Why we need ARID – a new body to protect our water supplies

Like the rest of the world, the UK is experiencing the effects of climate change – notably on our rainfall. In addition, our population is growing. These factors are already putting a strain on our water supplies.

Every day, water companies in England and Wales provide nearly 16 thousand million litres of water. We use over half of this in our homes, plus a fifth when we’re at work, school, and in shops, hospitals and businesses. Another fifth is lost from the water network through leaks.

The water regulator, Ofwat, has told all water companies to reduce leaks by 50% by 2050 (from 2017-18 levels). In the next five years, water companies are planning to invest £96 billion across water and wastewater. £11bn of that is for storm overflows.

However, a third of the water we need to save to secure reliable supplies for the future has got to come from us all using less water, especially at home.

Defra’s Plan for Water sets out that by 2050, England has to cut its water usage to 110 litres per person per day. The Welsh water companies have agreed to the same reductions. At the moment, we are each using 144 litres of water every day on average. That figure has stayed about the same for the last ten years – it even increased during the pandemic.

CCW’s research shows that:

  1. 48% of people already feel they are doing as much as they can to save water.
  2. A further 15% of people don’t plan to make any changes because they don’t feel they need to.
  3. More than six in ten people have not taken action in the last six months to reduce the effect of their water use on the environment.

So to make the water savings we need to make will require a massive effort. We will have to put in place policies, regulations as well as practical interventions and easy-to-understand advice.

We will also need to properly understand what changes people’s behaviour. Many water companies already provide smart water meters to customers. Some are trialling what they charge for different amounts of water to help customers use less. In September 2023, the government announced that toilets, sinks, dishwashers and washing machines will be sold with new water efficiency labels. In addition, most water companies run education and social media campaigns to try and influence people’s behaviour in how they use water.

But there is no central oversight on what works in saving water customers can’t tell us by changing their supplier – as they might with a phone provider – it’s even harder to measure.

CCW believes there needs to be one umbrella body to provide overall strategy and give direction; to coordinate all the demand management activities; and evaluate them in a central evidence base so future investment can be targeted at the programmes that deliver the best results.

We call our proposed body ARID – Accelerating Reductions in Demand.

The task ahead of us all – to secure reliable, affordable supplies of clean water – is huge. If we don’t work together to pool our knowledge and resources, we could face a future of restricted water supplies. This would not only make our lives more difficult – it risks putting pressure on our rivers and streams and threatening the environment even more.

Our ARID proposal

The future security of our public water supply and protection of our natural water resources depends on a successful, and sustained, reduction in our levels of demand for water at home, and in businesses, as well as in all other aspects of our daily lives.

To achieve this we will need to bring about a significant change in public attitude and behaviour as well as put in place the policies, regulations and practical interventions and advice to help people reduce the amount of water they use.

This will only happen if these activities are coordinated, given direction, and importantly any learnings are used to build an evidence base that will enable future funding to be targeted at the programmes that deliver the best results.

There is an opportunity at PR24 to set us on this urgent course of action. Failure to do so will mean more of the same small-scale activity, a continuing lack of public engagement and inevitable soaring peaks in water demand we saw in the last couple of years as the temperatures increased, just at the time when the environment is at its most vulnerable.

We need to act now. Accelerating Reductions in Demand (ARID) would be the catalyst for a step change in demand management.

Demand management has an essential role to play in securing the resilience of our water supplies to the impacts of Climate Change, the demands of a growing population and economy, all while ensuring we leave sufficient water in the environment so it is protected and can thrive.

Reducing the amount of water people use will need to be achieved alongside significant leakage reduction, and significant investment in new water resources. Balancing supply and demand will require people to be helped and encouraged to use less water at home and in their places of work.

Challenging demand reduction targets have been agreed in both England and Wales and mean that accelerating reductions in demand are important priorities for both nations.

According to assessments done for the National Framework for Water Resources in England the water resource deficit is around four billion litres per day by 2050 and greatest in the south and east of England.

Detailed planning has shown that even after the development of new resources such as reservoirs and transfers, about a third of the volume needed to achieve water security must be met from demand management. In other words, by making better use of limited and uncertain resources. Consumers will, therefore, have a fundamental role in ensuring secure water supplies for current and future generations. However, they are largely unaware of the assumptions being made in the planning processes about the active role they are expected to play.

Water companies have committed to, and are investing, to halve the leakage from their distribution networks by 2050, but have made little progress in persuading their customers to reduce their water use. Indeed, post Covid, there have been significant changes in demand patterns and levels.

In 2022, many companies were dealing with record breaking levels of customer demand as temperatures rose and the widespread drought took hold across England and Wales.

While there have been numerous trials and pilots to engage with customers through awareness raising and the provision of devices to, for instance, reduce the volumes used in toilet flushing; these have had minimal lasting impact and so the achievement of current planning assumptions – and our future water security – are in doubt.

