The water industry has warned that without even greater bill rises, firms will be unable to deliver reforms to stop sewage outflows and sufficiently improve the country’s leaky infrastructure.
The dire message was shared in a letter from industry trade association UK Water to Ofwat ahead of Wednesday’s deadline for English and Welsh water companies to submit their responses to the regulator’s draft decisions on their business plans for 2025-2030.
Ofwat had said water bills would rise an average of 21%, less than firms requested.
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Crisis-hit Thames Water said separately on Wednesday that the planned curbs meant it could not attract the fresh investment it desperately needed. It has now proposed a 52% increase to bills by 2030.
That could rise to a 59% hike, taking the average annual bill to £696, if it is given extra spending allowances by the regulator.
Thames had initially sought a 44% rise across the five-year period.
‘Uninvestable’
The industry letter, seen by Sky News, mirrored the sentiment expressed by Thames that Ofwat’s draft determinations were not tenable.
It stated that Ofwat’s plans would make it “impossible” for companies to attract the level of investment needed and would reduce the UK’s attractiveness to international investors.
For the industry to be appealing to investors it has said high fines for environmental damage must be lessened and bills hiked even higher. This was echoed in the letter.
Unless Ofwat changes course on the business plans and firms become more investible “companies will not be able to deliver for their customers and the environment or play their role in driving much-needed growth in the economy”, the letter said.
Growth and environmental damage
Economic growth will be constrained and environmental damage will continue unless Ofwat changes its plans, UK Water chief executive David Henderson wrote to David Black CEO of Ofwat.
“Without change, new homes will be blocked, the recovery of our rivers will be slower and we will fail to deal with the water shortages we know are coming.”
Companies face “the largest ever” cut to investment and “the most punitive targets ever” which will mean there’s not enough money to stop sewage outflows and fix leaky pipes.
“Ofwat’s proposed cuts would delay plans to reduce leaks, sewage discharges and service failures.”
Targets to improve water quality, service and sewage outflows are “increasingly unachievable” and “set the sector (and Ofwat) up to fail”, the letter said.
As some regions face larger cuts than others, Water UK said it would contribute to regional inequalities.
What’s happening with water suppliers?
The industry has faced widespread financial woes, millions in fines for sewage outflows, and creaking infrastructure.
The UK’s largest water supplier Thames Water risks entering a form of government insolvency known as special administration as its parent company has defaulted on debt payments.
The company said that it had submitted its response to Ofwat’s draft determination, describing it as “not tenable”.
Ofwat’s final decision will be published on 19 December.
In response to the letter an Ofwat spokesperson said:
“We expect to receive responses from many organisations, including water companies, customers, environmental and consumer organisations and investors.
“These are likely to reflect a diverse range of views on the proposals we have made. We will consider all of these responses carefully.”
(c) Sky News 2024: Thames Water seeks 52% hike to bills by 2030 as industry slams watchdog’s curbs