Scottish Water: spending on track but outputs slipping, says regulator

The Water Industry Commission for Scotland's (WICS) annual assessment for 2025-26 found Scottish Water broadly on track on spending and strong on day-to-day service. It also found that output delays, and risks to environmental and climate commitments, are growing as the 2021-27 regulatory period enters its final year. The report lands a week before WICS sets charges and investment for 2027-33.

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Source: WICS via Water Magazine ↗

What we know

• Spending: £3.636bn invested over the first five years of the period, £10m below the level assumed when charges were set. Capital spending held broadly to plan even though revenues were lower than expected (WaterBriefing). Operating costs ran 3.4% above allowance (Water Magazine).
• Outputs: 99% of forecast outputs were delivered in aggregate in 2025-26, down from 118% the year before. Only nine of the 32 lagging categories are expected to recover by the end of the period, so the share expected to recover has fallen from 50% to 28% (WICS).
• Sewage discharges: the company is off track against its commitment to address 108 high-priority unsatisfactory intermittent discharges by December 2027, and eight schemes may miss the deadline. WICS also flagged a risk to Scotland's Improving Urban Waters Routemap commitments (WaterBriefing).
• Carbon: net operational emissions fell around 55% against the 2006-07 baseline, short of the 60% interim target for 2025. WICS says the company remains off track for net zero by 2040, which Scottish Water attributes to slower-than-expected grid decarbonisation (WICS).
• Service: the overall performance score was 413, above the 397–412 target range. Non-compliant wastewater works rose from 18 to 26, although the population equivalent affected fell from 696,092 to 356,184. Scottish Water blamed drought early in the year and four named storms. Leakage was 453 Ml/d against a 441–451 target range, despite 14,517 leak repairs, 9% more than in 2024-25 (WICS).

WICS chief executive David Satti said Scottish Water continues to deliver "some of the highest levels of service in its history", but that "delivery has slowed in some areas". He said WICS would watch leakage and environmental performance closely. Scottish Water chief executive Alex Plant said outputs behind plan were "countered by an equal number being ahead of plan", and that the company is confident it will meet its long-term commitments.

What others are reporting

WaterBriefing and Larder Magazine both pick out the fall in wastewater treatment compliance and the Urban Waters Routemap risk. They also note that WICS will publish its Final Determination for 2027-33 on 12 November 2026.

Background

The deterioration shows when set against last year. In its 2024-25 report, WICS recorded a record performance score of 416 and 22 lagging categories, 11 of which were then expected to recover. Operational emissions were down about 52%, a shortfall WICS attributed mainly to slower grid decarbonisation. The company then expected to remove 95 of the 108 priority discharges by December 2027, with the remaining 13 under discussion with SEPA. That report also put Scottish Water's leakage at 25% of distribution input, against a 20% weighted average for English and Welsh companies.

The next period is already being priced. WICS's June draft determination allowed £7.9bn of investment for 2027-33. It capped annual charge rises at CPI plus 2%, or 2.3% if certain costs, including the £560m West Central Bioresources project, materialise. Scottish Water had asked for CPI plus 3.3% (The Water Report). Consumer Scotland welcomed the lower cap but warned that affordability "will remain a concern" for low-income consumers.

What we don't know yet

It is not clear which of the 32 lagging categories carry the greatest environmental consequence. Nor do we know whether undelivered 2021-27 outputs will be carried into the 2027-33 settlement, and if so at whose cost.

What to watch

• The Final Determination on 12 November: whether the draft's £7.9bn and CPI+2% hold, and how carried-over outputs are treated.
• Which of the eight at-risk discharge schemes slip beyond December 2027, and SEPA's response.
• Wastewater treatment compliance and leakage in the final-year (2026-27) data.