- Written by Kevin Peachey
- cost of living correspondent
image source, Getty Images
Water companies are predicting average household bills will rise faster than inflation in April, drawing criticism from activists.
Average annual water and wastewater bills in England and Wales are expected to rise by 6%, from £27 to £473, according to supplier trade group Water UK.
In Scotland, water and waste charges will rise by 8.8%, or £36.
Water companies are under intense scrutiny after dumping sewage into rivers.
Water UK chief executive David Henderson said: “Next year will see record amounts of investment from water companies to secure the future of water supplies and significantly reduce the amount of sewage in our rivers and oceans. It's expected,” he said.
He said businesses in England and Wales were expected to invest more than £14.4 billion in the next financial year, which would be the highest annual investment ever.
Giles Bristow, chief executive of the charity Surfers Against Wastewater, described it as “a small step on a very long road to recovery”.
He said: “This perhaps signals that the water industry is finally waking up to the scale and extent of the sewage scandal and the chronic condition of the UK's water system.”
Charges may vary
The expected average bill is calculated by businesses and will exceed the latest inflation rate of 4%, which measures general price increases. Actual individual charges may vary significantly based on regional differences and meter usage levels.
In England and Wales, Wessex Water and Anglian Water are at the top of the list, with average bills set to rise to £548 and £529 respectively, while customers in Northumbria will have the lowest average bill at £422 .
One of these, Welsh Water, which serves the majority of people in Wales, will actually reduce your bill by 1% in April.
The watchdog also told suppliers they needed to offer support to people struggling with their bills.
Chief executive David Black said: “We know this is a big worry for people who are already struggling, which is why water companies are taking steps to protect those who need help most. We must do our best.”
More than one million households in England and Wales are getting cheaper rates through the Business Social Tariff scheme, saving an average of £151 last year. Around half of households in Scotland receive financial support from their water bill.
Five water companies are allocating a portion of their profits to fund social charges, and consumer groups are calling on other water companies to join.
Mike Keel, chief executive of Consumers' Council for Water (CCW), said: “Nearly a fifth of households say they are struggling to pay their water bills, and these increases are likely to affect low-income households. “This will put even more pressure on our customers.”
“If water companies are serious about restoring confidence in the sector, they should use some of their profits to help those who can't afford new rate increases.”
Commenting on why water companies continue to use profits to pay dividends to shareholders, Water UK's Mr Henderson argued that the industry-wide average is 3% and has been at that rate since the beginning of the decade.
“Once you hit the dividend, you don't get the investment you need. Investors around the world can put their money in other sectors, in other countries. It’s extremely important.”
Separately, Ofwat is considering proposals by water companies in England and Wales to increase bills by £156 a year by 2030 to pay for upgrades and reduce sewage emissions.
Water UK says the increase will almost double infrastructure spending to £96bn.
But Jim Wright, global infrastructure revenue fund manager at Premier Mitten, suggested that even this increase may not be enough to upgrade Britain's water and wastewater systems.
“The number of people involved is huge,” he told BBC Radio 4's Today programme.
“Obviously, you will be replacing systems that are 100 years old in some cases, which could potentially cost tens of billions of pounds over the next 10 to 20 years. You have to weigh it up against what you can pay in book form. It's a tough dilemma for Ofwat.”
Mr Wright acknowledged that the cost of infrastructure in England must be borne by customers, but said the average household paid £1.29 a day for water and wastewater services.
“It's obviously not a huge amount,” he said. “If it increases, it will certainly hurt people's pockets, but if it increases by 30-40% over the next 10 years and you get good results from that spending, it's probably an affordable number.”
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