Water shortages could stall plans to build more than one million homes

England does not have enough water to build the 1.5 million homes pledged by the government this parliament, according to a new report.

Housing was declared one of Labour’s “five missions for government” ahead of the 2024 general election, with 1.5 million homes set to be built over a five-year period under Sir Keir Starmer’s premiership.

However, independent analysis commissioned by Water UK published earlier this week found England only has enough water for 420,000 homes – more than a million short of the Labour target.

The trade body cites two key reasons for this shortage: bureaucratic hurdles where planning rules continue to slow down new water infrastructure, and legislation which prevents companies from building to meet future demand.

David Henderson, chief executive of Water UK, highlighted the importance of lowering the “future use” regulatory barrier.

He said: "We desperately want to be able to provide enough water for new housing. But we are being held back by a regulatory system that makes building new reservoirs much slower than it should be, and unrealistic optimism about how much water people will use in the future.”

The current rules he refers to are based on government targets, which assume business demand for water will fall by 9 per cent in real terms by 2037 to 2038.

Water UK insists this prediction is unrealistic. Instead, the report highlights that non-domestic water consumption is only set to increase, particularly in light of the growing number of data centres around the country.

Currently, data centres are explicitly excluded from the Environment Agency's national framework for water resources – an official document that sets out the national strategy for water infrastructure, meaning the additional demand for water isn't currently accounted for in water resource planning.

But, with 563 established data centres, and more than 100 more in varying stages of development across the UK, a report submitted to parliament by Water UK earlier this year estimated data centres currently use 6.6 million litres of water per day, which is equivalent to the water used by 20,000 average homes.

This figure is expected to increase to 19.8 million litres, the equivalent to 60,000 homes, by 2030.

By excluding these centres from national calculations for water usage, Water UK warned both new and existing houses will “increasingly face more frequent restrictions on water use, such as hosepipe bans”.

Under UK law, before developers can build new housing, local planning authorities and water companies must confirm that the regional water network has the capacity to supply the residents living in those homes once they move in.

If there isn't enough water available in the region, water companies cannot grant connections, and local councils can freeze planning permission.

To try and increase the number of available water sources, the trade body has called for the national framework for water resources to be changed so that it reflects England’s actual use of water and the risk of additional demand from businesses like data centres.

By doing this, the firms responsible for the construction of water sources like reservoirs would be able to bypass the “red tape” that prevents them from building to meet future demand.

The report also calls to attention the impacts that climate change will have on future water consumption, with England facing a potential 5 billion litre daily shortfall by 2055, according to the Environment Agency.

A spokesperson for the Department for Environment, Food and Rural Affairs (Defra) said the government is taking action to address water scarcity concerns, with all registered water companies now working with the regulator Ofwat, Natural England and the Environment Agency on 2025 to 2030 water resource management plans.

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