Household water bills in England and Wales are set to increase by an average of £123, translating to a rise of approximately £10 per month from April 1.
This hike has been confirmed by industry body Water UK, which will see the average water and wastewater bill jump from £480 to £603 for the next year alone.
Every five years, regional water suppliers in England and Wales submit their plans to regulator Ofwat for the upcoming half-decade. These plans detail how much they can raise bills over the period and how much they intend to spend on upgrading drains, sewers, and reservoirs.
Following this, Ofwat issues a draft ruling in July, initiating about six months of final negotiations over how much companies can charge.
In December, Ofwat released its final decision on bill increases, and Water UK has just announced the increases by company, including inflation, that will take effect from April 1.
What does this mean for consumers?
The average water and wastewater bill will rise from £480 to £603 for the next year alone an increase of around £10 a month, from £40 to £50.
However, millions of households face even steeper rises. Southern Water customers are set to see a 47% increase, Hafren Dyfrdwy and South West Water customers a 32% increase, Thames Water customers a 31% hike and Yorkshire Water bills going up by 29%.
Bournemouth Water customers will also see a 32% increase in their bills.
The average yearly Southern Water bill is set to skyrocket to £703 due to a proposed increase.
Why are bills rising so much?
Water companies are grappling with issues related to their drains, reservoirs and sewers, leading to massive pollution spilling into our rivers and waterways. This necessitates billions in system upgrades.
Being privatised entities, these firms also aim to turn a profit to attract further investment from shareholders. Compounding the issue, many are burdened with enormous debt piles.
The 10 largest water companies have a staggering combined debt of about £60billion.
Charles Watson, chairman of the environmental campaign group River Action, has criticised regulator Ofwat for “failing” and “running up the white flag” by announcing rises in household water bills. He said: “The shareholders in these companies are just laughing all the way to the bank.”
Isn’t Ofwat supposed to prevent such sharp increases?
In December, Ofwat claimed that it had “robustly” examined firms’ requests to raise bills. However, it ended up granting firms higher bill increases than they initially requested in their business plans submitted in early 2024.
For instance, Anglian Water initially requested for average annual bills to rise to £573 by 2030, a 17% increase. Ofwat reduced that to £557 in a draft ruling in July.
But when water firms were given an opportunity to submit updated requests for bill increases, Anglian ramped its request up to £649 in annual bills.
In its final decision, Ofwat permitted Anglian to charge customers an average of £631 per year, significantly above the company’s initial increase proposed in the first half of 2024.
Similar processes happened at Northumbrian Water, Severn Trent, South West Water, United Utilities and Yorkshire Water.
Critics are fuming over what they perceive as chronic underinvestment in infrastructure by these firms since their privatisation in 1989, while substantial shareholder dividends have been paid out.
In the three decades since water companies were privatised, not a single major reservoir has been constructed in England and Wales.
Liberal Democrat environment spokesman Tim Farron labelled the industry “a national scandal”.
He accused companies of “failing to invest in fixing leaky infrastructure, whilst company executives are stuffing their pockets with bonuses”.
Labour has initiated an independent commission which is scrutinising how regulator Ofwat operates.
Environment Secretary Steve Reed criticised the last Conservative government for “irresponsibly letting water companies divert customers’ money to line the pockets of their bosses and shareholders”.
He stated: “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.”
Households are now being informed of substantial bill increases starting in April. Mike Keil, chief executive of the Consumer Council for Water, stated: “These rises are the largest we’ve seen since privatisation and will heap considerable pressure on millions of customers who are already having to make difficult choices.”
“Customers want to see investment in improving services and cleaning up our rivers but that can’t come at an unbearable cost to struggling households.”
