Severn Trent pledges to slash water bills by five per cent

Severn Trent, which covers the Midlands and Wales, said it will introduce a real-terms bill reduction of five per cent, the largest price cut in two decades.

To facilitate the reduction, the water giant said it will use "innovation and commercial pipelines" to deliver a 13 per cent efficiency in spending, with total expenditure of £6.6 billion planned over the five-year period.

In addition, Severn Trent is proposing a new "community dividend" of one per cent of profits each year, to support communities in the region.

Severn Trent has more than eight million customers across Central England and Wales, including in Stafford, Wolverhampton, Birmingham and Shropshire. It also provides sewerage services to around 1.3 million people from Cannock to Stourbridge and West Bromwich who get their water from Walsall-based rival South Staffs Water.

Liv Garfield, Severn Trent's chief executive, said: “We haven’t created our plan in isolation – we’ve carried out the biggest ever consultation with our customers and stakeholders to find out what really matters to them and have then produced this plan which we absolutely believe will improve our service and our legacy for future generations.

“That means that, at a time when prices are going up, our customers’ bills will be coming down, we’ll help more vulnerable customers than ever before, and we’ll invest billions of pounds to make our service even better.

“By doing this, and by improving the day-to-day service we offer even in those areas where we’re already sector leaders, we firmly believe our customers will be served better, our environment protected, and future generations educated about the importance of water as a precious resource.”

Among the other pledges in the Severn Trent plan is a promise to help nearly 50 per cent more customers who are struggling to pay their bills, an eight per cent cut in sewer flooding and a 15 per cent cut in leaks.

Improvements will be carried out on up to 1,300 miles of rivers across the region, commitments over responses to low pressure complaints, and the creation of a £10m Technical Academy for the region.

The water regulator will assess water company's business plans and publish its findings in January.

Ofwat senior director John Russell said: "We've reached a key milestone in our price review process.

"From now until January 2019, we'll pore over each and every business plan and we'll be looking for evidence that they are robust, ambitious and, crucially, that they have been shaped by customers.

"All companies have had an opportunity to develop high-quality plans, but where plans aren't sufficiently ambitious or stretching, we'll step in to protect customers and the environment."

Meanwhile, United Utilities said it would cut average bills by 10.5 per cent in real terms between 2020 and 2025, amounting to a reduction of £45 per customer.

The North West-focused firm also said it will invest £750 million in delivering a "major water resilience scheme" for customers in Manchester and the Pennines.

Innovation

The company will aim to deliver a 15 per cent reduction in leaks by 2025, according to its five-year business plan released to regulator Ofwat.

As part of Ofwat's 2019 price review, water companies are required to outline a detailed business plan, demonstrating how they will meet the needs of their customers from 2020 to 2025.

United Utilities boss Steve Mogford said: "We are cutting bills such that they will be lower in real terms in 2025 than they were 15 years ago, whilst also delivering higher standards of service, increasing resilience, delivering innovation and investing for the long-term."

The utilities firm also said it will reduce capital expenditure by over £1 billion to £5.4 billion from 2020 to 2025.

Thames Water, meanwhile, said it would keep bills flat but spend £11.7 billion on upgrades, including £2.1 billion to "boost resilience and reduce leakage".

In June, the company - which supplies more than 15 million people - was ordered to pay a total of £120 million to compensate customers over leakage failures.