Water sector risks ‘AI ambition gap’ without urgent action on skills

Ofwat’s new AI adoption plan is welcome news for the water sector, but the industry risks creating an “AI ambition gap” unless it addresses the worsening skills crisis. That’s according to specialist recruiter, Murray McIntosh



Ofwat’s report sets out a clear direction for the sector, positioning AI as central to improving environmental outcomes, operational performance and customer experience, while supporting long-term economic growth. It also confirms that AI is already embedded across core activities, including network management, customer engagement and regulatory reporting.



However, Murray McIntosh says the reality on the ground presents a fundamental challenge to this vision. Data from its Water Industry Labour Report shows that nearly half of engineers (49%) identify a lack of skilled workforce as the single biggest issue facing the sector, while 66% are considering leaving the industry and 23% expect to retire within five years.



Crucially, the firm warns that the industry is already seeing a disconnect between AI ambition and workforce readiness. While 31% of engineers say they are actively developing AI and technology skills, these capabilities are not currently among the most sought-after by employers, who continue to prioritise hands-on engineering experience, project delivery and leadership.



This misalignment, Murray McIntosh argues, risks slowing adoption and limiting AI's impact across the sector.



Adam Cave, Founder and Managing Director at Murray McIntosh, commented:



“The direction set out by Ofwat is absolutely right. AI plays a critical role in helping the water sector tackle some of its biggest challenges, from environmental performance to operational efficiency. However, a clear disconnect is emerging. Engineers are already responding to the AI agenda and investing in new skills, yet the industry is still primarily hiring for traditional delivery capabilities.

“At the same time, we are facing a shrinking workforce, rising attrition and growing delivery pressure as AMP8 ramps up. That creates a very real risk that AI ambition outpaces the sector’s ability to deliver on it. AI is not a substitute for skills, it’s a force multiplier, but without enough skilled people to implement, manage and interpret these systems, its value will be constrained.



“In fact, in many cases, AI will increase demand for experienced engineers, not reduce it. The sector cannot automate its way out of a talent shortage. Instead, we need a more joined-up approach to workforce and technology planning, with clearer alignment between employer demand, skills development and long-term sector priorities. This includes greater collaboration across water companies, regulators and the supply chain, alongside a stronger focus on attracting and retaining talent in the industry.



“Ofwat has set a strong foundation as the sector enters its most ambitious investment cycle to date, but unless we tackle the skills challenge alongside it, there is a risk that progress will be uneven and opportunities will be missed.”



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