Ofwat bill plan draws PM warning

The water regulator Ofwat has issued a draft determination that would allow 13 water companies in England and Wales to spend up to £3.4bn more than previously planned. The companies had requested £4.3bn in additional allowances, meaning the regulator scaled back the overall amount. The proposed extra spending is intended to support investment in water infrastructure and services. It would sit alongside a much larger investment programme that has already led to bill increases being scheduled over the second half of the decade.

Under the draft decision, the additional allowances would be recovered in part through higher customer charges. The proposals are provisional and remain subject to a formal consultation. Any changes to bills would only proceed if the draft determination is confirmed later in the year. Ofwat has set out a timetable that includes detailed feedback from affected stakeholders before a final ruling is made.

The draft determination envisages that five companies – Southern Water, Thames Water, Severn Trent, Wessex Water and South East Water – will be allowed to increase charges before the end of the decade to recover some of the extra spending. These rises would come on top of earlier bill increases linked to previously approved investment plans. The scale and timing of the additional bill changes would vary between companies and would take effect only if Ofwat confirms its draft decision.

Households served by these suppliers therefore face the prospect of further upward pressure on water bills in the coming years. The regulator’s approach seeks to balance funding for new investment with the affordability of services. However, the prospect of higher charges has already prompted political scrutiny and public debate over how the costs of upgrading the water system should be shared.

Prime Minister Andy Burnham has sharply criticised the idea that customers should bear excessive costs from the additional allowances. He said water customers "cannot be treated as a blank cheque" and warned that any attempts to pass unnecessary costs on to households "will be challenged". His comments signal closer political attention on how regulated utilities finance investment and set prices.

Burnham also stated that the government will consider giving the public more control over the water industry as a way to help keep bills low. While no specific mechanisms were detailed in the available information, the remarks indicate that options for strengthening consumer influence are under review. The intervention places added pressure on both Ofwat and the companies as they navigate the consultation process.

Ofwat’s draft determination now moves into a consultation phase running until 24 September 2026. During this period, water companies, consumer groups and other stakeholders can respond to the proposals and challenge aspects of the planned spending and bill impacts. The feedback will inform any revisions to the allowances and charging plans.

A final decision is expected in December 2026, after the consultation responses have been assessed. Only at that point will it be clear how much extra spending is ultimately authorised and how it will translate into customer bills. Until then, the £3.4bn figure and associated charge increases remain provisional and could be adjusted in light of evidence and public concerns.