Ofwat approves £104bn water industry spending plan

Aaron Morby 2 months ago
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Water companies have today received the green light to advance a £104bn infrastructure spending plan to improve water quality across the country.

Green light for promised water industry work bonanza
Green light for promised water industry work bonanza

The green light means household water bills will rise by an average of 36% to fund big investments in water and wastewater treatment upgrades.

The 2024 Price Review final determinations will trigger a quadrupling of new investment over the next five years realising a promised work bonanza for firms installed on water frameworks.

It will also open the taps to the biggest programme of water supply projects in decades, including nine new reservoirs.

Key elements of the investment package

  • £12bn on 2,884 projects reducing spills from storm overflows;
  • £6bn of upgrades to combat nutrient pollution for around 1,000 sites and catchments;
  • £3.3bn on nature-based solutions and increasing biodiversity;
  • £2bn of development funding to unlock £50bn investment for 30 major projects designed to secure water supplies including nine new reservoirs and nine large-scale water transfer schemes;
  • £456m of extra funding on day-to-day allowances to increase the rate at which water mains are replaced, with 8,445km set to be improved over the next five years.

To help finance this essential investment programme, bills in England and Wales will increase by an average of £31 per year (36%) before inflation between now and 2030. This annual average increase compares with a £39 increase requested by companies in August 2024 (44%).

David Black, Ofwat chief executive, said: “Today marks a significant moment. It provides water companies with an opportunity to regain customers’ trust by using this £104bn upgrade to turn around their environmental record and improve services to customers.

“Water companies now need to rise to this challenge, customers will rightly expect them to show they can deliver significant improvement over time to justify the increase in bills. Alongside the step up in investment, we need to see a transformation in companies’ culture and performance. We will monitor and hold companies to account on their investment programmes and improvements.”

He added: “We have robustly examined all funding requests to make sure they provide value for money and deliver real improvements, while ensuring the sector can attract the levels of investment it needs to meet environmental requirements. This has seen us remove £8bn of unjustified costs compared with companies most recent requests. In addition, our approach to setting a rate of return has saved customers £2.8bn.”

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