Millions of households face higher water bills after the industry regulator gave five companies the provisional go-ahead to collect billions more from customers.
Prime Minister Andy Burnham has warned water companies they cannot treat households as a “blank cheque”, as anger continues over rising bills and poor performance across the sector.
Ofwat has provisionally allowed water companies in England and Wales to spend an additional £3.4 billion by the end of the decade.
The money is intended to fund upgrades to water networks, help infrastructure cope with new homes and data centres and tackle potentially harmful PFAS, or “forever chemicals”, in drinking water.
But the decision is likely to fuel further anger among households already facing higher water bills.
Ofwat had previously approved an average 36% increase in water bills between 2025 and 2030, with bills already rising sharply.
Burnham warns water firms
Mr Burnham said he understood why customers were angry about the latest decision.
“The truth is customers have been asked to pay more for years, yet serious pollution incidents are at record levels and the pipes are still leaking,” he said.
He added: “None of which is the billpayer’s fault, who should not be treated as a bottomless source of funding for other people’s failures.”
The Prime Minister warned water companies against simply passing additional costs on to customers.
“Customers cannot be treated as a blank cheque,” he said.
“Where water companies seek to pass unnecessary costs on to households, they will be challenged.”
Mr Burnham said the Government would look at ways of giving customers more control over the industry while keeping bills as low as possible.
He said: “Our water industry has clearly not been working for people for far too long.”
Which water companies can raise bills?
Five of the 13 water companies covered by the Ofwat decision have been provisionally allowed to increase charges to fund additional investment.
They are:
- Thames Water
- Severn Trent Water
- Southern Water
- Wessex Water
- South East Water
The increases are expected to apply between 2027 and 2030, although the final decision has not yet been made.
Ofwat's latest decision follows requests from the 13 companies for a total of £4.3 billion in additional investment.
The regulator has provisionally approved £3.4 billion.
Some water customers face another increase
Thames Water is among the companies that could increase bills under the latest proposals.
The company, which serves around 16 million customers, is already under intense financial pressure and has more than £20 billion of debt.
The prospect of further bill increases is likely to add to frustration among its customers.
South East Water is also facing scrutiny following a series of supply interruptions which have left thousands of homes, businesses and schools without water.
The latest proposals are therefore being announced against a backdrop of continuing criticism over sewage pollution, water quality, leaks and supply failures.
Customers' group demands answers
The Consumer Council for Water (CCW) said households were already struggling with rising water bills and wider cost-of-living pressures.
Steve Hobbs, senior policy lead at the organisation, said customers wanted investment but needed to know their money was being spent properly.
“Customers want investment that delivers cleaner rivers, more reliable water supplies and infrastructure fit for the future,” he said.
But he added that this had to be balanced against the pressure already facing households.
“Ofwat needs to be able to show that every pound of this additional £3.4 billion is necessary, delivers value for money and is not funding work water companies should have already have paid for,” Mr Hobbs said.
He said trust in water companies was at an extremely low level.
“Trust in water companies has never been lower and customers need to see their money is being well spent,” he said.
Why are water bills going up?
Ofwat has already allowed water companies to increase bills by an average 36% between 2025 and 2030.
There was a particularly large increase in 2025, followed by another 5.4% average increase from April 2026.
The latest proposal is separate and would allow selected companies to collect additional money from customers to fund further investment.
Water UK, which represents the water companies, defended the additional spending.
A spokesman said the summer's drought had demonstrated the need for new investment.
“This summer’s drought has shown exactly why new investment is so vital,” he said.
The organisation said the money would help safeguard services, support new homes and business growth and replace ageing infrastructure.
It acknowledged that increases would be difficult for some households.
“Where bills will rise, we recognise any increase is difficult and help is available for anyone struggling to pay,” the spokesman said.
Government promises water regulator shake-up
Environment Secretary Angela Eagle also criticised the current system of regulation.
She described regulation of the sector as “toothless” and promised to “fundamentally reform” it.
She said: “I know that households across the country are watching every pound and I share their frustration that years of underinvestment and toothless regulation has led to this.”
Ofwat said the additional investment would help address some of the infrastructure problems facing the sector.
Helen Campbell, Ofwat's executive director for delivery, said the money would support new housing and business growth while improving drinking water quality and removing PFAS and other forever chemicals.
She said the regulator would monitor the companies' performance.
“If they don’t, expenditure can be clawed back,” she said.
Ofwat will consult on the draft decision until September 24, with a final decision expected in December.
That means households will have to wait until later this year for confirmation of exactly which companies can increase charges and by how much.
Share