Leakage

Customers deserve the best possible service from their water company. So, whenever there is a period of dry weather it is understandable there is a focus on drought and hosepipe bans – with much discussion about the amount of water that is lost through leaks.

This is also happening at a time when we need to take better care of the environment by using less water from rivers and streams (abstraction), while still making sure there’s enough for the needs of the population and to support the economy.

One important way water companies can help is by fixing leaks to support keeping supplies secure for the future.

Progress has been made. Water companies have cut leakage by 43% since 1989, when the sector was privatised, but there’s still more to do to make sure this vital resource is not wasted.

Currently, around a fifth of water running through pipes is still lost to leakage, and Ofwat (as the economic regulator) expects water companies in England and Wales to significantly reduce this volume.

Companies have been given approval by Ofwat to fund work to further reduce leakage in the coming years. Through our 2024 Price Review (PR24), over £700 million has been allowed for companies to further reduce leakage in the network. This is supported by additional allowances of over £1.7 billion for delivery of 10.4 million smart meters to support companies to reduce leakage and reduce household consumption.

This article explores some of the key questions around leakage and highlights some of the work being done to help tackle the issue:

Leakage in the water industry

Leakage in the water industry

What is leakage? Why is water lost to leaks? Is it possible to have no water lost to leaks?

Leakage isn’t just what you see when a pipe bursts in a street. Officially, leakage is the water that companies cannot account for; so water that has entered their system but has not been delivered to homes, businesses or used in their operations. 

Water companies’ leakage targets and figures are based on the pipes that they are responsible for maintaining and the customer supply pipes that put water into a property. In total, the overall network in England and Wales has 425,000 km of mains pipes, equivalent to a distance from the earth to beyond the moon. 

Leakage is driven by a number of factors such as the condition of pipes and companies’ operational strategies (for example, how they manage water pressure). 

Some leaks in water pipes are inevitable, as pipes can wear out or be damaged when they naturally expand and contract during normal operation and this can worsen during very dry or freezing weather. 

We expect companies to find and repair leaks and to replace pipes that wear out to bring down leakage, while managing the impacts of external factors such as the weather. 

Achieving a leakage level of zero is not possible in any water system, as there will always be small leaks that are hard to detect or would be very expensive to fix. 

However, we are seeing progress; the replacement of existing pipes and development of new networks means over 40% of pipes are less than 30 years old, and the Ofwat innovation fund is funding transformative initiatives to look at new ways of identifying and tackling leakage. 

The wider adoption of smart metering in the coming years will help better detect leakage issues too. 

But it’s also important to note that even if leakage was completely stopped, our full water needs would not be met. There is also a need to work on reducing overall demand and increasing supply through schemes such as new reservoirs.

How do you measure water that is lost to leaks?

Leakage can’t be directly measured; the only way to do that would be to collect every drop that is leaked. It has to be estimated, by adding up all the water put into the supply network and subtracting all the water that has been delivered. This figure is then cross checked against flows at night when customer use is at a minimum. 

Water meters can help provide an accurate record of water used, but the amount of water used at properties that don’t have meters is calculated using sample properties. Some water in the system is also used for activities such as firefighting, or keeping the mains clean, but the remaining water that is unaccounted for is reported as leakage. 

Every water company has a leakage target that they are set each year – if a company doesn’t meet its leakage target, it has to return money to customers.  

At the price review in 2019 (PR19) we updated how leakage performance was reported to improve consistency between water companies and required all companies to report a three-year average of leakage. We are confident the way we expect English and Welsh companies to report leakage is as good as anywhere in the world. There is always room for improvement, and we are now investigating how we can further improve the accuracy and consistency of leakage reporting. 

Prior to PR19, companies were able to report performance in different terms; for example, some used annual figures and others used three-year averages or averages over a longer period. 

The PR19 update to leakage reporting made comparisons between companies easier, any trends more visible, and also means that reported figures are less skewed by exceptional events.

How does the UK compare to the rest of Europe?

Making international comparisons on leakage is not easy as the methodology used to calculate leakage varies from country to country. Many countries use the term ‘non-revenue water’ which also includes unbilled consumption such as illegal connections, errors in customer billing and unaccounted for water which may not actually be leakage. In England and Wales all those losses are not reported under the term leakage when measuring water company performance.  Our review of the leakage reporting methodology will consider how we can better compare the performance of companies in England and Wales with other countries. 

We do have data for leakage for the UK as a whole (including Scotland and Northern Ireland), which means there are some broad comparisons that can be made. 

How does England and Wales compare to Scotland and Northern Ireland?

Water companies in England and Wales overall leak less water than either Scotland or Northern Ireland. 

