Millions of households in England will pay even higher water bills than previously expected, after the competition regulator gave its final verdict on industry spending plans for the coming years.
Five water companies had appealed to the Competition and Markets Authority to let them raise bills higher than was initially allowed by Ofwat, the industry watchdog. On Tuesday, the CMA said it would let them raise annual bills by an extra 2.2% on average.
The five companies – Anglian, Northumbrian, Southern, Wessex and South East – together serve 14.7 million customers.
Thames Water, Britain’s biggest provider with another 16 million customers, also initially appealed but then pulled out amid crisis talks to try to cut its debt burden and secure its future.
Under England and Wales’s mostly privatised water system, Ofwat sets the amount that suppliers can charge customers over a five-year period. It said in December 2024 that average annual household bills could rise 36% to £597 by 2030 to help pay for maintenance and investment.
The appealing companies had argued they should be allowed to spend more than that, however, to pay for upgrading their creaking networks of pipes, sewers and reservoirs.
The CMA said on Tuesday it would let them spend an additional £463m in revenue – 17% of the total £2.7bn extra that the five firms had requested.
The extra spending will be funded by the 2.2% increase for customers, which comes on top of a 24% average increase already allowed by Ofwat across those five companies.
Water bills in England and Wales are already set to rise again by an average of £33 a household in April, in the latest above-inflation increase. Last year’s annual rise was £123, at the start of the five-year period.
The decision could prove a political headache to Emma Reynolds, the environment secretary, after the industry’s ratings hit rock bottom last October amid record levels of sewage spills.
The pollution scandal has returned to the spotlight in recent weeks after the Channel 4 drama Dirty Business told the story of how private companies have been allowed to contaminate Britain’s rivers and waterways.
An independent group of experts appointed by the watchdog had initially said they would allow £556m in extra spending in a provisional October decision, but have trimmed that in the months since.
Kirstin Baker, the chair of the group, said: “We’ve rejected most of the bill increases water companies asked for but allowed limited extra funding where that’s genuinely needed, balancing concerns about affordability with the need to secure our water supplies and cut pollution.
“A significant part of this extra money reflects market movements since Ofwat’s decision.”