I work in this field and I know there has been a lot of work been going on for a long time about these water shortages at the Environment Agency. Hands off flow restrictions and drought orders aren't something that is done lightly - they are being put in to try and save water for the warmer months.
Unfortunately even if the water companies never had any leaks we'd still be in the same situation. Central, SE and E England simply haven't had enough rainfall in the winter to recharge groundwater, rivers and lakes. There has been temporary increase in river flows during some rainfall periods but as the soil has been so dry since the beginning of the year there isn't much chance that the groundwater aquifers will be recharged much at all.
Up here in the North we have less population, more water storage. Down south water resources are very stressed at the best of times. Plus people in the SE use more water than anyone else - there is a good reason why the "save water" message keeps being played - a lot of people who should know better don't listen!
Piping water down to the south has been looked at in detail but as has been already said is spectacularly expensive and isn't a realistic option. Building more reservoirs would be a lot cheaper and more effective - but I suppose the NIMBYS don't like that idea. :-/
Anglian region has been in official drought since June last year as the 2010 winter was very dry too, adding to the problems.
There is a balance to be made to satisfy the demands of business, farming, the natural environment and personal use and everyone has to play their part to help. Simply complaining that it's someone else's fault doesn't help at all.
Have a look at the EA website and have a read about what the situation is now and all the work that has been done about water resources. I'll post some links up soon that may be of interest.