Millions of households in England and Wales are being warned to expect a significant increase in their water bills over the next five years, with average rises of 21 percent anticipated. The exact details of the increases are set to be announced this week.
According to Environment Secretary Steve Reed, the privatised water industry’s “catastrophic failure” due to underinvestment and inadequate regulation is the reason behind the expected surge in bills. Reed expressed his understanding of the public’s anger towards the prospect of higher bills and acknowledged the industry’s shortcomings.
He attributed the bill rises to a widespread “failure of regulation and governance” and called for a “complete reset” of the water industry to address issues such as poor service, polluted waterways, and persistent leaks. The water industry regulator, Ofwat, has indicated that the increases are necessary to fund improvements, estimating an average annual increase of £94, or 21 percent, over five years.
However, privatised water companies have been pushing for a higher increase of 40 percent. Reed stated that he is working to rectify the broken system and prevent similar price hikes in the future, sharing the public’s frustration about the rising bills.
He acknowledged that the final figure is yet to be determined but attributed the higher bills to the industry’s failures. Mr Reed blamed the Conservatives‘ failure to invest in water infrastructure improvements, stated: “It’s got crumbling infrastructure, it’s got bursting pipes, and we’ve got the highest level of sewage ever recorded. People up and down the country are furious about the level of sewage pollution in our rivers, lakes and seas.”
He also said £41m was paid in bonuses since 2020 to water executives. The government is already implementing new rules to ring-fence money for investment, according to Mr Reed, as well as giving Ofwat the power to ban unfair bonuses and introduce personal criminal liability for water executives responsible for pollution. A commission has been ordered to plan the “biggest reset in 35 years”.
He continued: “This government cannot undo the damage that the Tories did to our water infrastructure by refusing to invest in it for 14 years. I know there’s no way that I can undo that damage. It’s happened, and now consumers are being asked by Ofwat to pay the price of that failure. What I can do is make sure it never happens again.”
The minister clarified that the price setting regime is independent of the government and he has no power to intervene. However, there have been calls for the regulator Ofwat to be scrapped and the entire price setting regime to be revised.
Ed Davey, the Liberal Democrat leader, said: “Families across the country, already struggling to make ends meet, have been faced with sky-high water bills, while water company executives have lined their pockets with bonuses. The Liberal Democrats are urging the government to scrap Ofwat and introduce a tough new regulator with real teeth, to make sure water companies put customers and the environment first, instead of just lining the pockets of their shareholders.”