Ofwat, the water regulator for England and Wales, has given an unprecedented warning. By 2050 average water bills may exceed £2,000 a year with the growing cost of upgrading much of the water network in outdated infrastructure and failing services. This forecast comes on the heels of fears about a softened corporate balance sheet and a legacy of underwhelming investment by profit-motivated private firms. The regulator has provided its evidence to a government-commissioned inquiry chaired by Sir Jon Cunliffe.
The water industry has suffered from a funding crisis for over 30 years. Consequently, private companies usually direct investments towards maximizing returns for shareholders over providing necessary and reliable public services. Ofwat warned that without “substantial funding,” the country risks experiencing life-threatening drought conditions within years.
The average annual domestic water bill has more than doubled, from £480 to £603. If we don’t act urgently, these costs will continue to rise. Ofwat cautioned that average bills may be over £1,000 by 2050 in nominal terms without inflation taken into account. Including inflation, projections find that they could climb to around £2,000.
To secure adequate water supplies and improve river water quality standards, Ofwat stated that approximately £300 billion would need to be invested over the next 25 years. That’s why this investment is so important—to give communities the amplification they need to develop new water sources. It strengthens transportation network infrastructure to help achieve net-zero climate targets.
In its annual assurance report, the watchdog Ofwat said it was worried that all this extra money raised from customers wouldn’t be spent in the right way. The regulator called for a “fundamental overhaul” of the existing system of water management. This change is absolutely critical if we want to address the urgent work ahead of us.
“