When a sluice gate failed 24 metres below the water’s surface at Thames Water’s Queen Mother reservoir near London’s Heathrow airport, there were no easy fixes available.Emptying 37m cubic metres (1,307m cu ft) of water was not an option, meaning that helmeted divers were limited to 98-minute stints in the high-pressure environment.The risky project required a team on a floating platform with a crane to cut out the broken equipment with thermal lances, bolt a plate on to the reservoir wall, and install the new equipment.It took more than a year until last October to complete, according to Glenfield Invicta, the contractor that carried out the work for Thames Water.Water companies across Britain are gearing up for more of these repairs and upgrades than ever this year, as the industry undertakes the biggest spending spree in its history until 2030.

It follows decades of underinvestment by the privatised water system in England and Wales.On Tuesday, Labour announced plans to overhaul regulation of that system to try to make sure companies invest enough to avoid sewage overflows or leaking pipes.It will replace Ofwat, the regulator in England and Wales, and shift to a new regime regulating each company individually, rather than setting industry-wide targets.Yet that will take time.In the meantime, water companies must continue with upgrades.

In December 2024 Ofwat granted suppliers permission to increase bills by an average of 36% between 2025 and 2030 to allow £104bn of spending on pipes and water treatment works, compared with £51bn in the last five years,That steep bill increase came at a political cost, amid outrage around the country over sewage spills into rivers and seas,Now they have won the money, some experts believe the water companies may struggle to spend it,Nobody disputes that much of the spending is necessary,The water system is creaking in very visible ways; South East Water faced heavy criticism this month after thousands of residents were without water for days this month, an incident which followed a similar outage before Christmas.

A drumbeat of serious pollution issues resulted in six companies being banned from paying executive bonuses in the year to June.Stuart Colville, the deputy chief executive of Water UK, a lobby group for the industry, said suppliers had demonstrated a “steep increase in ambition”, with plans to increase capacity at 1,700 wastewater treatment works and upgrade 3,000 storm overflows.However, he argued that the bills increase was needed to make up lost time during a period when bills were kept lower.“We’ve got all this legacy of catch-up,” he said.“Why did that underinvestment take place? Bills should have been about 25% higher than they would have been if they’d kept up with inflation.

We’ve not seen enough investment since about 2010.”However, the justification for the bills increase is disputed.River Action, which campaigns for cleaner waterways, has gone as far as legal action against Ofwat, arguing that households are paying twice for investments to stop sewage leaks that should have been funded from their previous bills.Ofwat, which oversaw the underinvestment, is itself due to be abolished as Labour brings in a new regulatory system.“We believe that the water companies have already had more than enough money to sort out the problems,” said James Wallace, the chief executive of River Action.

He and others have argued that money was siphoned out by previous investors in the form of excessive dividends to shareholders.The spending has already started, but water companies are not the only ones looking for builders.The Labour government has a very long construction shopping list: 1.5m homes a year, £28bn in upgrades for the gas and electricity grids, the Hinkley Point C and Sizewell C nuclear reactors, a new £33bn runway for Heathrow airport – not to mention enough potholes to fill the Albert Hall many, many times over.With the water spending on top, that would suggest an infrastructure boom to rival the reign of Queen Victoria, when water assets still in use today were built such as Joseph Bazalgette’s Westminster embankment in London, the Thirlmere aqueduct supplying Manchester, and the Elan Valley aqueduct supplying Birmingham.

The water industry does have some more recent examples it can draw on, according to Dieter Helm, an Oxford University professor of economic policy who has advised previous Labour and Conservative governments on energy and water,He cited the Thames Tideway – an update to Bazalgette’s works in London – as an example of a large, well managed project,But water companies will be battling with other sectors for the equipment, workers and materials to pour concrete and lay pipes across the country,“What is the capacity to build all this?” said Helm,“Very little.

There’s a scarcity of contractor supply, a scarcity of materials,”In-demand contractors spy a “massive opportunity”, according to one person at a large engineering firm,Galliford Try, Kier and Morgan Sindall are among the FTSE 250-listed companies expected to benefit,The engineering company Costain is working on projects for at least six English companies, from Northumbrian in the north-east to reservoirs for Anglian in Cambridgeshire,Alex Vaughan, the Costain chief executive, said water companies had tried to bring in contractors earlier than usual to secure the expertise they needed.

“For the UK to have a sustainable and resilient water system, a consistent, long-term approach to the delivery of water infrastructure is needed,” he said,He added that longer-term strategies and “extended delivery frameworks” were allowing companies such as his to recruit people more easily because they could offer longer-term stability,Beyond securing enough builders, several experts are worried about inflation,Helm said infrastructure projects often overran by 30% on time and 30% on costs – wherever they were in the world,“Do we think the cost inflation in the construction sector will get any better?” he said.

“Well, why would we think that?”Ofwat has mechanisms to adjust for inflation, which will protect the companies to a certain extent, by making bill payers pay more if price indices rise rapidly.Spending billions of pounds is not simply a matter of buying something off the shelf.It requires large, experienced teams keeping a beady eye on progress.That becomes a lot harder if you are distracted.Distractions do not come much bigger than those faced by Thames Water, which has been locked in seemingly endless talks with investors and the regulator to restructure its huge debts and avoid temporary nationalisation.

But Ofwat also judged in November that South East and Southern required active monitoring for financial problems, with another six water companies on the “elevated concern” list.Six companies are also appealing to the Competition and Markets Authority for more money from bills, tying up managers who could otherwise be overseeing investments.The increases to bills over a five-year period were front-loaded to this financial year – prompting a bigger political backlash and a surge in complaints from households – in order to get cash to companies quicker.But the current spending period started in April, so a quick start required planning years ago.Martin Young, a former investment bank analyst who now runs the Aquaicity consultancy, said that some of the better-run companies with less debt appeared to have got moving more quickly.

“The listed companies on balance are performing better than the unlisted companies,” he said.“That would have given them potentially a good head start.Those who were more stretched either operationally or financially were always going to find it a little bit tougher.”There is a split between the water companies steeling themselves for a five-year spending marathon, and the analysts who worry it will be too much for them.Water UK’s Colville argued that companies faced “really strong financial penalties if they fail to deliver”.

“We are getting on with it,” he said.“We recognise that delivery is absolutely essential for restoring trust and justifying the increases in bills.”The companies face a tall order to prove they can do that.River Action’s Wallace said he expected “disappointment and more criminal pollution by water companies”.“I would be stunned if they get through this capital programme in this period of time,” said Helm.

“If they do they will pay top dollar,”