Ofwat has warned that households in England and Wales face a significant 36 per cent increase in water bills over the next five years.
The proposed bill rises would begin to take effect from April next year.
The total increase will amount to an average rise of £31 per year or £157 over the five-year period, marking a substantially higher jump than initially proposed in July’s draft plans.
The regulator says the increases will fund a £104bn upgrade of the water sector, aimed at delivering lasting improvements for customers and the environment.
Households will face an immediate steep increase, with bills set to rise by £86 or 20 per cent in the next year alone, before inflation is factored in.
This increase will be followed by smaller percentage rises in each of the subsequent four years.
Southern Water wants to be allowed to increase bills by 84%
SOUTH WEST WATER
The increase is markedly higher than Ofwat’s earlier draft proposals from July, which had suggested average annual rises of around £20 per household.
Thames Water customers will see their bills rise by 35 per cent to £588 by 2030, up from the current £436, following the latest ruling.
The increase falls significantly short of the 59 per cent rise Thames Water had requested as it seeks to negotiate a bailout.
The troubled water company, which serves 16 million people in London and the South East, needs a £3bn loan from creditors to continue operating beyond March.
Additionally, Ofwat has fined Thames Water £18.2 million for paying “unjustified” dividends of £158.3 million to shareholders, with £131.3 million to be clawed back to protect customers.
David Black, Ofwat chief executive said: “Today marks a significant moment. It provides water companies with an opportunity to regain customers trust by using this £104 billion upgrade to turn around their environmental record and improve services to customers.”
He emphasised that water companies must rise to this challenge, as customers will expect significant improvements to justify the bill increases.
He added: “We recognise it is a difficult time for many, and we are acutely aware of the impact that bill increases will have for some customers.”
Steve Reed, Labour’s Environment Secretary blamed the Conservative Government for the current state of the water industry.
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He said: “Under the Conservatives, our sewage system crumbled. They irresponsibly let water companies divert customers money to line the pockets of their bosses and shareholders. The public are right to be angry after they have been left to pay the price of Conservative failure.”
He pledged that a Labour government would “ringfence money earmarked for investment” to prevent it being diverted to bonuses and shareholder payouts, promising to “clean up our rivers, lakes and seas for good.”
Mike Keil, chief executive of the Consumer Council for Water (CCW), warned that many households would struggle with the increases.
He said: “These bill rises may be less than what water companies wanted but they are still more than what many people can afford.
“We know at least two in five households will find these increases difficult to afford, but the support being offered by some water companies lacks ambition,” Keil added.
The increase is markedly higher than Ofwat’s earlier draft proposals from July
PA
He called for a single social tariff to end what he described as “the current postcode lottery of support.”
Chris Walters from Ofwat told BBC Breakfast the record £104 billion investment programme would fund crucial improvements to water infrastructure.
He said: “That is needed to safeguard the health of our rivers, our seas and our waterways, to improve the resilience of our water supplies and to get companies to really raise their game.
Walters acknowledged public concerns about the rising costs, stating: “I know that is a concern for many customers… and that’s why today we’re also announcing record levels of support for customers.”
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