United Utilities signs pioneering DPC contracts for £3bn Haweswater refurbishment

United Utilities has signed the contracts for the Haweswater Aqueduct Resilience Programme (HARP) – the £3bn water transfer refurbishment project that is pioneering the Direct Procurement for Customers (DPC) model.

The largest water infrastructure scheme to be undertaken in the North West, HARP will see the replacement of six tunnel sections along the 110km Haweswater Aqueduct – a critical pipeline originally completed in the 1950s to transfer drinking water from the Lake District to communities across the North West.

Cascade Infrastructure, an Austrian-led special purpose consortium comprising STRABAG Equitix and GLIL Infrastructure, will form the Competitively Appointed Provider and will manage design, construction, maintenance and financing of HARP. STRABAG UK will deliver the full design and build of the project, supported by Arup which will provide design services.

United Utilities has also appointed Turner & Townsend as the Independent Technical Adviser, to provide assurance across the programme, and cost and technical certification throughout the construction phase.

The HARP project will be supported by a £300m credit enhancement guarantee from the National Wealth Fund (see below). Multiple pension providers have invested through GLIL, including the local government schemes of London, Lancashire, Berkshire, West Yorkshire, Merseyside and Greater Manchester. Finance has also come from providers including Aviva and Just Group, a FTSE 250 retirement specialist managing £28bn of retirement savings. Tim Cannon, senior investment manager at Just Group, said: “Just is committed to financing nationally significant UK infrastructure that delivers long-term economic, social, and environmental value. Investing in the HARP supports regional development while providing the secure, long-term income to pay our policyholders and delivering lasting value for stakeholders.”

The contract announcement comes 70 years after water first flowed through the aqueduct after being built between between 1933 and 1955 by the then local authority the Manchester Corporation. Mayor of Greater Manchester, Andy Burnham, said: “The Haweswater Aqueduct has served our region well for decades. This landmark investment ensures it will continue to do so for generations to come. It’s not just about securing the water supplies we need for our city region to grow - it’s also about creating jobs, building skills, and delivering long-term value for our communities.” Among the wider economic benefits HARP will provide are 1200 jobs and apprenticeships.

Contract signing marks a major milestone. The project will move into delivery phase in 2026, with an expected build time of nine years.

Ofwat identified 24 major projects at PR24 that are expected to be delivered via DPC, with a whole life cost of around £50bn.

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Government guarantee provided to reduce project risk — by Verity Mitchell

The HARP project will be supported by a £300m credit enhancement guarantee from the National Wealth Fund (NWF). The NWF was set up to deploy capital to projects that advance the Government’s growth agenda. The deployment of NWF guarantees for a DPC project enhances the growth-supporting credentials of the Government.

The loan guarantee will help to mobilise private capital by de-risking the project, according to the NWF. As with Thames Tideway, explicit government support has been given to lower the project finance risk.

It will therefore be impossible to judge whether the DPC was actually cheaper to deliver than a conventional procurement by United Utilities, as the cost of debt will now be lower than project finance without any government support.