Ofwat has introduced a combined six-gate approval process for major water infrastructure projects, aiming to simplify regulation and give investors greater certainty across a programme valued at more than £50bn.
The Major Water Infrastructure Programme (MWIP) contains 30 projects accepted through Ofwat’s 2024 Price Review final determinations. Their estimated whole-life expenditure exceeds £50bn in 2022-23 prices, with projects ranging from early development schemes to completed assets such as Thames Tideway.
The programme is being overseen by Chris Taylor-Dawson, Ofwat’s senior director of major projects. It is intended to help address a projected public water supply shortfall of more than 4,800Ml/d identified by the Environment Agency if no action is taken.
Single process for major schemes
The new process brings together the Regulators’ Alliance for Progressing Infrastructure Development (Rapid), which oversees early-stage development, and Ofwat’s Major Projects team, which regulates later delivery.
Previously, water companies had to navigate two separate regulatory systems, each with its own requirements, timelines and decision points. Taylor-Dawson said the combined process was created to reduce duplication and clarify what projects must achieve at each stage.
“The aim of the combined gated process is to reduce the burden on companies, by making the gates that these projects need to go through clearer in terms of what needs to be achieved at each of those gates and reduce duplication,” he said.
Taylor-Dawson said the process should not materially extend delivery times, arguing that robust technical, commercial and business-case work provides a stronger foundation for complex projects.
“There’s a real duty on all of us to check, challenge and be confident at key stages,” he said. “I think the process fundamentally is healthy to create confidence and structure.”
Projects move towards delivery
The projects covered by MWIP vary significantly in scale and complexity. Havant Thicket Reservoir is under construction and is being developed to support Portsmouth Water and Southern Water customers. Its operating model has been expanded from winter-only storage to year-round storage, using highly treated wastewater from Southern Water’s treatment works.
Thames Water’s White Horse Reservoir, formerly known as the South East Strategic Reservoir Option, has entered procurement. The proposed reservoir would have a capacity of 150M.m³ and is intended to improve supply resilience while reducing abstraction from existing sources. A planning application is expected later in 2026.
The Hampshire Water Transfer and Water Recycling project submitted its Development Consent Order application on 28 May and has been accepted for examination by the Planning Inspectorate. The scheme is designed to provide 9M.l of water a day for Southern Water customers by recycling water from Budds Farm Wastewater Treatment Works and transferring it to Havant Thicket Reservoir.
Other schemes include the Grand Union Canal Transfer Scheme, a partnership between Severn Trent, Affinity Water and the Canal & River Trust. It would transfer water from Minworth, near Birmingham, through the Coventry, Oxford and Grand Union canals before sending it through a new treatment works to an existing reservoir near Luton.
Taylor-Dawson said the project presented challenges because it involves multiple organisations, the use of canal transfers that have not been common in recent decades, and the need to establish an appropriate private finance structure. He described such schemes as important steps towards a national water grid.
The Cwm Taf project in South Wales is also being reshaped following public consultation. Dŵr Cymru Welsh Water has revised the original proposals, with construction hoped to begin in 2028.
Competition and financing
Ofwat expects many MWIP schemes to be delivered through competitive models because water companies may not be able to finance and manage every project within their existing responsibilities.
The two main models are Direct Procurement for Customers (DPC) and the Specified Infrastructure Projects Regulations (SIPR). SIPR was used for Thames Tideway, allowing an independently regulated infrastructure provider to develop and own the asset for a defined period. DPC is being used for the Haweswater Aqueduct Resilience Programme, with a competitively appointed provider responsible for delivery under contract to the water company.
Taylor-Dawson said SIPR was currently aimed at very large and complex projects, but Ofwat was considering lowering the legislative threshold. He said some reservoirs could fall within a broader SIPR category if the change went ahead.
Ofwat is also working towards a more standardised agreement for DPC providers. Taylor-Dawson said consistency, predictability and a clear allocation of risk and reward would be important to attracting finance and reducing costs for customers.
“If we get that balance right, we increase competition and we reduce the cost of capital, which in turn means customers will be paying less for these projects,” he said.
Ofwat has held discussions with contractors and plans to bring investors and the wider supply chain together at an event in October as it continues to develop the commercial arrangements for the programme.