The head of the water regulator for England and Wales has defended water companies against criticism for not building new reservoirs despite high levels of executive bonuses and shareholder dividends.
David Black, chief executive of Ofwat, also said that old pipes were not to blame for leaks and that most companies met their leakage targets.
Water companies have come under fire as England faces water shortages. Some homes have run out of water, rivers have dried up and farmers are facing crop failure. Many are upset with 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 criticized for paying £58m in pay and benefits over the past five years. Since privatisation, shareholders have been paid £72 billion in dividends. The money has come from heavy debt, with companies borrowing £56bn, and big bills, with prices rising 40%.
However, Black said critics did not give companies enough credit for measures taken to reduce leaks and improve water supplies, suggesting they did not understand the “complex” problem.
He told the BBC’s Today programme: “There is not enough consideration given to what is happening in the sector; we appreciate that it is complex and difficult to understand.”
Ofwat has the power to fine companies 10% of turnover if they fail to meet targets. Despite high levels of leakage, many companies are meeting these targets, prompting campaigners to question whether they are strict enough. For example, Thames Water has 11,000 leaks across the system but does not fall below the regulator’s standards.
Black said: “Thames Water is not at odds with their performance, as I understand it. There is a risk of leaks across the networks. Some of the biggest problems we face on networks are in modern infrastructure, it’s simply not the case that this is due to old pipes.”
Many have also criticized water companies as no new major reservoir has been built since privatization in the 1980s, but Black said they were not necessary. He said: “The reason there were no reservoirs is that demand had actually fallen during that period.”
He also defended the large pay received by the bosses and shareholders of the water companies, saying it made them more competitive in the global market.
Campaigners said they disagreed with Black’s assessment and were shocked that he suggested they did not understand the issue.
Stuart Singleton-White, head of campaigns at the Angling Trust, said: “It is painful to hear Ofwat, who are complicit in our broken water sector, acting as apologists for that system and the water companies. Ofwat has prevented much of the investment needed and allowed companies to take big profits and turn down our rivers.”
Christine Colvin, director of advocacy and engagement at the Rivers Trust, said: “This drought highlights that the targets and timelines agreed with the water sector are not enough to ensure we are climate resilient in the long term. Why are we now talking expensive transfers between basins when we A fifth of our water supply is leaking?”
Some MPs also believe Ofwat needs to take tougher action against water companies. Philip Dunne, the Conservative MP and chair of the environmental audit committee, said the regulator needed to do more to restore public confidence in water companies.
He told the Guardian: “The performance of van companies is under the spotlight now more than ever before. Incidents of sewage contamination and leaks that waste 20% of our water supply every day undermine public confidence. It is clear that much needs to be done to make our water sector fit for purpose, especially as the effects of climate change are likely to worsen water scarcity in the coming decades.
“To drive meaningful improvements, water company boards must be encouraged to develop plans to manage water resources and treatment, and work with regulators to ensure these can be delivered.”
Ofwat declined to comment further.