Ofwat, the UK’s water regulator, has set out a record £88bn spending package that would see Londoners’ bills go up by an average of £99 in the next five years excluding inflation.
The long-awaited investment plan, which follows a lengthy period of negotiations between struggling water firms and the regulator, proposes that £35bn be invested into Britain’s creaking sewage infrastructure to reduce pollution and improve customer service. This represents a threefold hike on the 2020-2025 period.
Ofwat outlined that the average bill increase for water firms across the UK will be £19 a year over five years – a total of £94 – before taking into account the effects of inflation. Thames Water customers specifically will pay an extra £99 by 2030.
The figure is significantly lower than the amount many water companies like Thames had requested as part of their business plans, which were submitted to Ofwat in the Spring. Southern Water wanted to increase their water bills by 91 per cent, while Thames had proposed a hike of 44 per cent, or £191.
Water firms like Thames, which earlier this week warned it had 11 months’ worth of capital left, have argued in the run-up to the decision that a significant hike was needed to customer bills if they were to be able to afford the many necessary infrastructure upgrades required to stem pollution and leaks.
But a rise would have left many of their customers struggling to pay their bills even more, with research having shown one in five families already struggle to pay their bills.
Ofwat says the plans will help reduce the number of spill from storm overflows by 44 per cent relative to 2021 levels, by upgrading 2,500 overflows.
It will also allocate £6bn to make improvements at over 1500 wastewater treatment works and set eight new performance targets.
David Black, chief executive of Ofwat said: “Customers want to see radical change in the way water companies care for the environment.
“Our draft decisions on company plans approve a tripling of investment to make sustained improvement to customer service and the environment at a fair price for customers.
“These proposals aim to deliver a 44% reduction in spills from storm overflows compared to levels in 2021. We expect all companies to embrace innovation and go further and faster to reduce spills wherever possible.
“Today’s announcement also increases the resilience of our water supplies to the impact of climate change and will reduce how much water is taken from rivers by enabling a range of long-term water supply projects, which includes plans for 9 reservoirs. “