Why, then, did Britain fail to build the infrastructure it needed to keep up?

Why Britain Failed to Build Reservoirs

Sam Dumitriu, head of policy at the British think tank Britain Remade, told Statement that the country had been short-sighted.

"Britain has failed to build reservoirs in advance of demand", Dumitriu said.

Part of the problem, he argues, lies in the way the water industry has been regulated, with the drive to keep bills affordable pulling against the need to finance long-term infrastructure.

"In part the issue is due to the way we regulate water. Regulators have wanted to keep bills low but have been far too short-termist. Failing to approve investment plans that would have anticipated rising demand and risks from climate change."

Ofwat, formally the Water Services Regulation Authority, is the economic regulator for the water and sewerage industry in England and Wales. It sets price controls through five-year reviews, determining both how much companies may charge customers and how much they must invest in return.

The tension between affordability and investment is one that Ofwat's own price reviews illustrate well, though the regulator disputes the suggestion that its approach has neglected long-term resilience. Its 2019 price review set out two objectives that do not always sit easily together: "affordable bills for all" and "long-term resilience". When Ofwat conducted its initial assessment of water companies' business plans for 2020–25, only three were judged strong enough to receive an immediate green light, while the rest were sent back to strengthen their proposals.

That same tension has carried over into the current investment cycle. Thames Water is the largest water and wastewater company in the United Kingdom, serving around 16 million customers across London and the Thames Valley. Under its 2024 price review, Ofwat allowed Thames Water's average bill to rise by 35% between 2024–25 and 2029–30, a fraction of the 53% increase the company had most recently proposed.

Six companies subsequently asked Ofwat to refer their determinations to the Competition and Markets Authority (CMA) for a fuller review, although Thames Water's case was later deferred. The remaining five argued that Ofwat's settlements left them without the revenue needed to meet their obligations.

In March 2026, the CMA granted them some additional funding, but rejected 83% of the £2.7bn ($3.6bn) in increases they had collectively sought. The regulator said it had to balance the pressure of rising household bills against the need to finance investment, secure water supplies and reduce pollution.

The dispute illustrates the financial constraints weighing on the sector, though it does not, on its own, establish that regulation is to blame for Britain's failure to build reservoirs. For Dumitriu, regulation is only part of the story. Even once investment has been approved, he argues, Britain's planning system can add years to a project before construction ever begins.

"At the same time, even if plans to invest in reservoirs were approved by the regulator, our planning system throws massive hurdles in the way. Take a project like the proposed reservoirs in Abingdon. It's been talked about for decades but the planning application has only just gone in and there's still a three-year process before construction can begin. If we are to cope with droughts like this in the future then we need a dramatically simpler and faster process", Dumitriu said.

Nowhere is this lengthy process more apparent than in Oxfordshire, where plans for a vast new reservoir near Abingdon have been under discussion since at least 2006. Twenty years on, it has still not been built. The scheme, now known as the White Horse Reservoir, is expected to submit its Development Consent Order application by the end of 2026. If that application is approved, construction is forecast to begin in 2029, with the reservoir not expected to start supplying water until around 2040.

A Reservoir Decades in the Making

Originally known as the Abingdon Reservoir, and later rebranded the South East Strategic Reservoir Option (SESRO), the project has since taken on a third name: the White Horse Reservoir.

Jointly developed by Thames Water, Affinity Water and Southern Water, it would store water drawn from the River Thames during periods of high flow, releasing it back into supply during droughts and spells of peak demand. The reservoir would have a planned capacity of around 150 billion liters and would provide around 271 million liters a day, contributing to the supply for as many as 15 million people across the South East.

Over the years, the project has undergone repeated assessments of its cost, its environmental impact and its value when measured against alternatives such as reducing leakage, lowering consumption and transferring water between regions.

Its initial estimated cost was £2.2bn ($3bn), based on 2021–22 prices and including contingency and client costs. Since then, the latest estimated capital cost has climbed sharply, to somewhere between £5.5bn and £7.5bn ($7.4bn–$10.1bn), prompting further scrutiny over whether the project still represents value for customers.

Before construction can begin, the reservoir must also pass through the Regulators' Alliance for Progressing Infrastructure Development (RAPID), a body established in 2019 by Ofwat, the Environment Agency and the Drinking Water Inspectorate to oversee the development of major water infrastructure across the country.

But even a project of this scale cannot close the gap alone.

The South East is forecast to face a water shortfall of more than two billion liters a day by 2055. The White Horse Reservoir, for all its scale, would provide only around 271 million liters a day, covering just part of that deficit.

The rest will have to come from other infrastructure, from lower consumption, and from a sustained reduction in losses from leaking pipes.

The Problem Runs Deeper Than Rain

A staggering 19% of water entering the public supply network is lost to leakage, much of it through pipework whose age can be traced back to Victorian times. Thames Water alone loses around a quarter of the water it supplies

New reservoirs are therefore only part of the solution. Water companies will also have to cut the amount lost through aging pipes and rein in consumption, even as they expand supply infrastructure. Crucially, they will first need enough water to fill the reservoirs they build. Reservoirs typically store rainfall and water abstracted from rivers, while groundwater offers a further source.

But abstraction from rivers and aquifers is constrained by the need to protect natural flows and the ecosystems that depend on them, particularly during drought. Other options include transferring water between regions and recycling it, while desalination could offer a supply that does not depend on rainfall at all.

The "running out of water" headlines, then, do not mean Britain will literally run dry. What they mean is that during periods of drought and high demand, available supplies could increasingly fall short, forcing restrictions on households and businesses and piling pressure onto both development and the environment.

Nor is Britain's problem simply a shortage of rain. The real challenge is whether enough water can be captured, stored and moved to wherever it is needed, precisely when it is needed there.

A hotter climate is adding to the pressure. Population growth is driving up demand. And major infrastructure, by its nature, can take decades to deliver.

Britain's water crisis, then, is not simply a story about how much rain falls from the sky. It is a story about whether the infrastructure beneath that rain can be built and adapted quickly enough, and whether the planning of reservoir capacity is genuinely geared toward the future.