Water bills expected to rise, says regulatoron July 5, 2023 at 10:38 am

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Water companies are likely to put up bills to fund improvements, says boss of regulator Ofwat.

David BlackImage source, Ofwat

Water bills are likely to rise in 2025 to cover the cost of improving suppliers’ 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.”

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.

However, 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.

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”.

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.

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.

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