Water bills in England and Wales to rise by £31 a year from April - a bigger increase than expected to fix 'twin crisis' of pollution and shortages
Household water bills in England and Wales will increase by an average £31 a year over the next five years, regulator Ofwat has announced.
The increase is significantly higher than the expected average rise of around £20 a year per household, outlined in the regulator’s draft proposals in July. Ofwat said the increase would pay for a £104 billion upgrade of the water sector to deliver “substantial, lasting, improvements for customers and the environment”.
However, despite the average £31 a year increase figure, households will face a heavy average hike of £86 or 20% in the next year, excluding inflation, with smaller percentage increases in each of the next four years. The average bill will rise by a total of £157 or 36% over the next five years.
Ofwat chief executive David Black said: “Today marks a significant moment. It provides water companies with an opportunity to regain customers’ trust by using this £104 billion upgrade to turn around their environmental record and improve services to customers. 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.
“Alongside the step up in investment, we need to see a transformation in companies’ culture and performance. We will monitor and hold companies to account on their investment programmes and improvements.
“We recognise it is a difficult time for many, and we are acutely aware of the impact that bill increases will have for some customers. That is why it is vital that companies are stepping up their support for customers who struggle to pay.”
He added: “We have robustly examined all funding requests to make sure they provide value for money and deliver real improvements, while ensuring the sector can attract the levels of investment it needs to meet environmental requirements.
“This has seen us remove £8bn of unjustified costs compared with companies most recent requests. In addition, our approach to setting a rate of return has saved customers £2.8 billion.”
Thames Water is to be allowed to hike consumer bills by 35% by 2030 following a decision by the industry regulator, as it was also handed an £18.2 million fine for paying “unjustified” dividends to shareholders. The average annual bill will rise to £588 by 2030, Ofwat said, up from current levels of £436.
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 regulator said it will claw back £131.3 million of the payments so it does not come out of customer bills.
Mike Keil, chief executive of the Consumer Council for Water (CCW), called for a social tariff and better support as he warned over the financial hit to households from the increase in bills. He said: “These bill rises may be less than what water companies wanted but they are still more than what many people can afford. Customers will be hit particularly hard from April, with a large chunk of these increases frontloaded into next year – on top of inflation.”
Environment Secretary Steve Reed said the public have a “right to be angry after they have been left to pay the price of Conservative failure”. He added: “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.”