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Water companies are asking for bills to be hiked even higher than they first requested earlier this year – with one company seeking an increase of 84 per cent.
The latest requests would see the average bill for customers in England and Wales rise by 40 per cent between now and 2030, to £615 a year.
Utilities including beleaguered Thames Water have applied to the regulator, Ofwat, to hike tariffs so they can upgrade their networks, often after years of underinvestment.
The increases will also pay for higher energy costs since pumping water around the country uses plenty of power, as does treating sewage. Energy costs make up around a tenth of water companies’ costs.
Southern Water wants bills to rise the most from today’s prices, by 84 per cent, while Thames Water is asking for a 53 per cent rise. Only one company, Wessex Water, is not demanding higher bills than first requested.
Downing Street said that “no one wants to see a situation where water bills are rising” but stressed that as a regulator, Ofwat was independent of government.
The Conservatives accused ministers of planning to give in to price hikes.
Shadow environment secretary Steve Barclay said: “Before the election, Labour said they would be tough on water bosses, yet they are now giving in to their demands to hike bills on consumers.”
Earlier this year, companies asked Ofwat for bills averaging £585 by 2030, an increase of about one-third from the current average of £439.
In its draft price review in July, the regulator pared back those requests to an average of £535. But now, after a consultation period, 10 of the 11 water companies have hit back with even higher requests than before.
Since being privatised in 1989 by the then Conservative government, many water companies have been accused of underinvestment and paying large dividends to their new owners and shareholders.
Thames Water has come in for particular scrutiny because of its parlous financial position. It has been teetering on the edge of collapse and is trying to raise money from its investors.
The company has £15bn of debt and is in talks with 90 creditors who hold about two-thirds of those borrowings.
The companies have also been criticised for the amount of raw sewage dumped into rivers and the sea.
The firms can release sewage when rainfall is high to prevent flooding, but these releases have grown in frequency and have led to more beaches being shut.
The Environment Agency has warned against swimming at 24 sites in the UK because of drops in water quality, warning of the risk of sickness for those who do.
Earlier this month Ofwat said water companies were being hit with £157.6m in penalties after they missed pollution and leak targets. Thames Water accounted for more than a third of the fines at £56.8m.
These poor performances have led to calls for the companies to be renationalised but that would cost £99bn, an unlikely figure given chancellor Rachel Reeves’s plan to shore up public finances.
Baroness Hayman, a Department for Environment, Food and Rural Affairs (Defra) minister, told the House of Lords last month: “Given the significant costs attached, the government has no intention to nationalise water companies.”
Labour vowed to “put failing water companies under special measures to clean up our water” in its 2024 general election manifesto.
Ofwat will make a final decision on water companies’ plans to raise bills from 2025 to 2030 in December.
