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New & insight
About Us
Trustees
Policyholders
Purposeful investments
Sustainability
Investors
New & insight
‘Water, water everywhere. Nor any drop to drink.’ Coleridge was describing the perils of sailors surrounded by salt water they could not drink, but he could easily have been describing England’s current predicament – increasingly prone to flooding yet failing to provide sufficient water supplies to our growing population.
Between 1992 and 2024, the UK population grew by around 12 million people and is set to increase by several million people in the next few years. No reservoirs have been completed since 1992 and the only one currently being built at Havant Thicket in Hampshire, which PIC is proud to fund, is expected to complete by 2031. By 2050, the country is expected to fall short by four to five billion litres of water each day.
In 2022, the former National Infrastructure Commission (now the National Infrastructure and Service Transformation Authority) projected 31 reservoirs would be needed in England. The current government has pledged nine, of which two have been fast tracked as nationally significant infrastructure projects – yet the first of these will only be ready in 2036.
Managing Director of PIC Capital
We urgently need to accelerate the delivery of new reservoirs. The Purposeful Finance Commission (PFC), which PIC chair, advocated how we might do that in our recent report ‘Reservoir Underdogs: Unlocking regulatory challenges to delivering new reservoirs’, the PFC looked specifically at the water sector’s fragmented and unaccountable regulatory landscape and proposed three key recommendations:
We are delighted that Environment Secretary Emma Reynolds, has adopted many of these themes in the Water White Paper. At the Economist Water Summit, she stated the need to shift “from a fragmented regulatory landscape to a single, integrated water regulator”, to create “an attractive, sustainable investment environment” in the water sector, and recognised the role that water infrastructure has in unlocking growth.
However, that is only one side of the coin, on the other flood risk is increasing. Public First, a research consultancy, estimates that flooding costs the UK economy £2.4 billion in direct physical property and infrastructure damages per annum today, but this could rise to £3.6 billion in 2050.[i] Past floods also damage future growth - ‘every year flooding costs the economy £6.1 billion of lost Gross Value Added (GVA) through flooding events that have occurred in the previous five to ten years.’[ii]
In response, the Department for Environment, Food & Rural Affairs (DEFRA) have allocated £10.5 billion taxpayer funding for new flood defences and to repair existing ones, with 20% of this allocated to deprived areas. This long-term funding could help protect many areas. Unfortunately, the regulator has adopted an approach which threatens to write off a large area of the country by diverting investment away from areas of high and medium flood risk – most of which are in places are in the most economically productive areas of England.
We could reduce flooding and safeguard water supplies at the same time by using the delivery of new reservoirs and the new funding for flood defence as part of a combined strategy to boost private investment in these areas, helping build their climate resilience. Such risks can be managed and mitigated. The Thames Barrier in London and flood defences in the Netherlands show that a different approach can unlock large areas for development, valuable when the government is looking to deliver 1.5 million new homes by 2029.
