The UK government has told water companies to put ‘consumers before profit’ after the industry admitted households would be asked to foot the bill for a £10bn investment program to reduce sewage spills.
Ruth Kelly, director of industry trade body Water UK, acknowledged on Thursday that a proposal by water companies to increase investment to help prevent sewage spills for the rest of the decade, customers would pay through “modest increases in their bills.”
But Downing Street said on Thursday the government did not want households to bear the burden of investment.
“We’ve been clear throughout that we don’t want to see things disproportionately affect customer bills, especially since we know people across the country are struggling with the cost of living, which is why we’re helping. we have in that area,” he said.
The proposed increase in bills still needs to be approved by regulator Ofwat, which said it would “look into the details” as part of its normal process, which requires companies to submit their business plans by October. The final decision will be made in 2025.
Ofwat said he would consider whether the £10bn investment proposal it was new construction or projects for which companies had already been paid, as well as its fit with other needs such as the urgent requirement to repair leaky pipes.
“Water companies should explain how their proposals will be funded, the proposed impact this will have on bills, and its expected return to shareholders and lenders,” the regulator said.
According to Ofwat, only 60% of the £2.2bn that water companies could have invested in wastewater infrastructure by 2025 has so far been spent.
It has already tabled a proposal to bring £1.6bn of originally planned 2025 to 2030 spending forward over the next two financial years to reduce sewage spills from storm overflows.
Household bills rose 7.5 percent in April, the biggest rise in two decades, to an average of £448 a year.
It is not yet known what the impact on bills would be if the £10bn investment is agreed, as it is set according to an Ofwat formula.
Shadow environment secretary Jim McMahon told Sky News water companies should not pass the cost on to consumers. “We can’t have, in a cost-of-living crisis, families shoulder the burden of that because the water companies still think they can carry on with business as usual.”
Sir Dieter Helm, professor of economic policy at Oxford University, said Water UK’s announcement was “more of a spin than an apology.”
“If they regret their many failures, I want to know what they are going to do to correct it,” he said. “If the answer is that they’re going to get the regulator to approve another £10bn to be funded by customers, that doesn’t sound like an apology. That sounds like a very profitable option for them.”
All it says is if Ofwat throws us some more customer money, we’ll make some more.”