Water companies are to invest more than £96bn to upgrade the water and sewerage network – but in return customers face an increase of £156 a year to average bills by 2030.
The companies, who have faced months of criticism for their performance on issues including overflows of raw sewage into rivers, will submit their five-year investment plan starting in 2025 to the industry regulator Ofwat this week.
Under the blueprint, the privatised water industry is pledging to nearly double current levels of investment.
It has pledged to introduce a raft of new measures, including building 10 new reservoirs to ensure supply security, and reducing leakage by a quarter compared to 2020 levels.
The package will also see £11bn spent on tackling the issue of sewage overflows, reducing the number of spillage incidents by 140,000 a year in what industry body Water UK claimed will be “the most ambitious modernisation of sewers since the Victorian era”.
But the plan, which requires Ofwat’s approval, also confirms expectations that renewal of Britain’s water infrastructure will result in higher bills, with proposed “incremental” increases to the amount charged to customers over the five-year period from 2025-30.
In the first year of the plan, average bills in England are expected to rise by £7 per month, rising to an increase of £13 per month by 2030.
Water companies are under pressure to minimise any rises while also gaining suitable investment from private sources. Campaigners argue that the companies, many of which have made substantial profits since privatisation in 1989, should rely on extra investment from shareholders rather than extracting additional funds from bill payers.
Last week Severn Trent, which services millions of households across the Midlands and Wales, raised £1bn from shareholders to help fund its £12.9bn plan.
It also revealed that the average customer’s bill would rise 36 per cent from £379 in 2024-25 to £518 in 2029-30.
Water UK said it understood the impact of the cost-of-living crisis on customers and its consequently plans commit to more than doubling the number of households eligible to receive support on bills to some 3.2m – an increase of more than two million homes.
David Henderson, chief executive of Water UK said: “These record-breaking investment proposals will secure our water supply as we deal with a changing climate and a growing population.
“While increasing bills is never welcome, this investment in our country’s infrastructure is essential to ensure the security of our water supply. Water companies are seeking regulatory approval to reduce overflow spills into rivers and seas as fast as possible and to doubling the number of households receiving support to pay their bills.”
Oftwat has warned that firms must show “ambitious” plans to tackle pollution while also giving customers value for money.
Ofwat chief executive David Black said: “The water industry needs to deliver a step change in investment and performance to clean up our rivers and seas while also helping to ensure we can meet the climate change challenge.
“Ofwat’s role is to forensically scrutinise their proposals, to ensure any increase in bills is justified, efficient and delivers significant improvements in water quality. We will assess how companies help customers to afford any bill increases.”
Customers and stakeholders will be consulted on the plans over the coming months, the regulator said.
A spokesman for the Department for Environment, Food and Rural Affairs said: “We expect water companies to use their next five-year business plans to set bold and ambitious plans that deliver for people and the environment – delivering the clean and plentiful water the public expect.”