Millions have been warned to brace for an average 21 percent surge in water bills over the next five years. Details of the increases are due to be announced this week as households across England and Wales are forced to pay for a “catastrophic failure” of underinvestment and toothless regulation.
Environment Secretary Steve Reed, who has responsibility for the privatised water industry, said the public has every right to be angry about the prospect of higher bills and industry failure. He told the Observer that a widespread “failure of regulation and governance” was to blame for bill rises expected to average at least 21 percent over the next five years.
He said a “complete reset” of the water industry was needed in the face of poor service, polluted waterways and persistent leaks.
The water industry regulator Ofwat has already warned that the increases are needed to pay for improvements.
It signalled that increases would amount to an average of £94 a year – 21 percent – over five years. However, the privatised water companies have been pushing for a higher 40 percent.
Amid warnings that the hike could hit many families already in financial distress, Reed said he was now doing everything he could to fix a broken and discredited system to stop similar price rises happening again.
He said: “No one wants to see these bills rise. I share people’s anger that this will be happening. We don’t know what the final figure will be, but the higher bills people will be seeing are because of the Conservatives’ failure over the last 14 years to invest in improving the water infrastructure.
Mr Reed added: “It’s got crumbling infrastructure, it’s got bursting pipes, and we’ve got the highest level of sewage ever recorded. People up and down the country are furious about the level of sewage pollution in our rivers, lakes and seas.
“At the same time, the Tories allowed money to be spent on bonuses and shareholder payouts – £41m in bonuses since 2020 – to water executives who are overseeing catastrophic failure.”
Mr Reed said the government was already bringing in new rules ring-fencing money for investment, as well as handing Ofwat the power to ban unfair bonuses and introduce personal criminal liability for water executives responsible for pollution. A commission has also been ordered to draw up the “biggest reset in 35 years”.
He added: “This government cannot undo the damage that the Tories did to our water infrastructure by refusing to invest in it for 14 years. I know there’s no way that I can undo that damage.
“It’s happened, and now consumers are being asked by Ofwat to pay the price of that failure. What I can do is make sure it never happens again.”
The minister said the price setting regime is independent of the government and he has no power to intervene. However, there have been calls for the regulator Ofwat to be scrapped and the entire price setting regime to be revised.
Ed Davey, the Liberal Democrat leader, said: “Families across the country, already struggling to make ends meet, have been faced with sky-high water bills, while water company executives have lined their pockets with bonuses.
“The Liberal Democrats are urging the government to scrap Ofwat and introduce a tough new regulator with real teeth, to make sure water companies put customers and the environment first, instead of just lining the pockets of their shareholders.”
