Water bills expected to rise, says regulator - BBC

Water bills expected to rise, says regulator - BBC News

Water bills expected to rise, says regulator

Water companies are likely to push for bill increases in 2025 to cover the cost of improving services, the boss of regulator Ofwat has said.

It comes after the biggest providers have been severely criticised for their records on sewage spills and plugging leaks.

Many are also heavily in debt, with Thames Water currently at risk of being taken over by the government.

Ofwat boss David Black denied it had failed to regulate the industry well.

But he admitted there were "hard lessons to learn" and that he had been "angered" by excessive chief executive pay in the water industry.

Despite the criticism, Mr Black told BBC Radio 4's Today programme that customer bills were likely to rise as companies tried to improve.

"We expect companies will request increases in bills at the next price review to fund large investment programmes, and those programmes will deliver improvements to the environment."

Former environment secretary George Eustice said last Wednesday bills were set to rise again in 2025 by about £42 per household on average over a "long time frame".

It followed a report in the Times newspaper that increases could be as much as 40%, a figure Mr Eustice dismissed, saying it would be "far lower".

Water UK, which represents suppliers, told the BBC any rises would be a matter for the regulator.

Last week it emerged that Thames Water was struggling to raise the money it needed to service its huge £14bn debt pile.

The firm, which supplies a quarter of the UK population, has faced heavy criticism over sewage discharges and leaks and is under pressure to improve its services.

If Thames cannot raise the money it could be put into a "special administration regime" - where it would be temporarily re-nationalised - although Mr Black said this remained a "backstop option" and "we're still a long way from that".

Mr Black said Thames had until the "early part of next year" to find the money and currently had £4.2bn cash reserves in the bank.

Asked specifically if customers would have to pick up the tab if investment was not forthcoming, he responded: "No."

Last week Health Minister Neil O'Brien also sought to assuage concerns about the potential impact on customers, but the influential business select committee warned taxpayers could still be hit.

'Taxpayers exposed'

Labour MP Darren Jones told the BBC that if the government was forced to take over the running of Thames Water, "taxpayers will be exposed to the debt and running costs of a very large company".

But an Ofwat spokesperson said there were no similarities with the collapse of Bulb - the energy company which went under last year costing the taxpayer millions. "This is not a Bulb moment, there is no switch on, switch off here." they said.

Ofwat says it is still waiting to see how Thames Water plans to fix its finances and that the company needs to raise "substantial" sums. Talks are ongoing to try to secure the extra funding.

The regulator has faced claims it has failed to properly oversee the industry.

But Mr Black said companies were responsible for their financial structures, not Ofwat, which was tasked with protecting customers.

Last week Thames Water was fined £3.3m over a "reckless" incident in which "millions of litres" of undiluted sewage was pumped into rivers near Gatwick Airport in 2017.

Business plans

Mr Black's comments follow his appearance at the Lords' business committee at Parliament on Tuesday, during which he said Ofwat was waiting to see Thames Water's revised business plan to assess its future needs.

However, he told the committee "substantial sums of money" were needed.

Water companies across England and Wales need to submit their business plans for 2025-2030 to Ofwat by 2 October. These include its planned improvement works for the period.

The regulator will then issue its draft parameters over what can be charged early next year.

Industry body Water UK announces price increases annually, usually in February.