Why are water bills going up so much?
Households are facing the largest rise in water bills since the privatisation of the industry 36 years ago.
Household water bills in England and Wales are to rise by an average of £123 from April 1, equating to an increase of around £10 a month.
The rise, confirmed by industry body Water UK, will take the average water and wastewater bill from £480 to £603 for the next year alone.
Here the PA news agency breaks down what happens next, and what it will mean for consumers.
– What happened?
Every five years, England and Wales’ regional water suppliers submit plans to regulator Ofwat for the upcoming half decade.
The plans include how far they can increase bills over the period, plus how much they will spend on upgrading drains, sewers and reservoirs.
Ofwat then gives a draft ruling in July, kicking off about six months of final negotiations over how much firms can charge.
Ofwat published its final decision on bills increases in December, and Water UK has just announced increases by company, including inflation, that will take effect from April 1.
– What’s the damage?
The average water and wastewater bill will increase from £480 to £603 for the next year alone – an increase of around £10 a month, from £40 to £50.
However millions of households face even steeper rises, with Southern Water customers to see a 47% increase, Hafren Dyfrdwy and South West Water customers a 32% increase, Thames Water customers a 31% hike and Yorkshire Water bills going up by 29%.
Bournemouth Water customers will see a 32% increase to their bills.
The increase will see the average yearly Southern Water bill reach £703.
– Why do they want to raise bills so much?
Water firms face huge problems with their drains, reservoirs and sewers, leading to vast amounts of pollution spilling into rivers and waterways.
That means firms need to spend billions on upgrading their systems.
Because they are privatised, they also want to turn a profit so they can keep getting more investment from shareholders.
To make matters worse, many face huge debt piles. The 10 biggest water companies have about £60 billion of combined debt.
Regulator Ofwat has “failed” and “run up the white flag” by announcing rises in household water bills, the chairman of an environmental campaign group said.
Charles Watson, from River Action, said: “The shareholders in these companies are just laughing all the way to the bank.”
– Isn’t Ofwat meant to stop such sharp increases?
Yes. Ofwat said in December that it had “robustly” examined firms’ requests to raise bills.
But it actually gave firms higher bill increases than they asked for in their original business plans submitted in early 2024.
For example, Anglian Water had initially asked for average annual bills to rise to £573 by 2030, a 17% increase. Ofwat reduced that to £557 in a draft ruling in July.
Water firms then had a chance to put forward updated requests for bill increases. Anglian hiked its request to £649 in annual bills.
In Ofwat’s final decision, it allowed Anglian to charge customers £631 on average per year – well above the initial increase submitted by the company in the first half of 2024.
Similar processes happened at Northumbrian Water, Severn Trent, South West Water, United Utilities and Yorkshire Water.
– What else is getting people angry?
Critics say firms have chronically underinvested in their infrastructure since they were privatised in 1989, while paying out huge shareholder dividends.
In the 30 years since water firms moved into private hands, not a single major reservoir has been built in England and Wales.
Liberal Democrat environment spokesman Tim Farron said the industry was “a national scandal”.
He accused companies of “failing to invest in fixing leaky infrastructure, whilst company executives are stuffing their pockets with bonuses”.
– Is anyone trying to fix it?
Labour launched an independent commission which is reviewing how regulator Ofwat works.
Environment Secretary Steve Reed said the last Conservative government “irresponsibly let water companies divert customers’ money to line the pockets of their bosses and shareholders”.
He said: “The public are right to be angry after they have been left to pay the price of Conservative failure.
“This Labour Government will ringfence money earmarked for investment so it can never be diverted for bonuses and shareholder payouts. We will clean up our rivers, lakes and seas for good.”
– What happens next?
Customers are now learning of sharp hikes to their bills from April.
Mike Keil, chief executive of the Consumer Council for Water, said: “These rises are the largest we’ve seen since privatisation and will heap considerable pressure on millions of customers who are already having to make difficult choices.
“Customers want to see investment in improving services and cleaning up our rivers but that can’t come at an unbearable cost to struggling households.”
