Millions of households in England and Wales are set to face increased water bills following a provisional decision by the industry watchdog Ofwat to approve a £3.4 billion investment plan. Five out of 13 water suppliers have been granted the go-ahead to raise charges by the end of the decade to fund new infrastructure projects.
The plan includes investments in infrastructure for new housing, data centers, increased capacity, and measures to improve drinking water quality, including the removal of PFAS, also known as forever chemicals. Ofwat stated that the funding is intended to address years of underinvestment and to support business growth.
However, the decision has also drawn attention to past performance issues. Ofwat rejected £752 million of proposed spending, citing instances where water suppliers had not delivered on previously funded work. Helen Campbell, executive director for delivery at Ofwat, indicated that the regulator will closely monitor performance, with the possibility of clawing back expenditure if companies fail to meet expected improvements for customers and the environment.
Southern Water customers are expected to see the largest annual increase, with bills rising by up to £80 by 2030. Thames Water bills will increase by £3 in 2027 and £5 in 2029. Severn Trent customers will see increases of £3 and £5 in the same years, while Wessex Water bills will rise by £4 and £7. South East Water is set to increase bills by £1 in 2029.
Environment Secretary Angela Eagle acknowledged the frustration over past underinvestment and regulatory failures. She stated that the government has ring-fenced money for new infrastructure to ensure it is used for essential fixes and that reforms are underway to make the water sector more efficient, aiming for lower bills, higher standards, and cleaner waterways.
The approval follows a three-month review by Ofwat, during which the 13 water businesses initially requested £4.3 billion in additional investment. The regulator will now consult on the draft decision until September 24, with a final verdict expected in December. This development comes as around half of households in Britain are currently under a hosepipe ban due to drought conditions in various areas.
Some of the newly approved spending will be added to customer bills after the next spending review, scheduled for 2030.