For the first time since privatisation in 1989 we are seeing progress made in the delivery of large scale new water resource projects in England. This is overseen by an alliance of regulators (Regulators Alliance for Progressing Infrastructure Development – RAPID) working together with regional water resources planning groups under a clear governance regime, an agreed funding stream, and explicit government support.

Ofwat has set aside some £470 million to be released in a phased/gated approach through processes established by RAPID to fund investigations into a broad range of different options such as major new reservoirs and large scale transfers of water. Inevitably, not all of these will progress through the various stages, but potentially some £14 billion of capital works could be agreed by the end of the investigation process.

Despite the crucial importance of achieving the necessary demand reductions to help reduce the future deficits, there has not been an equivalent level of investment or structured governance put in place to deliver this. The RAPID model has demonstrated what can be achieved with strong commitment and leadership, realistic resources and a clear framework. It therefore provides a viable potential template for an equivalent scale and rate of progress on demand management.

ARID could potentially adopt a similar approach, with a focus on collaboration, coordination and the provision of leadership and momentum within a similar structured framework. We believe this should extend across England and Wales, while acknowledging the need to take into account devolution and the different legislative drivers and existing structures within the two nations.

Ofwat has stated its desire to see more partnerships in this space to drive change, and has recently announced the establishment of a new £100 million Water Efficiency Fund; however, there is a danger that without appropriate oversight, coordination and leadership the sector will continue to do more of the same, which will not bring about the step change in attitudes and behaviours required. The details of how this fund will be administered and applied is currently the subject of a high level public consultation.

We can see potential in combining the Fund and ARID proposal. However, while we welcome Ofwat’s initiative we feel the scale of the demand management challenge is far greater than the proposed current level of funding would suggest.

There is further work to be done on ARID’s detailed Terms of Reference, objectives, governance and resourcing. Fundamentally, however, it should aim to ensure that companies have the ability to trial more innovative demand management measures and behavioural change techniques, and for these to be evaluated on a more consistent basis so their impact is understood in terms of water use, and for these learnings to be captured and shared.

The delivery and progress of projects would be reported on in a public manner, through workshops that are open to all. The data and information gained from ARID projects would be freely available to not only the sector, but more widely. This approach would bring interested parties together, drawn from academia and commercial interests which would help generate further ideas, approaches and initiatives.

ARID would bring coordination and oversight of the practical delivery of projects focussed on demand side measures. The evidence base generated would then allow successful interventions to be rolled out on a much larger scale.

ARID could also aim to increase awareness of the importance of water to society and the economy, and the relationship between water used in homes and businesses and the environment. The objective of raising awareness is to demonstrably effect behaviour change.

The gap between societal expectation of service and willingness to change personal behaviour seems to be growing. Attitudes towards the water industry have also hardened in recent years – best summarised as: “fix your leaks before you expect us to act”. The challenge has therefore got significantly harder since the last Price Review and is not one that the water industry can be expected to tackle alone.

Governments have committed to introduce water efficiency labelling on appliances which could deliver some water savings – but over an extended timescale. Appliance labelling is recognised as having a significant part to play in raising awareness with customers, in the way that energy efficiency labels have improved energy awareness as well as appliance efficiency.

In addition, by reducing hot water use in homes and businesses, water labelling would also help to reduce energy demand.  There have been no other significant national initiatives to help consumers understand the real scarcity of water in what they perceive to be a wet nation.

ARID would encourage initiatives that help to inform consumers on the importance and value of water. It would therefore need the status and the credibility necessary to become a trusted, independent, voice in this space. This would require a specific range of skills and expertise that could be drawn from organisations already active in this area, as well as academia, the regulators and CCW.

The increase in household metering (and smart metering in particular) has the potential to play a part in helping to reduce demand, provided that customers can be helped to understand how they can reduce their consumption and their bills and why this is important to do.

Smart metering will also help to assess the impact that any programmes are having on water use. However, it should be acknowledged that meters are not well received by all customers with some raising affordability concerns.

Even if new homes are constructed so as to facilitate lower water consumption, customers will not necessarily achieve or exceed the theoretical standards if the occupants are not similarly aware of the need to conserve water. Behaviours are as important, or more so, than fixtures and fittings and ARID would have the potential to support activities designed to address both angles. There is still a lot of work to do to win customer support nationwide.

By facilitating larger scale programmes and interventions at a regional or potentially national scale, ARID will help build an evidence base which will also help to inform future strategies and also help to challenge the assumptions about reductions in demand used in water resource management plans. With sufficient funding it would be possible to consider.

One option would be for ARID to oversee a ring-fenced and centrally-coordinated fund to be allocated in PR24 (with those funds awarded using a similar ‘Gated’ process to that employed by RAPID) to deliver large-scale demand management programmes initially starting in those areas where the deficits are most acute.