Leakage measured in litres per person per day is approximately 40% lower in England and Wales than in Scotland and Northern Ireland (Figure 1). 

In 2024-25 England and Wales leaked 46.4 litres of water per person per day while in Scotland and Northern Ireland this figure was around 80 litres of water. This difference in performance has been broadly the same for the last five years. 

Leakage in the UK measured in litres per person per day

Bar chart showing leakage – measured in litres per person per day in the UK

Figure 1. Leakage – measured in litres per person per day. UK countries

Source: Ofwat, using data from Ofwat, Scottish Water APRs, Northern Ireland Water APRs and ONS population data.

Has leakage in England and Wales improved?

Overall, the water sector in England and Wales has been improving – leakage is now at its lowest level ever in England – however more needs to be done. 

There was a sharp reduction in the years immediately after privatisation, followed by two decades in which levels of leakage remained broadly flat. This can largely be accounted for as companies were achieving the ‘economic level of leakage’ – that being where the cost to reduce leakage was balanced against the cost of water lost. 

More recently, after our interventions and challenge to the sector in 2017, we have again started to see further improvements, with some companies making significant reductions. 

Climate change, environmental considerations and population growth has highlighted the need to target companies on absolute reductions in leakage, in order to preserve natural resources and to ensure there is enough water for everyone that needs it. 

Since privatisation, reduction in leakage is estimated at 2,131 megalitres per day (Ml/d), based on a benchmark of 5,000 Ml/d at privatisation and a most recent figure of 2,869 Ml/d at 2024-25. 

As time has progressed, the methodology for leakage reporting has become increasingly sophisticated, meaning we can now have the highest level of confidence in the data reported since records began. 

We have made sure that the targets we set companies are stretching. For the 2025-30 period we have set targets based on a further reduction of 457.3 Ml/d (a 17% cut between 2024-25 to 2025-30). 

Based on a 2023-24 per capita household consumption for England and Wales of 138.3 l/d, this is equivalent to the daily household consumption for a population of 3.31 million – greater than the needs of Birmingham, Liverpool, Sheffield and Manchester combined. 

On a longer-term basis, water companies have committed to reducing leakage by 50% from a 2017-18 baseline by 2050. 

Average annual leakage England and Wales in Ml/day

Line graph showing leakage over time in England and Wales

 

Figure 2. Leakage over time in England and Wales – measured in ML/d

Source: Ofwat

We have also published a leakage dataset spreadsheet with leakage reported consistently with the methodology established for the PR24 performance commitment (covering the period 2017-2025), and leakage reported based on companies historical reporting methodologies (1992-2017). 

What are some of the things being done to improve performance on leakage?

Companies have been incentivised to up their game, as they have on a range of other performance measures designed to benefit to customers and the environment. 

It is very clear to us that the companies recognise the need to both collaborate and to innovate in order to meet the leakage targets they have committed to. 

Between 2020 and 2025, a total of almost £135 million was returned to customers in the form of lower bills across the sector because companies did not meet the robust expectations to deliver greater progress on leakage laid down by Ofwat. 

Looking ahead, at PR24, we set out our expectation for a further 17% cut in leakage over the next five years.  

This was supported by the approval of cost allowances of over £700 million to for companies to address leakage through pressure management, fixing leaks, and replacing water mains.  

We have also made a further £1.7 billion cost allowance for the installation of 10.4 million smart meters between 2025 and 2030 to support reductions in leakage and consumption. Smart meters will allow companies to gain a better understanding of the amount of water that is used at each property on each day, and also to identify continuous flow which is usually a good indicator that there is a leak on the property. 

In addition to this, the Ofwat Innovation Fund is funding transformative initiatives that look at new ways of identifying and tackling leakage. These include:

  • A £1.3 million project awarded to Space Eye to transform the use of satellite technology for the water industry. The project will include the design, launch and operation of micro-satellites to provide continual imaging of the entire UK water pipe network. Machine-learning algorithms will enable Space Eye to quickly locate leaks in pipes that become visible by rising to the surface, to help water companies fix problems quickly, resulting in fewer delays for customers affected by water supply issues and minimising disruption.  Five water companies in England and Wales, led by South Staffordshire Water, are teaming up with US micro-satellite experts Quub, the University of Wolverhampton, Scottish Water and Spring – the centre of excellence for water sector innovation – for the project.
  • Dark Fibre, an initiative which is using the fibre-optic cables already adjacent to water mains as leak sensors. The project is being led by Severn Trent Water. The concept was demonstrated in the first catalyst funding round (Dark Fibre 1). The latest project, Dark Fibre 2, builds on this work to solve remaining challenges, prove at scale and build industry confidence. The solution will then be brought to market to enable deep reductions in leakage whilst keeping customers’ bills as low as possible.