Key facts
- Water bills in England and Wales are set to rise as regulator Ofwat allows water companies an additional £3.4 billion in spending.
- The extra funding is intended to support new housing developments, data centers, and pollution reduction efforts.
- Five specific water companies will see earlier bill increases, with others spreading costs into the 2030s.
- The decision is provisional and subject to public consultation, with a final decision expected in December.
Millions of households in England and Wales are set to face higher water bills following a decision by the industry regulator, Ofwat, to permit water companies to spend an additional £3.4 billion. This extra expenditure, which comes on top of an already approved £104 billion investment program, is intended to facilitate new housing developments and support the growth of data centers.
Ofwat announced on Thursday that 13 water companies had requested to spend an extra £4.3 billion due to unforeseen costs. The regulator approved £3.4 billion of this request. The additional funds include £1.2 billion for safeguarding water services and assets and £477 million for enabling housebuilding and data center development. Five companies—Southern Water, Thames Water, Severn Trent, Wessex Water, and South East Water—will be permitted to increase bills more significantly before the end of the decade, while others will spread the costs into the 2030s.
This development raises questions about the UK's resource capacity, as the government aims to build 1.5 million new homes and establish AI growth zones requiring substantial data center infrastructure. Approximately £34 million of the extra spending is also designated for reducing toxic chemicals in the water system, a move announced shortly after data revealed widespread pollution in English water bodies.
Helen Campbell, executive director for delivery at Ofwat, stated that the new funding would enable water companies to proceed with necessary projects without delay, supporting housing and business growth while improving environmental outcomes. She added that performance would be tracked and expenditure could be clawed back if companies fail to deliver.
However, the decision has drawn criticism from politicians and environmental groups. Prime Minister Andy Burnham expressed concern about the impact on family budgets during the cost of living crisis. Campaign groups like River Action and Friends of the Earth described the decision as an "insult" and "daylight robbery," citing decades of underinvestment, leaks, and pollution. They advocate for greater public control over water companies.