Having ring-fenced funding to facilitate innovative projects and initiatives which focus on demand reductions, would allow companies across England and Wales to explore options and so progress beyond their current risk-averse and small-scale approach.

The role of ARID would be to assess proposals and provide assurance that appropriate customer protection is in place, agree a delivery plan, with suitable check points or gates when progress and outputs would be reviewed, and further funding potentially agreed.

If a project is not delivering it can be stopped.  ARID would ensure that the outcomes/results of all projects/programmes, successful or otherwise, are evaluated on a consistent basis, and the learning captured and shared. And in doing so, provide a realistic sense of the time, budget, resources and governance it really takes to deliver successfully and sustain any reduction in demand.

ARID is intended to be the catalyst for an urgent step change in managing water demand. This means breaking out of the present situation whereby water efficiency is part of base expenditure and therefore most companies invest relatively small amounts in it because they have little confidence in the investment actually delivering sustained reductions in demand.  And because the investment is piecemeal and small-scale it does not provide the evidence base to suggest that a greater investment would be worthwhile.

It would be essential for any ARID funded programmes to be outside of existing funding and planning processes to ensure there is no overlap, and importantly, no double counting/duplication of funding. These programmes would be helping to deliver the ultimate goal of reducing demand but should not simply replicate existing programmes in the company’s WRMP that would be funded at PR24.

Customers’ money needs to be spent wisely on the things that will deliver tangible benefits to society at large and there should be clear lines of sight in terms of the different funding streams.

Demand reductions are not only integral to water security but they also have the potential to offset (or defer) some of the capital schemes currently being considered.

In order to deliver a step change in outcome they need a step change in how they are accounted for when delivered at scale.  This would mean water companies having confidence in how regulators would view ambitious programmes of demand management actions, in terms of a proportion of expenditure being allowed for large scale trials with a commitment to release further funding if and when the schemes delivered the projected savings.

In other words, a directly comparable regulatory approach for demand management to the water resource schemes.

This would facilitate and encourage the sharing of outcomes on what works and what doesn’t.  It would ensure that companies can build on these results so that they can take forward proven and effective programmes of work, as well as ensuring more consistent and impactful communication and engagement with consumers.

In addition, the economies of scale from larger scale trials would help to provide, for the first time, evidence about the costs and benefits of different options, and which deliver best value. This would enable more realistic comparisons of the costs of demand management versus water resource schemes, and where the trigger points lie in terms of options appraisal within the adaptive planning process.

The overall outcome would mean that water companies would have sufficient confidence in demand management measures to develop credible long-term plans that achieve reductions in demand and deliver water security. In addition, customers would benefit by saving money on their water and sewerage bills, and by reducing their hot water use, save on their energy bills too.

They would also be empowered by having more control over their water use, and would have a greater understanding of why it was important to conserve water.

ARID would require a small, agile, multidisciplinary team made up of water efficiency experts, demand side experts from energy, communications experts, behavioural scientists, with a similarly small oversight Board made up of Ofwat, EA, CCW, Defra plus a few others.

Funding would come from Ofwat through PR24. An alternative option to mirroring RAPID would be to use the resources assigned to overseeing the Ofwat Water Efficiency Fund, and in doing so merge both proposals so that ARID would repurpose those resources. Clearly this only works if ARID and the Water Efficiency Fund become merged into a single concept.

There could potentially be a larger advisory steering group involving organisations outside of the water sector which might include manufacturers, supermarkets, developers and wider conservation groups – but with so many other groups already in existence it would make more sense for the oversight Board to connect with these other groups to get a steer/seek advice.

ARID should also link very closely to the existing regional water resource planning groups, and with RAPID to ensure seamless coordination of plans and actions. In doing so it could encourage cooperation between companies at a regional, company-wide or sub-company scale with each participating company adopting one or more from a basket of potential measures, including some more untried and therefore potentially more “risky” innovative measures, in order to demonstrate their effectiveness, or lack of. These might include: tariff trials, water efficiency audits and retrofit programmes, smart metering implementation and communication campaigns.

There should also be a specific focus on the non-household market working with Retailers and non-household customers to incentivise water efficiency and maximise savings.

There is currently a window of opportunity to consider what changes are needed to deliver the multiple benefits that more efficient use of water resources might bring and for securing funding at PR24 to allow larger scale demand management schemes to then be taken forward during 2025 – 2030.

In responding to the Ofwat consultation on the proposed Water Efficiency Fund we have made clear the opportunity to bring ARID and the Water Efficiency Fund together in order to have a robust framework in place to deliver the reduction in demand that is necessary.

We think that a collaborative approach across England and Wales would be most beneficial and understand that some reflection might be required on how this would best work across national boundaries. We continue to hold open conversations with relevant stakeholders in both nations.

Our response to Ofwat’s consultation

We responded to Ofwat’s initial consultation on scoping the proposed Water Efficiency Fund (the Fund).
See our consultation response