Green Recovery – FINAL decisions
  3. Green Recovery – Draft decisions
  4. Letter from Government, water regulators and CCW
  5. Together with Defra, the Environment Agency, the DWI, and CCW, we set out our green recovery assessment criteria in November 2020
  6. Under our final decisions: Severn Trent Water will invest £566 million, Thames Water will invest up to £72 million , South West Water will invest up to £82 million, United Utilities will invest £64 million and South Staffs Water will invest £10 million
  7. The total amount of extra funding awarded to Severn Trent Water, South Staffs Water, South West Water, Thames Water, and United Utilities at final decisions is £793 million. This has reduced from £862 million proposed in our draft decisions. While we have increased allowances for South Staffs, United Utilities and maintained them for South West and Severn Trent, the allowance for Thames Water has reduced as the company reduced its green recovery proposals from £242 million to £94 million to maximise their benefit and scope for delivery over the 2022-25.
  8. The £1.9 billion figure reflects the value of the schemes approved for delivery from the former ‘Amber’ or unconfirmed schemes under the Water Industry National Environment Programme (WINEP). Water companies are now required to deliver these schemes as part of their 2020-2025 investment package.