Households in the UK face a 36% increase in water bills over the next five years as part of a major investment drive aimed at overhauling the country’s struggling water sector.
The decision, announced by Britain’s water regulator Ofwat, comes amid growing public outrage over sewage spills and concerns about the financial health of Thames Water, the nation’s largest supplier.
Key Details of the Plan
Average Increase: Water bills will rise by an average of 36% (excluding inflation), lower than the 44% hike requested by water companies but significantly above the 21% initially suggested by Ofwat in July.
Total Investment: The plan includes £104 billion in upgrades, targeting reduced sewage spills and improved infrastructure.
Consumer Protections: A clawback mechanism ensures unused funds are returned to customers, providing accountability for investments.
Government and Regulatory Pressure
The increase follows a call from the government in October for more investment to address years of neglect in the privatised water sector.
Critics argue that water companies have prioritised shareholder dividends over infrastructure maintenance, while companies claim regulatory pressure to keep bills low has limited investment.
Impact on Water Companies
Thames Water: Initially requesting a 53% bill increase, Thames Water has been approved for a 35% rise, a move seen as critical to securing £3 billion in new equity to stabilise its finances.
Southern Water: Granted a 53% increase, down from its proposed 83%, the highest among all companies.
Fines for Misconduct: Ofwat fined Thames Water £18 million for breaching rules by paying dividends in 2023 and 2024 without adequately linking payments to performance.
