England possesses sufficient water for only 420,000 new homes, falling far short of the government's target of 1.5 million, according to an analysis by Water UK, the trade association for the water industry. The organization cites a lack of spare water capacity and increasing demand from water-intensive industries, such as data centers, as key factors derailing government plans.
The analysis found that in some regions, the buffer between available water and current usage is as low as 2%. Water UK also disputes government assumptions that household water use will decline sufficiently, noting that it is falling at a slower rate than predicted. Concurrently, business demand is projected to rise, particularly from data centers, whose significant water needs are not currently factored into national water resource planning by the Environment Agency.
Government targets require water companies to plan based on a projected 9% decrease in business water demand by 2037-38, a figure Water UK believes is overly optimistic and does not reflect real-world trends. "We desperately want to be able to provide enough water for new housing, but are being held back by a regulatory system that makes building new reservoirs much slower than it should be and unrealistic optimism about how much water people will use in the future," said David Henderson, chief executive of Water UK.
Water UK attributes the impending shortage in part to regulatory complexities and past government decisions. Applications to build new reservoirs have faced delays, and planning rules impede the development of new water infrastructure. The last reservoir constructed in England was in 1992 in Derbyshire. Current regulations also prevent water companies from building infrastructure to meet future demand, such as that anticipated from the growing data center sector.
Henderson suggests that water schemes could benefit from a fast-track planning route similar to that granted to the Universal Studios theme park in Bedfordshire, which reduced its planning process from two years to six months. He also advocates for Natural England and the Environment Agency to rely on existing scientific evidence rather than imposing additional assessments based on hypothetical risks.
Historical Investment and Future Costs
Average water bills in England and Wales are set to increase by 26% in April 2025, a move Water UK deems necessary for vital new water infrastructure. This contrasts with the period between 2010 and 2024, when the water regulator, Ofwat, reduced bills by approximately 20% in real terms. Water UK estimates that maintaining bills at inflation-adjusted levels during that period would have resulted in bills being 25% higher in 2024. This sustained period of lower bills, according to the association, prevented an estimated £100 billion in potential investment when interest rates were low, hindering the industry's ability to address pressures from climate change, population growth, and new businesses.
Water UK warns that the inefficient and legally complex planning system, coupled with environmental laws that impose unnecessary constraints, jeopardizes essential infrastructure projects. The organization asserts that only the government has the authority to remove these barriers.