Water bills to rise further for millions after appeal

Millions of households in England will have to pay higher water bills than previously announced after Britain's competition watchdog agreed to allow five water companies to increase tariffs.

The companies – Anglian, Northumbrian, Southern, Wessex and South East – have sought permission to raise bills by more than the amount previously agreed by regulator Ofwat.

They argued that the increases set by Ofwat, which will average 36% over the next five years, are not enough to improve infrastructure.

A panel appointed by the Competition and Markets Authority (CMA) has now said bills could rise by an additional 3% on average – around £12 a year – partly because companies face higher borrowing costs.

An independent panel appointed by the CMA said Anglian and Northumbrian could increase their bills by a further 1%, Southern by 3%, South East by 4% and Wessex by 5%.

The five water companies serve more than 7 million residential and business customers and asked for far larger bill increases than were received.

The CMA-appointed panel said firms had asked for increased bills to raise a total of £2.7 billion in extra revenue, but it only managed to collect 21% of that amount, equating to an extra £556 million.

“We found that requests from water companies for significant bill increases beyond those allowed by Ofwat were largely unfounded,” said Kirstin Baker, who led the panel.

“We understand the real pressures on household budgets and are working to keep growth to a minimum while maintaining funding to deliver significant improvements at a reasonable cost.”

The CMA's proposals are preliminary and Ofwat and water companies have the opportunity to respond before the CMA's final opinion in a few months.

Water utilities finance most of their investment plans through debt. The CMA said part of the reason it allowed the rise was because interest rates on these loans had risen, making it more expensive for firms to pursue their plans.

Troubled firm Thames Water has also called for higher prices but has deferred the case until the end of October while trying to correct the bet on salvation.

Authorities have ordered water companies to repair aging infrastructure that has been found to be causing significant river and water pollution. The Environmental Protection Agency says there have been serious pollution incidents from water companies. grew by about 60% over the year.

Water Minister Emma Hardy said she expected every water company to “offer appropriate support to anyone struggling to pay”.

Ann Pardoe, from Citizens Advice, said: “Increasing water bills at a time when people across the country are already rationing showers and cutting back on laundry will push budgets through the roof.”

She called for a national social charge to help people from low-income families pay vital bills. Social tariffs are offered by some companies offering services such as broadband and energy, and allow beneficiaries to access cheaper bills, although the criteria vary from firm to firm.

The CMA's findings will result in an additional increase of an average of “£1 per household per month” for water company customers who are appealing, said David Henderson, chief executive of Water UK, which represents water companies.

Asked on the BBC Today program why companies could not pay for the necessary upgrades themselves, Mr Henderson said shareholders had already put in a lot of their own money and eight water companies were facing losses in 2024.

“They [investors] they don’t need to put money into this sector, they don’t even need to put money into this country,” he said, adding that many of them “haven’t made a profit in years. This is not an industry flush with money. This is an industry that provides vital infrastructure.”