Ofwat – the regulator of water companies in England and Wales – has today announced that companies will be allowed to increase their bills by 36 per cent by 2030.

The bump will mean that we’re set to pay more for our water bills than ever before. 

And that 36 per cent headline rise will come on top of future inflation.

FactCheck analysis finds that, in cash terms, this means the average water bill will top £700 in 2030 – around 50 per cent higher than today.

How much have water bills risen?

Prior to this, water bills had stayed fairly stable throughout the 2010s in real terms (i.e. once you account for inflation).

And, since 2020, bills have actually fallen in real terms. The water industry says bill increases didn’t keep up with the huge inflation we saw during the cost of living crisis. 

But bills are now set to rocket upwards following Ofwat’s announcement, which covers the next five years – meaning they’ll reach around £600 by 2030. 

Bear in mind, this is in 2022-23 prices, so the number you’ll actually see on your bill in 2030 will be higher. That’s because water companies will also be allowed to add extra on to your bills to account for inflation. 

And our analysis shows that, even using moderate inflation assumptions, this means the average water bill will be over £700 cash in 2030.

This is 50 per cent more than the average bill in cash today.

We don’t know what inflation will be in future years, but we assume the target of 2 per cent in our analysis. If inflation ends up being higher, the cash increases would be even higher too.

Ofwat and Water UK will not estimate average bill prices in cash for 2030 as they say they do not have a view on what future inflation will be.  

Why are water companies allowed to raise bills?

In the summer, Ofwat provisionally said it was going to allow bills to rise by around 21 per cent in real terms over the next five years. 

It’s now revised that figure upward to 36 per cent – though this is still lower than what companies asked for.

Water companies and Ofwat say they need more money to invest in order to fix our water system, following revelations about the huge volume of sewage they’ve been spilling into waterways

Now, Ofwat says the allowed bill increases will be used to fund a £104 billion investment in the system, which will go towards reducing sewage spills and pollution, and improving services. Some of the promised infrastructure improvements will include nine new reservoirs.

But companies have faced heavy criticism for the dividends they’ve paid out to shareholders since privatisation, and the bonuses they’ve paid to water bosses.

David Black, Ofwat Chief Executive, said: “Water companies now need to rise to this challenge, customers will rightly expect them to show they can deliver significant improvement over time to justify the increase in bills”.

Water UK, the body which represents the water industry, said today: “After a decade of cuts Ofwat has finally listened to public anger and agreed a much-needed quadrupling of investment in our aging infrastructure”.

“We understand increasing bills is never welcome. To protect vulnerable customers, companies will triple the number of households receiving support with their bills to three million over the next five years.”

(Image credit: ANDY RAIN/EPA-EFE/Shutterstock.)