Households in England and Wales will see their water bills increase by an “extortionate” average of £86 next year alone, as firms faced accusations of years of under-investment in their crumbling infrastructure.
Regulator Ofwat said it will allow companies to raise average bills by £31 a year, or £157 in total, over the next five years to £597 by 2030 to help finance a £104 billion upgrade for the sector.
That represents a 36% increase before inflation, which will be added on top.
However, despite the average £31 a year increase, households will be hit particularly hard from April with an average hike of £86 or 20% front-loaded into the coming year, with smaller percentage increases in each of the next four years.
Consumer Council for Water chief executive Mike Keil said: “These bill rises may be less than what water companies wanted but they are still more than what many people can afford.
“We know at least two in five households will find these increases difficult to afford but the support being offered by some water companies lacks ambition.”
Tom MacInnes, director of policy at Citizens Advice, said the price rises will “hit many households hard”.
Sienna Somers, senior nature campaigner at the organisation, said: “Dirty water companies shouldn’t be able to rely on their customers to foot ever higher bills while they line the pockets of their shareholders and leave our rivers brimming with sewage.
“These extortionate price rises won’t guarantee us cleaner water or solve the sewage crisis, they simply reward businesses for breaking the rules that protect people and nature. That’s why now more than ever, we need the human right to a healthy environment enshrined in law, so that communities can hold water companies to account.”
The confirmed increase to bills is significantly higher than the 21%, or £19 a year, rise per household, outlined in the regulator’s draft proposals in July.
Since then, the regulator has been in detailed discussions with each water company over their spending plans.
The biggest bills increase will be allowed for Southern Water, whose customers will pay 53% more by 2030. This is likely to cause further frustration for almost 60,000 households across Hampshire who have been hit by a water outage at a Southern Water supply works this week. The company has apologised and said the issues may continue until the weekend.
Bills will rise by 47% for Severn Trent customers, with a 42% increase for customers of the Welsh water companies Dwr Cymru and Hafren Dyfrdwy.
Thames Water is to be allowed to hike consumer bills by 35%, as the regulator also handed it an £18.2 million fine for paying “unjustified” dividends to shareholders.
The ruling falls well short of the 59% Thames Water had said it needed in the run-up to the decision, as the embattled water company tries to negotiate a bailout.
The company, which serves about 16 million people in London and the South East, is battling a funding crisis that could see it run out of cash by March.
“Water companies now need to rise to this challenge, customers will rightly expect them to show they can deliver significant improvement over time to justify the increase in bills.”
Industry body Water UK said: “After a decade of cuts Ofwat has finally listened to public anger and agreed a much-needed quadrupling of investment in our ageing infrastructure.
“This will be the largest amount of money ever spent on the natural environment, and will help to support economic growth, build more homes, secure our water supplies and end sewage entering our rivers and seas. Each water company will now need to take time to assess what Ofwat’s decision means for them.
“We understand increasing bills is never welcome. To protect vulnerable customers, companies will triple the number of households receiving support with their bills to three million over the next five years.”
We’ve approved substantial improvements for customers and the environment through a £104 billion upgrade for the water sector
Ofwat’s David Black: “Customers will rightly expect companies to show they can deliver significant change over time to justify the increase in bills” pic.twitter.com/PxalE17uEt
— Ofwat (@Ofwat) December 19, 2024
“This Labour Government will ringfence money earmarked for investment so it can never be diverted for bonuses and shareholder payouts. We will clean up our rivers, lakes and seas for good.”
Environment Secretary Steve Reed said: “Under the Conservatives, our sewage system crumbled. They irresponsibly let water companies divert customers’ money to line the pockets of their bosses and shareholders.
“The public are right to be angry after they have been left to pay the price of Conservative failure.
“This Labour Government will ringfence money earmarked for investment so it can never be diverted for bonuses and shareholder payouts. We will clean up our rivers, lakes and seas for good.”
