Water companies warned: 'No new reservoirs until you plug leaks'

With Britain facing hosepipe bans and other restrictions, Baroness Young, chief executive of the Environment Agency, said yesterday that "far too much water'' is being wasted and it will not allow "any new resource development'' until this is fixed.

The clampdown follows publication of the latest leakage figures last week, which revealed that a quarter of all water supplied in England and Wales is wasted, at a time when the country is increasingly suffering the effects of drought.

Last winter was the third driest on record. Despite a slight reduction last year, the agency says, "leakage has not dropped significantly in the past five years''. In the Home Counties there are now hosepipe and sprinkler bans, and Thames Water - the biggest supplier in the country - is expected to impose restrictions next month.

Although customers are urged to cut consumption, Lady Young says that "driving this message home isn't made any easier when they see how profligate some suppliers continue to be". The agency's decision is a particular blow to Thames Water, one of two companies that failed to meet leakage targets for last year.

It was planning a new reservoir in Oxfordshire and a water desalination plant in the Thames Estuary. In all, it loses about a third of its supply, amounting to an average of 100 litres a day - enough to run three showers - for every home it supplies.

In much of north London, its leakage rates reach 60 per cent. A major pipe replacement programme was started in April, and it now plans to replace 850 miles over the next five years. But Lady Young added: "It should have started years ago. The company must put more management focus on improving the way it finds and repairs leaks in existing pipes.''