Household water bills to rise by an average £31 a year from April

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 £104bn 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 per cent 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 per cent 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 £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.”

Tom MacInnes, Director of Policy at Citizens Advice, said: “These price rises will hit many households hard. While it’s encouraging to see help for customers increasing, the current dysfunctional approach to bill support in this industry means that people will continue to miss out.

“Ending the postcode lottery for water social tariffs – cheaper rates for those who need them –  is an essential step to shield those struggling to keep pace with rising bills. 

Charles Watson, chair and founder of campaign group River Action, said: “It is a travesty that customers are now being forced to pay higher water bills, especially when these increases are directly the result of years of under-investment by the water industry.

“Shareholders in the water companies must be laughing all the way to the bank. With customers now being forced to foot the bill to repair and upgrade the water industry’s crumbling infrastructure, the very people who have already benefited for years from huge dividend payments, will see the value of their assets increase in thanks to this customer funded investment.

“The real question remains staring us unanswered in the face: when will those who have profited so rapaciously from decades of operational neglect, causing horrendous environment damage in the process, finally be held accountable and made to pay up for their totally irresponsible custodianship of these essential public services?”

A spokesperson for WaterUK, the trade body representing the UK’s water firms, said: “After a decade of cuts Ofwat has finally listened to public anger and agreed a much-needed quadrupling of investment in our aging infrastructure. 

“This will be the largest amount of money ever spent on the natural environment, and will help to support economic growth, build more homes, secure our water supplies and end sewage entering our rivers and seas. Each water company will now need to take time to assess what Ofwat’s decision means for them.

“We understand increasing bills is never welcome. To protect vulnerable customers, companies will triple the number of households receiving support with their bills to three million over the next five years.”

Press Association.