Ofwat chief defends water companies over lack of new reservoirs

theguardian.com:

The head of the water regulator for England and Wales has defended water companies against criticism over not building new reservoirs despite high levels of executive bonuses and shareholder dividends.

David Black, the chief executive of Ofwat, also said old pipes were not to blame for leaks and that most companies were meeting their leakage targets.

Water companies have come under criticism as England faces water shortages. Some homes have run out of water, rivers have turned dry and farmers are facing crop failures. Many are outraged at the companies for failing to invest in reservoirs, fix leaks and stop sewage pollution from their pipes.

The bosses of England’s water companies have been criticised for banking £58m in pay and benefits over the last five years. Since privatisation, shareholders have been paid £72bn in dividends. The cash has come from big debts, with companies having borrowed £56bn, and big bills, with prices having risen 40%.

However, Black said critics were not giving companies enough credit for actions being taken to reduce leaks and improve water supply, and suggested they did not understand the “complex” issue.

He told the BBC’s Today programme: “There isn’t sufficient account given to what’s happening in the sector; we appreciate it’s complex and difficult to understand.”

Ofwat has the power to fine companies 10% of their turnover if they do not meet targets. Despite high levels of leakage, many companies are meeting these targets, which has led campaigners to question whether they are strict enough. For instance, Thames Water has 11,000 leaks across its system but is not falling below the regulator’s standards.

Black said: “Thames Water are not in breach of their performance, by my understanding. There