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Ofwat's final determination for the 2025–2030 period (AMP8) approves a totalexpenditure of £104 billion, marking the largest investment programme sinceprivatisation.
Water Companies
• Opportunities: Access to increased funding facilitates infrastructure upgrades and service improvements.
• Risks: Companies are expected to raise over £7 billion in equity to support their investment programmes, posing challenges in securing necessary financing.
For companies to raise this level of debt, it is important that they maintain resilient financial structures. In their representations, companies forecast a need to raise over £7 billion of equity to support their investment programmes. Some companies additionally proposed to restrict dividends, to support delivery of investment. We expect companies will need to revisit their financing plans for the 2025-30 period now they have the certainty of our final decisions. In some cases, companies will need to take steps to strengthen their levels of financial resilience.
• Opportunities: The surge in projects offers growth prospects for contractorsand suppliers.
• Risks: Potential bottlenecks due to labor shortages and material supplyconstraints may affect project timelines.
• Opportunities: Anticipated improvements in water quality and servicereliability.
• Risks: Average household (water and sewerage) bills are forecast to rise byalmost £250 over the next five years, a 51% increase, reaching £730 by 2030.ofwat
• Employment: The investment is expected to create over 30,000 new jobs and 4,000 apprenticeships across the UK.
• Regional Development: Infrastructure projects are anticipated to stimulate economic growth in various regions.
• Inflationary Pressures: Increased demand for materials and labor may contribute to inflation in the construction sector. Procurement Challenges – Engineering Labour, Carbon-Intensive Materials.
• Labour Shortages: The sector faces a significant skills gap, with an estimated need for 100,000 new operatives by 2030. causeway.com
• Material Supply: High demand for carbon-intensive materials like concrete and steel may lead to supply constraints and increased costs
• Storm Overflow Reduction: Investment of £11 billion is allocated to reduceoverflow spills, aiming for a 28% reduction in storm overflows and a 30%reduction in total pollution. ofwat.gov.uk
Further, we are supporting a £6 billion programme to reduce nutrient pollution. This will help improve the health of our rivers and lakes, removing harmful elements such as nitrogen or phosphorus. These mainly emerge from fertilisers, animal waste and wastewater discharges. Action will include upgrading treatment works to remove nutrients from wastewater, working with farmers to promote sustainable farming practices, and using nature-based schemes like wetlands to provide natural treatment solutions. Over 2025–30, we expect the sector to reduce phosphorus entering rivers from water company activities by 28%. Our decisions support action on around 50% of water sector-related reasons for water bodies declining in condition or not meeting national environmental quality standards. Reduce storm overflow spills by 60% on 2021 levels, with over £2 billion of investment Total pollution incidents down by 30% Reduce internal sewer flooding events by 40%
• Reduce storm overflow spills by 60% on 2021 levels, with over £2 billion of investment
• Total pollution incidents down by 30%
• Reduce internal sewer flooding events by 40%
• Biodiversity Net Gain: A mandatory 10% biodiversity net gain fordevelopments is introduced, promoting nature-based solutions such aswetlands and rain gardens. gov.uk
• Timeline: AMP8 spans from April 2025 to March 2030.
• Implementation Risks: AMP8 represents a substantial investment phase for the UK water sector, offering opportunities for infrastructure development and environmental enhancement. However, the success of this programme depends on effective stakeholder collaboration, addressing procurement challenges, and ensuring financial and operational readiness.
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