Value for Money
Regulating for investment and outcomes in the water sector
Published 25 April 2025
9 recommendations
Department for Environment, Food & Rural Affairs, Unknown (355)
Business and industryEnergy and environmentPollution and environmental qualityRegulation
nao.org.uk
This report examines water regulators effectiveness in ensuring the nation’s future water supply and attracting necessary investments.
Recommendations (9)
Source: NAO Recommendations Tracker
Department for Environment, Food and Rural Affairs
Rec 1
Accepted
Work in Progress
For future plans, Defra needs to understand the costs and deliverability of targets and the impact on customers' bills.
Department for Environment, Food and Rural Affairs
Rec 2
Accepted
Work in Progress
Defra should consult on options to ensure delivery of a coherent national system plan for water, including balancing trade-offs between different duties.
Department for Environment, Food and Rural Affairs
Rec 3
Accepted
Work in Progress
Defra should address gaps in responsibilities, particularly around the wastewater network, and ensure regulators work together to achieve the same outcomes for the environment and customers.
Environment Agency
Rec 4
Accepted
Implemented
EA must understand whether actions in water company plans are being delivered and having the intended impact and delivering statutory environmental targets.
Department for Environment, Food and Rural Affairs; Environment Agency; Ofwat
Rec 5
Accepted
Work in Progress
EA, Ofwat and DWI should align deadlines and limit inconsistencies in planning timelines and assumptions.
Ofwat
Rec 6
Response Pending
Given the limited progress in developing a common understanding of asset health, Ofwat should continue to work with the sector, EA and DWI, reach a conclusion, and deliver its Roadmap for enhancing asset health understanding in the water sector on time.
Ofwat
Rec 7
Response Pending
Before the development of PR29 methodology, Ofwat should consider whether it can act to simplify the price review methodology. This should include evaluating the impact of outcome incentives on company performance, the impact of cost benchmarking on company behaviours and financial resilience, and the impact of price control deliverables on performance.
Ofwat
Rec 8
Response Pending
Before the development of PR29 methodology, Ofwat should seek to understand whether successful Innovation Fund projects are being taken up across the sector and the impact.
Ofwat
Rec 9
Response Pending
Ofwat should develop a view on how to identify and plan for investment needs over the long term and work with Defra and the other regulators to improve transparency and predictability in light of the recent sector downgrades.