Water bills set to rise for many after firms permitted extra funding

Water companies have been given the green light to increase bills for customers by an extra £3.4bn in coming years to meet increased pressures on infrastructure and the environment.

Nearly a third of the extra funding provisionally approved for 13 water companies in England and Wales is earmarked for making sure water services are maintained.

Some of the rest will be used to meet rising demand from housebuilding and data centres and to address pollutants known as “forever chemicals”.

Prime Minister Andy Burnham said the proposal was “real money out of family budgets at a time when they are struggling with the cost of living”, and an environmental group described the decision as “an insult”.

Customers of five water companies – Severn Trent Water, Southern Water, Thames Water, Wessex Water, and South East Water – are facing additional bill rises over the next two years, on top of increases that were already announced in 2024.

The new increases will vary between firms.

Southern, for example, will charge £43 extra next year, while South Eastern will only charge £1 more in 2029. The increases will only come into effect if they are given final approval later this year.

The other eight water firms identified – Anglian Water, Dwr Cymru Welsh Water, Hafren Dyfrdwy, Northumbrian Water, Wouth West Water, United Utiliites, Yorkshire Water, SES Water – would recover their additional spending through customer bills after 2030.

Many consumers are angry at being asked to pay anything more against a backdrop of interruptions to supply sometimes lasting for days, and rivers, lakes and beaches too polluted to use safely.

But water companies argue that these problems can only be solved by boosting spending to replace pipes, build treatment plants and establish new reservoirs.

Climate change has also increased pressure on the water infrastructure by making heavy rains and heatwaves more frequent.

The regulator, Ofwat, said the extra spending would enable the firms to support growth and better environmental outcomes, and ensure important upgrades were not delayed.

“We will track performance to ensure companies are delivering the expected improvements for customers and the environment,” said Helen Campbell, executive director for delivery at Ofwat.

“If they don’t, expenditure can be clawed back.”

Water companies need approval from the regulator, Ofwat, to raise customers’ bills, a process that takes place every five years to set spending budgets for the years ahead.

This decision to allow increased charges comes on top of already-agreed bill rises that were negotiated with the water companies in 2024.

The process allows firms to apply for additional funds for projects that were not known about at the time of the last review.

As part of the outlined increase, Ofwat has approved funding for schemes including provision for new data centres in Manchester, additional wastewater capacity in Newquay and to bring forward work by Wessex Water to tackle PFAS pollutants, originally planned for 2030-35.

However, the decision is provisional. There is a period of public consultation, with a final decision due in December.

Ofwat said water companies had submitted a total of £4.3bn worth of requests, but some of their proposed extra spending had been rejected.

Burnham said he understood why people were angry as they had been asked to pay more for years while pollution incidents and leaks continued.

“Where water companies seek to pass unnecessary costs onto households, they will be challenged,” he said.

Amy Fairman, from campaign group River Action, said: “Ofwat waving through yet more water bill hikes is an insult.”

Water companies had failed to make sufficient investment over the last 30 years, she said, leaving customers with “leaks, pollution and soaring bills”.

There should be greater public control of water companies, she added. “No more blank cheques for failure.”

Kierra Box, water campaigner at Friends of the Earth said: “Our rivers and seas are chock full of filthy sewage and chemicals, which have seen next to no improvement despite recent bill hikes.

“Now ordinary people are being asked to foot the bill once again to pay for decades of water company inaction on upgrading our crumbling water infrastructure. It’s daylight robbery.”