The United Kingdom is bracing for a significant rise in water bills, with an average increase of at least 21% forecasted over the next five years. This price hike comes amid longstanding public dissatisfaction regarding the state of the nation's waterways and criticism aimed at water companies for prioritizing executive bonuses and dividends over necessary infrastructure investment. Ofwat, the economic regulator for the water sector, asserts that these increases are essential to fund crucial improvements in the water infrastructure.
Public discontent has been further fueled by the government's perceived failure to invest adequately in water infrastructure over the past 14 years. The Consumer Council for Water reports that 18% of households are already struggling to manage their bills, with 40% indicating they would find it challenging to afford the proposed increases. This sentiment was echoed in a survey of 9,500 households, highlighting the financial strain on consumers.
Water bills are expected to rise by an average of £19 each year between 2025 and 2030, culminating in a total increase of £94 over the five-year period, as projected by Ofwat. However, water companies have pushed for a steeper average increase of 40%, which would see bills soar to £615 annually by 2030. In response to this situation, the government has commissioned a comprehensive review of the water sector, led by Sir Jon Cunliffe, aiming for a "complete reset" — potentially the most significant overhaul in 35 years. The government has also initiated a commission to develop proposals for this reset.
Environment Secretary Steve Reed described the situation as a "catastrophic failure" of underinvestment and weak regulation. He emphasized the urgent need for reform, citing alarming statistics such as the discharge of untreated human waste into rivers and seas for more than 3.6 million hours last year, a 105% increase from 2022.
"If you had damp in your home and you didn’t fix it, then 10 years later it will be far worse and you’d have to pay much more to put it right," said Reed.
"That’s exactly what has happened with our water sector. What we’ve done to help consumers with this is ringfence the money that’s earmarked for investment so it can only be spent on what it should be spent on, and that’s upgrading the broken water infrastructure," he added.
Reed stressed that the failure was not linked to ownership but to regulation and governance.
“The failure isn’t linked to ownership, it’s linked to regulation and governance,” he asserted.
The government's response includes implementing new regulations to ensure funds are allocated strictly for investment purposes and banning unfair bonuses. Additionally, Ofwat is being granted authority to impose personal criminal liability on water executives responsible for pollution.
“We’re going to be pragmatic about this and take the route that will resolve this problem the fastest and cost consumers the least,” Reed explained.
“This government cannot undo the damage that the Tories did to our water infrastructure by refusing to invest in it for 14 years. I know there’s no way that I can undo that damage. It’s happened, and now consumers are being asked by Ofwat to pay the price of that failure. What I can do is make sure it never happens again,” he stated.
Reed acknowledged public frustration over rising bills.
“No one wants to see these bills rise,” he admitted.
“I share people’s anger that this will be happening. We don’t know what the final figure will be, but the higher bills people will be seeing are because of the Conservatives’ failure over the last 14 years to invest in improving the water infrastructure,” Reed noted.
The current state of water infrastructure is dire, with widespread reports of crumbling pipes and unprecedented levels of sewage pollution.
“It’s got crumbling infrastructure, it’s got bursting pipes, and we’ve got the highest level of sewage ever recorded. People up and down the country are furious about the level of sewage pollution in our rivers, lakes and seas. At the same time, the Tories allowed money to be spent on bonuses and shareholder payouts – £41m in bonuses since 2020 – to water executives who are overseeing catastrophic failure,” Reed remarked.
Ed Davey also expressed concern about families' financial burdens exacerbated by rising water bills.
“Families across the country, already struggling to make ends meet, have been faced with sky-high water bills, while water company executives have lined their pockets with bonuses,” Davey commented.