Water bills are expected to increase by around 30% in the next five years, according to a significant report aimed at reforming the troubled industry. Sir Jon Cunliffe, the former Bank of England chief, highlighted a substantial surge in customer bills in the past year. Water UK has already cautioned that the national average water bills for the upcoming year (2025-26) are projected to climb by £123, equivalent to a 26% rise, approximately £10 per month.
In an interview with BBC Breakfast, Sir Jon emphasized the inevitability of bill hikes exceeding 30% in real terms over the next five years. Factors such as climate change, stricter environmental standards, demographic growth, and the necessity to modernize aging infrastructure contribute to the escalating costs of water production and wastewater management.
Addressing the need to support vulnerable individuals and manage increased water expenses effectively, Sir Jon stressed the importance of regulators incentivizing water companies to enhance efficiency. These statements accompanied the release of over 80 recommendations by the long-awaited Independent Water Commission, established by the Labour government.
Sir Jon proposed the elimination of the current regulator Ofwat, advocating for the establishment of a more cohesive and robust integrated water regulator, following criticism from Environment Secretary Steve Reed. Ofwat, responsible for regulating water companies’ service charges in England and Wales, would be replaced by a unified regulatory body, as per the recommendations.
The existing system has faced strong condemnation for overseeing water companies while they distributed dividends to shareholders, accumulated substantial debts, and witnessed a rise in sewage spills amid deteriorating infrastructure. Water minister Emma Hardy echoed the sentiment that the water system is dysfunctional and consumers have been consistently let down. She endorsed the Independent Water Commission’s findings, emphasizing the urgent need for comprehensive reforms to rectify the crisis.
Emma Hardy expressed her dismay at the 26% increase in water bills, attributing it to the deteriorating infrastructure. She supported Sir Jon Cunliffe’s suggestions for reform, underscoring the necessity for significant changes to address the pressing issues within the industry.