Reservoir Underdogs: Unlocking regulatory challenges to delivering new reservoirs

The Purposeful Finance Commission has found that infrastructure development in England is broken. As a result of decades of poor governance and planning, the current government has a tough challenge ahead: meeting its ambitious housing targets of 1.5 million homes by the end of this parliament, whilst also securing long-term water resilience.

The PFC in it's fourth report 'Reservoir Underdogs: Unlocking regulatory challenges to delivering new reservoirs' reveals that:

'By 2050, the country is expected to fall short by 4 to 5 billion litres of water each day due to climate change and a growing population, making this challenge [reaching the 1.5 million homes target] even harder. The former National Infrastructure Commission (now the National Infrastructure Service Transformation Authority) reported the need for approximately 31 reservoirs back in 2022 and critiqued the previous government’s lack of action. The current government has attempted to grasp the issue by committing to build nine new reservoirs; taking two existing reservoir projects into the ‘Nationally Significant Infrastructure Project' (NSIP) scheme, which transfers oversight of the project from the local authority to the civil service at the request of the Secretary of State. However, with no plans for the remaining seven reservoirs, none of the Government’s projects will offer a functioning reservoir until 2036'.

To address this, the PFC looks specifically at the water sector’s fragmented and unaccountable regulatory landscape, which has prevented any reservoirs being built in the UK since 1992 and proposes radical reform.

The commission proposes three key recommendations:

Empower a 'Reservoir Champion': Create a new, independent water regulator, with the authority and funding to drive delivery, similar to how the Olympic Delivery Authority (ODA) was empowered to plan, fund, and deliver the infrastructure of the 2012 Olympic Games.
Regionally Significant Infrastructure Project (RSIP) Model: Introduce a new RSIP model under mayoral jurisdiction, aligning reservoir approvals with housing targets and water resource plans.
Flexible Price Reviews: Reform the rigid price review cycle, allowing mid-cycle adjustments to protect customers and investor confidence, matching the pace of housing and infrastructure needs.

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