Water bills for households in England and Wales are set to increase by an average of £123 from April 1, translating to a rise of about £10 per month. This hike, confirmed by industry body Water UK, will push the average water and wastewater bill from £480 to £603 for the coming year alone. Here we break down what happens next, and what it will mean for consumers. What happened? Every five years, regional water suppliers in England and Wales submit plans to regulator Ofwat for the next half-decade. These plans detail how much they can raise bills over that period, as well as their spending on upgrading drains, sewers, and reservoirs. Ofwat then issues a draft ruling in July, initiating roughly six months of final negotiations over pricing.
Ofwat released its final decision on bill increases in December, and Water UK has just announced company-specific increases, including inflation, effective from April 1. What’s the damage? The average water and wastewater bill will jump from £480 to £603 for the next year alone – a rise of around £10 a month, from £40 to £50. However, millions of households face even steeper increases, with Southern Water customers seeing a 47% increase, Hafren Dyfrdwy and South West Water customers a 32% increase, Thames Water customers a 31% hike, and Yorkshire Water bills rising by 29%. Bournemouth Water customers will experience a 32% increase in their bills. This increase will push the average annual Southern Water bill to £703.
Why do they want to raise bills so much? The answer lies in the significant issues they face with their drains, reservoirs and sewers, which result in substantial pollution spilling into rivers and waterways. This necessitates billions of pounds worth of system upgrades. Being privatised entities, these firms also aim to generate profits to attract further shareholder investment. To compound matters, many are grappling with enormous debt piles, with the top 10 water companies shouldering a combined debt of about £60bn.
Charles Watson, chairman of environmental campaign group River Action, criticised regulator Ofwat for "failing" and "raising the white flag" by sanctioning increases in household water bills. He stated: "The shareholders in these companies are just laughing all the way to the bank.". Isn’t Ofwat meant to stop such sharp increases? Indeed, Ofwat claimed in December that it had "robustly" scrutinised firms' requests for bill increases. However, it ended up granting higher bill increases than those proposed in the original business plans submitted by the firms in early 2024. For instance, Anglian Water initially requested an average annual bill increase to £573 by 2030, marking a 17% rise.
Ofwat trimmed this down to £557 in a draft ruling in July. Subsequently, water companies were given an opportunity to present revised requests for bill increases, leading to Anglian raising its request to £649 in annual bills. In Ofwat’s final verdict, it permitted Anglian to charge customers an average of £631 per year – significantly above the initial increase proposed by the company in the first half of 2024. Similar scenarios unfolded at Northumbrian Water, Severn Trent, South West Water, United Utilities and Yorkshire Water.
What else is getting people angry? Critics argue that since their privatisation in 1989, firms have severely underinvested in their infrastructure while doling out substantial shareholder dividends. In the 30 years since water companies were privatised, not a single major reservoir has been constructed in England and Wales. Liberal Democrat environment spokesperson 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".
Is anyone trying to fix it? Labour has initiated an independent commission to review the workings of regulator Ofwat. 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.".
What happens next? Customers are bracing for hefty increases to their water bills come April. Mike Keil, chief executive at the Consumer Council for Water, said: "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.". He also pointed out that while households expect improvements and cleaner rivers, "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.".
