Water firms ask for bills to rise by £156 per year by 2030 to fund upgrade plan

Water companies across England and Wales have until Monday to submit their business plans (Rui Vieira/PA)
Water companies across England and Wales have until Monday to submit their business plans (Rui Vieira/PA)

Water companies have set out a five-year plan to prevent 140,000 sewage overflow spills per year — but will ask for customer bills to rise by about £156 annually to fund overall improvements.

Providers will invest £96 billion in the second part of the decade — almost double the current levels — in proposals companies say will pay for 10 new reservoirs, cut leaks and stop the equivalent of 6,800 Olympic swimming pools-worth of sewage spills.

Industry body Water UK said private firms had agreed to more than double the number of households that will receive financial support, rising by 2.0 million to 3.2 million, as the sector looks to address public anger over sewage being pumped into beaches and rivers during storms.

Consumers will be asked to pay higher bills to pay for the upgrades, with Water UK setting out that under the proposals the average bill in England is expected to be £7 per month higher by 2025 compared with 2023’s prices.

That will escalate to £13 per month extra by 2030, equivalent to £156 more per year.

The move to raise prices could face a backlash as households grapple with cost-of-living pressures and high inflation levels.

David Henderson, chief executive of Water UK, said he recognised increased bills were “never welcome” but urged regulator Ofwat to sign off on the proposals so the sector could counter sewage spills “as fast as possible”.

Ofwat has promised to “forensically scrutinise” the sector’s blueprint to ensure the hike in bills over the five-year period is “justified”.

Environment Secretary Therese Coffey has said “major improvements” were required, having called for water firms to “step up and deliver lasting changes” with its 2025-2030 submission.

Ms Coffey said she has been “very clear” with Ofwat that “customers should not pay the price for poor performance”.

The watchdog, which has faced questions about its ability to regulate the sector, will scrutinise the plans before a final decision is made at the end of next year.

The industry said the planned investment, if approved, would cut leakage by more than a quarter by 2030 compared with the start of the decade, putting performance among the top five countries in Europe.

Spending £11 billion on modernising Victorian era sewers is forecast to reduce spills into waterways by more than 140,000 each year by the end of the decade, Water UK said.

Nature-based schemes to manage rainwater will be created and technology brought in to better manage flows, as part of the upgrade works.

Water UK said 30,000 new jobs and 4,000 apprenticeships will be created to help deliver the plan, representing a 50% increase in the workforce.

Mr Henderson said: “These record-breaking investment proposals will secure our water supply as we deal with a changing climate and a growing population.

“While increasing bills is never welcome, this investment in our country’s infrastructure is essential to ensure the security of our water supply.

“Water companies are seeking regulatory approval to reduce overflow spills into rivers and seas as fast as possible and to doubling the number of households receiving support to pay their bills.

“Ofwat now needs to back these plans that are both ambitious and vital.

“Approving the plans is necessary so that we can provide the highest quality drinking water for a growing population, ensure the security of our water supply in the future and reduce the use of storm overflows as much as possible.”

Therese Coffey
Environment Secretary Therese Coffey said ‘major improvements’ were needed (Jonathan Brady/PA)

Ofwat chief executive David Black said: “Company business plans are an important first step in the price review process.

“Ofwat’s role is to forensically scrutinise their proposals, to ensure any increase in bills is justified, efficient and delivers significant improvements in river and bathing water quality.

“We will assess how companies are helping customers to afford any bill increase.”

Ofwat has said it will put in place an incentive regime to reward companies that improve performance, while hitting companies with financial penalties if they fail to deliver.

Customers and stakeholders will be consulted on the plans over the coming months, the regulator said.

Conservative Cabinet minister Ms Coffey, speaking before the industry’s plans were set out, said the sector needed “more investment, stronger regulation and tougher enforcement” to deliver “clean and plentiful water”.

She added:  “I have been very clear with Ofwat, the regulator, that customers should not pay the price for poor performance and they should use the full powers we have given them on behalf of consumers.”