(Bloomberg) — Average UK water bills are set to rise 26% from April, the biggest ever increase for households and business still feeling the sting of a cost-of-living crisis.
The industry association Water UK announced details of the hike, which is adjusted to inflation, following industry regulator Ofwat’s final price determinations in December. The average bill nationally will increase by £123 ($152.93) from April 1 to £603 per household, a record level.
The hike poses a challenge to a government elected on a promise of bringing down the cost of living for working people. Also coming on April 1 is a probable increase in the energy price cap, for a third quarter and a rise in the rate of National Insurance contributions for employers that’s likely to hit jobs and pay. These factors risk pushing inflation back up this year, above 3% according to economists.
Water companies and the government both say higher bills are necessary to fund infrastructure upgrades, following a groundswell of public ire over chronic leaks and sewage spills.
“We understand increasing bills is never welcome and, while we urgently need investment in our water and sewage infrastructure, we know that for many this increase will be difficult,” David Henderson, Water UK Chief Executive, said.
Last December, Ofwat said it will allow companies to spend as much as £104 billion on upgrades over the five-year period, funded primarily by bill increases. The ruling, covering the 2025-2030 period, ended months of speculation about how utilities will fund their biggest investment programs since privatization.
“People understand that the water sector needs investment,” Mike Keil, chief executive of Consumer Council for Water, said in a parliament hearing last week. “Bills are going up but people need to see some returns for it, otherwise it would be very damaging for the sector and the sector can’t afford any more damaging.”
The UK water industry has been roiled by crises, with the country’s biggest supplier Thames Water Utilities Ltd. on the brink of running out of money, and others not far behind. The average bill for Thames, which serves a quarter of England’s population, will rise by £151.
“We recognise the challenge that some customers are facing with increasing financial pressures and understand that the water sector is not the only area where customers are faced with rising costs,” David Black, Ofwat’s Chief Executive, said.
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