Water companies should spend more on helping vulnerable customers, according to consumer groups, as households in England and Wales brace for steep bill increases to be announced this week.
The water regulator, Ofwat, is due to reveal on Thursday how much water bills will rise over the five years from next April.
The industry is asking for permission to charge billions of pounds more to pay for upgrades but also to recoup financial returns for its investors.
The Consumer Council for Water (CCW), which represents households, said it was concerned that rising bills would make water unaffordable and that Ofwat should make companies step up support.
Mike Keil, the CCW’s chief executive, said: “There needs to be far greater ambition from some water companies in providing support to households who are not going to be able to afford these large bill rises.
“Companies’ existing plans fall short of meeting the commitment they previously made to end water poverty in England by 2030 and Ofwat should push them harder to deliver on this.”
Some campaigners want to see the introduction of a single social tariff for water, funded by a common pot into which all suppliers would pay.
Water companies in England and Wales already offer their own social tariffs, providing discounts to consumers on low incomes. However, some of the schemes are more generous than others, and because each company operates as a monopoly in its region there are vast disparities in how much consumers pay depending on where they live.
Tom MacInnes, the director of policy at Citizens Advice, said companies should work with the government to ensure that vulnerable people receive more help.
“We know water firms need to fund investment, but many households will struggle to shoulder these price rises,” he said. “Social tariffs for water – cheaper rates for those who need them – should be the safety net. The problem is there’s a postcode lottery for this support and our advisers report that people often don’t know about the tariffs, or face hurdles applying for them.”
Water company plans have come under intense scrutiny amid widespread disgust over sewage being regularly pumped into seas and rivers. However, part of the bills increase will also provide returns for investors England’s privatised water industry.
However, data obtained via a freedom of information request has shown that no fines have been issued to water companies for illegal sewage overflows, despite the Environment Agency identifying 465 since 2020, the Telegraph reported.
A further 154 are under investigation as potentially illegal spills with no instances of any enforcement action higher than a warning.
Ofwat sets out the amount that water companies in England and Wales are allowed to charge customers over five-year periods.
The regulator in July laid out a draft plan to allow companies to increase bills by £94 to £535 a year on average between 2025 and 2030 (with inflationary increases on top). The plans equate to £88bn in investment paid for by customers, but the industry wanted to charge £105bn.
The industry and consumer groups expect Ofwat to increase its offer above the £88bn in its final determination.
Any increase will be particularly important for Thames Water, which is struggling with debts of £19bn. Thames, which supplies 16 million customers across London and the Thames Valley, said on Tuesday it would run out of cash in March if it did not manage to agree a £3bn financial package, ahead of trying to raise a further £3bn in equity investment.
Several opposition politicians and campaign groups want the government to put Thames Water into special administration, a temporary nationalisation that is likely to impose losses on many lenders.
Research showed that, even before next April’s price increases, many households have struggled with water bills, which rose by 6% on average earlier this year.
In the first 11 months of 2024, Citizens Advice helped 40,700 people with water debt, a 14% increase on the same period in 2023. The average size of water debts of people asking for advice has also increased by 7% in the year to November, from £728 to £789.
Water UK, an industry lobby group, said CCW’s polling showed 75% support for investment to “support economic growth, build more homes, secure our water supplies and end sewage entering our rivers and seas”.
“We urgently need investment in our water and sewage infrastructure,” a spokesperson said. “However, we understand bill rises are never welcome, and water companies are massively increasing the level of financial support they offer to customers.
“Currently more than 2m households receive some level of support, including payment breaks, reduced tariffs and debt relief, and this number is set to increase to more than 3m in the next five years.”
An Environment Agency spokesperson said: “All spills are assessed to identify any noncompliance, and we will always pursue and prosecute companies that are deliberately obstructive or misleading, and take action if they are found to have breached the conditions of their permits.
“We are also increasing our water company inspections fourfold this year, with up to 500 additional staff, and making better use of data and intelligence to inform our work and hold water companies to account. We cannot comment further on live investigations until enforcement is complete.”
