"Water Companies Falling Behind: Environment Agency Exposes the Gap Between Water Industry Promises and Performance"

The report is an assessment by the Environment Agency (EA) of how water companies in England managed water resources between April 2025 and March 2026. It examines whether water companies are managing supplies sustainably, maintaining adequate reserves, responding to changing weather conditions and preparing for future pressures on water availability.

POLICY & POLLUTIONMANAGEMENT AND CONSERVATION

Editor

11/4/20265 min read

Water resources 2025 to 2026 – Analysis of the water industry’s annual water resources performance.

The report is an assessment by the Environment Agency (EA) of how water companies in England managed water resources between April 2025 and March 2026.

It examines whether water companies are managing supplies sustainably, maintaining adequate reserves, responding to changing weather conditions and preparing for future pressures on water availability.

An important context is the ongoing drought in 2026, which has highlighted the increasing pressure on water resources and the need for more resilient water supply systems.

1. The main findings

The report identifies a significant gap between what water companies promised to deliver in their Water Resources Management Plans (WRMP24) and what they actually achieved.

The most important findings are:

2. Leakage: a major industry failure

Major concern

One of the strongest criticisms in the report concerns leakage.

Water companies lost 2,621 million litres of water per day through leakage.
This compares with 2,617 million litres per day in 2024–25.
Companies had forecast leakage of just 2,441 million litres per day.
Actual leakage was therefore 180 million litres per day above forecast.

This means the industry has failed to achieve the planned reductions during the first year of the current investment period.

The Environment Agency highlights several measures that companies should implement:

Better detection and repair of leaks.
Replacement of ageing water mains.
Improved pressure management.
Greater use of smart meters.
Better preparation for drought, hot weather and ground movement.

The report is particularly critical of companies whose leakage performance has deteriorated despite their published commitments.

3. Increasing water demand

Total water entering the distribution network increased to 14,110 million litres per day, compared with 13,946 million litres per day in 2024–25.

This is particularly concerning because the WRMP24 forecast was only 13,774 million litres per day.

There are two important elements to this:

Household consumption
Average household consumption increased slightly from 136.5 to 136.9 litres per person per day.

The Environment Agency considers reducing household consumption essential to achieving long-term water security.

Commercial and industrial consumption

Non-household water demand is also an important issue. Increased demand from businesses, agriculture and horticulture places additional pressure on water resources.

The report identifies the need for water companies to work more closely with business customers to identify water-saving opportunities.

4. Water availability and drought resilience

The reporting period experienced contrasting weather conditions.

Spring and summer 2025 were exceptionally dry.
August 2025 was the driest August since 2003.
Reservoir storage fell to 57% by the end of August 2025.
Autumn and winter rainfall helped replenish water resources.
February 2026 received 170% of average rainfall.

However, drought returned after the reporting period, during spring and summer 2026.

The report explains that the drought conditions demonstrated how quickly water resources can come under pressure, even after a period of substantial rainfall.

The Environment Agency also highlights the longer-term effects of climate change, including more frequent droughts, heatwaves and intense rainfall.

Which water companies face the greatest supply pressures?

The report assesses the supply-demand balance under dry-year conditions.

It identifies:

These deficits indicate that available water supplies may be insufficient to meet forecast demand under the relevant dry-year planning conditions.

Other companies, including Severn Trent, United Utilities and Yorkshire Water, reported an overall surplus.

5. Smart meters and water efficiency

Area of progress

The report recognises that smart metering is an important tool in reducing water consumption.

In 2025–26:

65.2% of households had a water meter.
Almost 20% of households had a smart meter.
More than 16% of businesses had smart meters.

Smart meters can help water companies:

Identify leaks more quickly.
Monitor customer consumption.
Identify unusually high water use.
Encourage customers to reduce consumption.
Improve the accuracy of water demand forecasting.

Anglian Water has made particularly good progress, with approximately 61% of its households having smart meters.

However, the Environment Agency stresses that installing meters alone will not solve the water demand problem. Companies need effective customer engagement and practical water efficiency measures.

6. Maintaining water supply infrastructure

There is also positive news concerning water supply reliability.

The total volume of water unavailable because of operational outages fell from 518 million litres per day in 2024–25 to 378 million litres per day in 2025–26.

This represents an improvement of approximately 27%.

The Environment Agency attributes improvements to better asset management and operational interventions at several companies.

However, performance is inconsistent, with some companies continuing to experience significant supply interruptions and infrastructure problems.

7. Future water supply investment

The report emphasises the importance of delivering the schemes contained within water companies' WRMP24 plans.

These include:

New reservoirs.
Water transfer schemes between regions.
Water recycling and reuse.
Desalination.
Leakage reduction programmes.
Smart metering.
Demand management.

The Environment Agency is concerned that some companies have reported delays and delivery risks affecting planned water supply infrastructure.

This is particularly important because major infrastructure schemes take many years to plan, obtain approvals for and construct.

The report places considerable emphasis on companies delivering the infrastructure that customers are paying for through their water bills.

8. What happens next? 2026–2030

The report sets out expectations for the next five years, which coincide with AMP8 (Asset Management Period 8), covering 2025–2030.

The main priorities are:

Two longer-term ambitions are particularly important:

2038: Government's ambition is to reduce public water supply demand per person by 20%.
2055: Without further action, England could face a public water supply deficit of approximately 5 billion litres per day.

The report also identifies the development of the next generation of water resources management plans (WRMP29) as an important opportunity to address these challenges.

9. What does the report mean for the environment?

There are several important environmental implications.

1. Continued pressure on rivers and groundwater

Increasing abstraction to meet rising demand can place additional pressure on rivers, streams, reservoirs and groundwater supplies.

2. Greater vulnerability during drought

When river flows and groundwater levels fall, the ecological consequences can include reduced aquatic habitat, higher water temperatures and deterioration in water quality.

3. Leakage represents unnecessary environmental pressure

Water that is abstracted, treated and pumped before being lost through leaking infrastructure represents wasted energy, treatment chemicals and environmental resources.

4. Water reuse needs greater consideration

Reducing reliance on conventional abstraction through water recycling, reuse and more efficient industrial processes could help improve long-term water security.

5. Climate change increases the urgency

Water companies need to plan for more variable rainfall, prolonged dry periods and extreme weather rather than relying on historical patterns.

10. Overall conclusions

The Environment Agency's report is a fairly critical assessment of the water industry's performance.

It recognises improvements in smart metering and operational reliability but highlights three fundamental weaknesses:

Water companies are failing to reduce leakage at the rate they promised.
Household and commercial water demand remains too high.
New water supply infrastructure is not always being delivered quickly enough.

The report makes clear that water companies must move beyond producing long-term plans and demonstrate measurable improvements in actual performance.

The challenge is not simply to provide enough drinking water. It is to secure reliable supplies while protecting rivers, wetlands, groundwater and the wider natural environment.