Five water companies have been told to increase their leakage targets for AMP7 as the sector is set an overall challenge of a 17 per cent cut by 2025.

Ofwat told Utility Week that while its original goal for the majority of companies to achieve a 15 per cent reduction still stood, its draft determinations on their combined business plans for the next five years had produced the higher figure.

Much of this increase comes from the dramatically higher target for Thames Water which has been asked to go from a 15 per cent goal to 25 per cent.

Ofwat said this was because Thames had the worst performance on leakage in the sector and that this gap had grown during 2015-20.

United Utilities, which was one of three fast-tracked companies, has been told to increase its target from 15 per cent to 20 per cent, along with Affinity Water and Portsmouth Water.

South East Water, which had proposed the lowest target at 14 per cent, has been asked to move to 15 per cent.

Meanwhile, Northumbrian Water has been directed to lower its ambitions, from a 16 per cent cut to 15 per cent.

David Black, senior director, Water 2020, at Ofwat told Utility Week: “We have calibrated each company’s leakage reduction challenge so we have still got the expectation of a 15 per cent reduction but we have also looked at a company’s relative position. There are some which are ahead and some which are well behind.

“We are asking more from the companies lagging behind their peers. There are a few we are asking for a 20 per cent reduction from and then with Thames we have raised it to 25 per cent.

“We think the solution requires a step-change in how companies operate. We are expecting quite considerable innovation.

“If you look back at the sector’s history, there were great strides in leakage reduction in the 1990s – 30 per cent reductions in a relatively short period of time, but then very little over the past 15 years.

“I think that has been a matter of choice – they have taken their foot off the gas. The target is stretching and they will have to come up with innovative solutions to achieve it but there are some companies doing really good work in this area. Yorkshire came up with a 25 per cent reduction and a resources management with a 32 per cent reduction over the period. They have shown their commitment to tackle this.”