Professor John Uff, who chaired the hearing, accused the privatised company of having no emergency planning and causing public distress by threatening mains supply cuts.
In a damning 174-page report, he called on Yorkshire Water to consider a massive pounds 220m investment to pipe water from Northumberland to avoid a repeat of a crisis which put industry, education and the health service at risk.
Responding to the findings, the company admitted its handling of the crisis undermined public confidence in the company but insisted investment would avoid it being repeated.
The inquiry, held in March and paid for by Yorkshire Water, was commissioned following the public outcry last summer as company profits spiralled and reservoirs dried up.
Water shortages led to a mass road-tankering operation and threats of rota cuts and standpipes. The drought crisis was compounded by a series of public relations gaffes
The blunders, compounded by the announcement of a 17 per cent leap in profits to pounds 200m and a 21 per cent dividend to shareholders, only skimmed the surface of a profound crisis, which showed up the failings of water privatisation.
In his report, Professor Uff, an engineering expert from the University of London, concluded:
Yorkshire Water failed to do enough to modernise its infrastructure and tackle leakage from its pipes;
Leakage currently accounts for a similar quantity to the region's entire domestic consumption;
National and local regulators failed to take enough action to protect the interests of customers and the environment;
The health of local people was put in danger by the water company and the needs of businesses were overlooked.
He said low forecasts of demand for water, combined with an investment strategy that put the emphasis on raising quality and not improving facilities, meant the water supply system was already overstretched by the beginning of 1995.
Professor Uff outlined how the pounds 47m operation to tanker water into the area had only just avoided unprecedented rota cuts in the Bradford and Calder areas, which he said were not acceptable in a modern urban community. In his recommendations, he insisted the company should take bold steps to plug leaks which continue to cost it more than a third of its water.
At a news conference at Leeds City Hall, he said: "The inquiry revealed that this was a crisis waiting to happen. It might have been avoided but as a result of the drought it did happen."
Dr Kevin Bond, Yorkshire Water chairman, said many of the measures called for in the report were already being implemented.Reuse content