Water companies in England and Wales are losing 3.4 billion litres a day to leaks, according to an Ofwat report released yesterday.

Severn Trent Water, which was forced to close a flooded water treatment plant in Gloucestershire last month, lost more than 500 million litres every day, and was the only company to miss the industry regulator’s targets. The company cut leaks by just nine million litres daily, missing the 17million-litre target.

The watchdog also criticised Severn Trent for interrupting the water supply and underinvesting in security.

Severn Trent is the subject of a Serious Fraud Office investigation for allegedly misreporting leakage figures, and the company, which reported pretax profits of £252 million, pledged an extra £45 million to meet targets over the next three years. It also promised to cut charges by £12 million.

Regina Finn, chief executive of Ofwat, said it would have to put “huge efforts” into reducing the amount of water lost to leaks.

“Should Severn Trent Water not live up to this commitment, enforcement action will follow, including fines if necessary.

“We recognise that Severn Trent Water faces other more immediate priorities in dealing with the aftermath of recent floods but it must not lose sight of the work that it needs to carry out to control leakage,” she said.

The company, which serves 3.7 million households and businesses, was forced to evacuate the Mythe water treatment works near Tewkesbury last month after the River Avon and the River Severn burst their banks.

The closure left 140,000 households in Gloucestershire and Worcestershire without running water for more than a week, and Severn Trent estimates the total cost of dealing with the flooding at between £25 million and £35 million.

The report, covering the year ending in March, shows that leakages from all water companies in England and Wales fell by 100 million litres a day.

But despite beating targets by 20 million litres daily, Thames Water, Britain’s largest water company, had the highest daily leakage rate, at 790 million litres. Thames Water is in the process of replacing 228 miles of ageing pipes at a cost of about £150 million.

The regulator criticised Southern Water for failing to improve sewage treatment, and South East Water for its poor customer service.

Severn Trent, Southern Water and South East Water were also rebuked for dealing with complaints too slowly, inaccurate billing and bad helplines.

Ann Robinson, consumer policy director at the price comparison website uSwitch.com said: “Last summer’s droughts and this year’s floods have emphasised what a precarious state the water industry is in.

“The fact that the UK is still losing 3.4 billion litres of water each and every day indicates that there is no room for complacency.

“In no other industry would wastage on this scale be acceptable — the water industry must now shake off its poor track record, roll up its sleeves and seriously get to work.”

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