Rising water bills

Water sector upgrade will add £31 per year to average water bill

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Published: December 20, 2024
This Article was written by: Katie Hill - My Green Pod
bills, biodiversity, health, money, policy, politics, pollution, sewage, water

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‘Substantial, lasting, improvements for customers and the environment’ are set to be delivered through a £104bn upgrade for the water sector, Ofwat announced yesterday (19 December).

Yet campaigners have warned that Ofwat’s decision to allow water companies to increase bills by 36% (on average) will be a ‘bitter pill to swallow’ considering our water companies’ environmental record.

Investments in water

The 2024 Price Review (PR24) final determinations will see a quadrupling of new investment over the next five years, providing companies with funding to transform performance, ensure supplies for future generations and deliver cleaner rivers and seas.

Key elements of the investment package, which also reflect the UK and Welsh Governments’ stated priorities for the sector, include:

£12bn on 2,884 projects reducing spills from storm overflows
£6bn of upgrades to combat nutrient pollution for around 1,000 sites and catchments
£3.3bn on nature-based solutions and increasing biodiversity
£2bn of development funding to unlock £50bn investment for 30 major projects designed to secure water supplies including nine new reservoirs and nine large-scale water transfer schemes
£456m of extra funding on day-to-day allowances to increase the rate at which water mains are replaced, with 8,445km set to be improved over the next five years

Bills to rise by 36%

To help finance this investment programme, bills in England and Wales will increase by an average of £31 per year (36%) before inflation between now and 2030.

This annual average increase compares with a £39 increase requested by companies in August 2024 (44%).

‘This will be a bitter pill for customers to swallow after years of poor performance from water companies, and record levels of sewage in our rivers and seas.

‘Water company shareholders and bosses have frittered away much of the money that might have been spent on our knackered water system. While we should stop any further funds going towards bonuses and dividends, this would count for small change compared with what needs to be spent.

‘The government, which has taken some important steps recently, will have to make up some of the shortfall if we’re to stop this stench following us into the 2030s. Keeping raw sewage out of our bathing waters is a win-win – for our health, the environment and the public interest. Given that bills will now rise, Ofwat should focus its efforts on protecting customers who can least afford it, and on ensuring the money is spent on improvements and not on feathering the nests of company bosses.’

DOUG PARR
Greenpeace’s director of policy

Regaining customer trust

According to the Environment Agency, there were 3.6 million hours of sewage spills into rivers and seas in 2023, compared with 1.75 million hours in 2022.

In its latest Water Company Performance Report, Ofwat concluded that most companies were failing to meet most of the key targets set for the sector and that ‘customer satisfaction has continued to fall and is now at its lowest level [since 2020-21]’.

‘Today marks a significant moment. It provides water companies with an opportunity to regain customers’ trust by using this £104bn 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.

‘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 £2.8bn.’

DAVID BLACK
Ofwat chief executive