Millions face higher water bills as suppliers allowed £3.4bn extra spending

How the water suppliers’ extra spending affects you

On Thursday, the Water Services Regulation Authority (Ofwat) announced that water suppliers could spend £3.4 billion over the £104 billion cap from this year. 

This came as 13 companies requested to be allowed to spend £4.3 billion. 

In 2024, Ofwat had approved the cost of water to rise by 36% over the next half of the decade.

The £3.4 billion in extra spending is expected to be invested into varying ‘assets’, including £477 million to enable housebuildings and datacentres development.

Five water suppliers will be allowed to increase water bills before 2030 in order to increase spending. 

These five companies are Southern Water, Thames Water, Severn Trent, Wessex Water and South East Water.

The Labour government has set out to build 1.5 million households in order to combat the ongoing housing crisis.

In addition, the government is planning on hosting AI growth zones to attract massive datacentres in the UK.

This raises questions on if the UK has enough resources and water to feed into the government’s ambitions projects.

However, £34 million of the water companies’ investments are said to go into reducing toxic chemicals in water systems, improving drinking water from the tap.

At this time, Ofwat has said it would allow spending from water suppliers as “costs were uncertain or unknown.”

What this means is that further spending could lead to greater outcomes in terms of cleanliness and quantity from water supplies.

Helen Campbell, Executive Director of Delivery at Ofwat, said: “The newly agreed funding will help unlock much-needed new housing development and boost business growth across a range of sectors.

“As well as improving drinking water quality and the removal of Pfas and forever chemicals.”

However, it is not only the government and other organisational bodies that are looking closely at water companies' spending. 

Many of us are going to be affected directly by the increasing water bills.

“I know that households across the country are watching every pound and I share their frustration,” said the environment secretary, Angela Eagle.

“Years of underinvestment and toothless regulation has led to this.

“We have already ringfenced money earmarked for new infrastructure so it can only be spent on fixing the problems,” Eagle added.

“And will go further by fundamentally reforming the water sector so that it works for the public.

“Keeping bills as low as they can be, and delivering higher standards, better performance and cleaner waterways.”