Households set to learn water bills to rise by at least 20% over next five years

Households in England and Wales are set to learn their water bills will rise by at least 20% by 2030 to fix the “twin crisis” of pollution and shortages.

Ofwat is expected to announce on Thursday that charges will increase by more than 20% over the next five years, which means an average rise of £20 a year per household and the average bill soaring from £448 a year to £542.

Ofwat’s draft decisions released in July allowed water companies to increase bills by an average of 21%, before inflation is added, over the next five years to help fund £88 billion of investment in improving services and the environment.

The proposed bill rises would begin to take effect from April next year.

However figures released by Ofwat in October revealed water companies had subsequently asked to increase bills by even more than they originally requested.

The latest requests by firms would see the average consumer bill in England and Wales rise by 40% between now and 2030, costing £615 per year.

Southern Water wants to be allowed to increase bills by 84%, while scandal-hit Thames Water wants Ofwat to approve a 53% hike.

Thames Water will get particular attention as the company is in the midst of a bailout, in the form of a £3 billion loan from creditors.

The company, which serves about 16 million people, is in the grip of a funding crisis and only has enough cash to continue operating until March.

Thames Water is already in more than £16 billion worth of debt, which will rise even further if the rescue deal is approved by a court in February.

However, the cluster of investment firms that drew up the deal, including BlackRock, Abrdn and M&G, have said they need a huge increase in bills to make it happen.

An Ofwat spokesman said: “Our intention is to set a balanced package on Thursday that delivers better services for customers and ensures the sector attracts the investment it needs to deliver cleaner rivers and seas.

“We know that many customers continue to struggle with cost-of-living pressures and need extra help at this difficult time. Water companies in England and Wales are planning a significant increase in support for customers struggling to pay. The proportion of customers that receive social tariff support will rise to at least 8% in the 2025-30 period.”

Writing in the Telegraph at the weekend, Environment Secretary Steve Reed said: “We are facing this twin crisis of water pollution and water shortages because the Conservatives refused to invest to upgrade crumbling water infrastructure.

“Instead they let water companies divert customers’ money to line the pockets of their executives and shareholders.”

He wrote: “This week the independent water regulator will announce water bill rises to repair the damage. The public are right to be angry.”

Consumer groups have expressed concern that many households will not be able to afford a sharp rise in water bills, and urged water companies to provide more support.

Mike Keil, chief executive of the Consumer Council for Water (CCW), said: “Our research shows at least two in five households will find these future bill rises difficult to afford, which is why we need greater ambition from some water companies in providing help to those who are going to struggle.

“Companies’ existing plans fall short of meeting the commitment they previously made to end water poverty in England by 2030 and Ofwat should push them harder to deliver on this.”

Tom MacInnes, director of policy at Citizens Advice, said: “Our water systems need investment, and unfortunately that means higher bills are likely here to stay. Every day our advisors see people struggling to afford their water bills who will find paying higher prices impossible. It’s essential that these people are shielded from these extra costs.

“We believe the key way to achieve this is by ensuring there’s a comprehensive social tariff for water, which is available and accessible to those that need it. Though social tariffs currently exist, there’s a complicated postcode lottery and people often either don’t know about the tariffs, or face hurdles applying for them.

“The priority now is for the government and suppliers to work together to end this postcode lottery and ensure people receive the support they need.”

Industry body Water UK has estimated that water bills would be £110 or 25% higher today had they kept pace with inflation.

A spokeswoman said: “Water companies want to invest a record £108 billion to support economic growth, build more homes, secure our water supplies and end sewage entering our rivers and seas. We await Ofwat’s decision tomorrow and hope they give us the green light so we can get on with it.

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