Millions of households in England and Wales are about to feel a little more waterlogged in the wallet, as water companies have been given the go-ahead to spend an extra £3.4bn on top of an already generous £104bn investment programme. The regulator, Ofwat, has clearly decided that the 36% bill increase over the second half of the decade just wasn't enough of a splash.
On Thursday, Ofwat revealed that 13 companies had requested an additional £4.3bn in spending, citing 'unforeseen costs' - a phrase that usually translates to 'we didn't plan for this, but we'd like you to pay for it.' Of that, £3.4bn was approved, including £1.2bn to 'safeguard' water services and assets, and £477m to enable housebuilding and datacentre development. Because nothing says 'safeguarding water' like building more concrete.
Five companies - Southern Water, Thames Water, Severn Trent, Wessex Water, and South East Water - will be allowed to hike bills even more before 2030, while the rest will pass the costs onto customers in the 2030s. Because why not spread the pain across two decades?
The Labour government's grand plans to build 1.5m new homes and host massive AI datacentre complexes have raised some awkward questions about whether the UK has enough water and energy to support this growth. Apparently, the answer is 'yes, if we make customers pay for it.'
In a nod to public health, an extra £34m has been earmarked to reduce toxic chemicals in the water system. This comes just days after government data revealed that every single English water body is polluted with toxic chemicals. So, a drop in the bucket, but at least it's something.
The approved spending will bring the total to just below the industry's initial £108bn request. Ofwat had previously said it would allow extra funding for costs that were 'uncertain or unknown' - which, in corporate speak, means 'we're not sure, but we'll figure it out later.' This includes investments for United Utilities to support datacentres in East Manchester and upgrades to Newquay Wastewater Works, presumably to keep tourists from swimming in something unpleasant.
Helen Campbell, Ofwat's executive director for delivery, said the extra funding would help unlock housing and business growth, as well as improve drinking water quality and remove Pfas and forever chemicals. She added that the regulator would track performance and 'claw back' expenditure if companies don't deliver. Because that's worked so well in the past.
United Utilities got an extra £995m of its £1.11bn request, Severn Trent received £329m of £481m, and South West Water was granted £180m of £239m. All this will pile further pressure on bills, which were already set to rise by 53% for Southern Water customers by 2030, hitting £642. Severn Trent customers face a 47% increase, and Welsh companies Dŵr Cymru and Hafren Dyfrdwy are looking at 42% hikes.
Thames Water, which was fined £18.2m for paying 'unjustified' dividends, was allowed to add 35% to bills by 2030. On Thursday, Ofwat said Southern Water bills would rise by an extra £80, with £8 added for Thames and Severn Trent, £11 for Wessex, and £1 for South East Water. Every pound counts, right?
Environment secretary Angela Eagle expressed sympathy for households watching every pound, blaming 'years of underinvestment and toothless regulation.' She promised to ringfence money for infrastructure and fundamentally reform the water sector. We'll believe it when we see it.