Why Rachel Reeves’ reservoir plans are ‘far from a solution to UK’s water challenges’

Rachel Reeves has been warned her plan to throw the state’s weight behind the creation of nine new reservoirs will end up benefitting private water companies who continue to hike bills.

As part of an announcement to “kick start the economy” the chancellor announced nine new reservoirs including the Fens reservoir near Cambridge and the Abingdon reservoir near Oxford, with £7.9bn of investment being “unlocked”.

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But, with the UK failing to complete a new drinking water reservoir since privatisation, academics and industry experts told Big Issue Reeves’ plans may fail to live up to their billing.

“New reservoirs are no bad thing but these projects will become privately held assets, benefitting the monopoly water companies,” said Eleanor Shearer, senior research fellow at Common Wealth. “The government should instead be addressing the deeper crisis, bringing water companies back into public ownership.

“Since privatisation, there has been a drought of investment in our vital water infrastructure. Last year, Thames Water said that around £19bn worth of its assets were in poor or failed condition.”

Private water companies have an incentive to back the creation of supply side projects like reservoirs above demand-reducing measures like education programmes, said Kevin Grecksch a departmental lecturer in the University of Oxford’s school of geography and the environment.

“One reason why water companies want to build hard infrastructure like reservoirs is because this creates assets. These are private companies, so they they need to have something on their balance sheets,” said Grecksch.

“You can have a world class education programme, but if your next investor is knocking on the door, that programme is worth not even a pound. But a reservoir can be worth a couple of billion pounds.”

Trust in water companies reached a 13-year low in 2024, with less than a quarter of the public trusting them to do what’s right for the environment. Secrecy from water companies also fed the lack of public confidence, the Information Commissioner’s Office warned in December. Water bills will rise by 36% by 2030, under a recently-approved set of price hikes.

Resistance from public protests and legal disputes made the plans for nine reservoirs unlikely, Grecksch added: “If we end up with maybe one or two, we’ll be lucky. I don’t see that we’ll end up with nine.”

The UK is facing severe challenges with water, as estimates suggest by 2050 there is a one in four chance households will see their water supply cut off for an extended period, thanks to severe drought. The South East is already designated as being in “serious water stress”, with this anticipated to spread to seven regions by 2030.

Yet a raft of new reservoirs may not be the answer, warned James Wallace, CEO of River Action. “While the investment in new reservoirs is a positive step, it is far from a comprehensive solution to the UK’s water challenges. Without immediate action to address our leaking infrastructure and hold polluters accountable, the security of our rivers and water supplies will continue to be at risk,” said Wallace.

Ofwat, the water regulator, said the new reservoirs would “boost the economy by creating local jobs and enabling new housing development. But Kirsty Holstead, a researcher in the Public Administration and Policy Group at Wageningen University, said the projects often became politicised.

“Building reservoirs shouldn’t be a go-to solution for water shortages. Significant infrastructure developments such as reservoirs are used as political currency. Reservoirs can have short-term benefits, but in the long term, they do not tackle the root cause of the issue. In the UK, per capita water use is high compared to other parts of Europe,” said Holstead. 

“We need more measures to reduce consumption and reuse water to address the challenges of our changing climate, including droughts.”

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