However, according to the BBC, water bills will now go up by more than initially expected to fund higher costs and more investment.
These hikes would add insult to injury for UK households, where trust in the water sector is already at a 12-year low, and they are facing council tax hikes and an ongoing high cost of living.
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Ofwat’s proposals have sparked a heated debate among water firms and the regulator. Suppliers wanted to push the average bill to a staggering £800, by 2030. This was to fund maintenance repairs, debt servicing and encourage investment in water, after shareholders withdrew £85.2 billion in support from ten water suppliers across the UK. But after Ofwat rejected sharp increases to household bills, firms have been left scrambling for ways to address the water industry crisis and reduce pollution levels.
Just recently, Thames Water – the UK’s largest water supplier that serves about 16 million customers – came under fire after an Ofwat investigation found that it dropped two investment grade credit ratings. The ratings are a requirement for all water companies to operate their licence. Thames Water is also facing fines of £104 million due to excessive sewage spills. On 25 October Thames Water secured a loan of up to £3bn following fears that it would run out of funding by Christmas. The cash lifeline will tide the utility giant over until October next year.
Households may have to bear the brunt of the failings of the water industry with a series of bill hikes. So, what do these proposals mean for your water bills and how could you cut costs? We explain below.
How much will my water bill go up?
Your water bill could increase by around 21% which is £19 a year, or an extra £94 over the next five years. However, a BBC report published on 22 October states that bills will now go up by more than initially expected over the next five years. The BBC says it is unclear by how much more bills will rise instead, but the watchdog will make its final decision at the end of the year.
Every water supplier proposed different hikes to service their debt and level up maintenance costs, so what you pay will depend on where you live.
Based on the original figures, Severn Trent, for instance, has proposed a £144 hike, which Ofwat reduced to £93. Southern Water customers, however, will face steep increases of nearly 44% over the next five years, taking their bills up by £183.
The spike in water bills planned for the next five years will hit customers harder than ever. Research by the National Institute for Economic and Social Research (NIESR) suggests that household disposable incomes have already fallen by up to 17% between 2019-24. Anita Dougall, CEO of consultancy Sagacity which works with Thames, Southern and Yorkshire Water argues that water companies shouldn’t service their debt by raising bills, calling it “unfair”.
The average water bill in England and Wales is around £473 a year, according to Water UK. This is an increase of around £28 on April 2023, but is below 2019-2020 levels, when it was £503 a year. Scotland’s average water bill will rise by around £36 for the 2024/25 year. If you live in Northern Ireland, there are no domestic water charges as of now.
While the above changes are set to take place from next year onwards, households will still face a rise in water bills this year. Bear in mind that water rates vary across the country, and what you are billed depends on your location, property size, and if you have a water meter.
What’s next for water suppliers?
Thames Water has a debt of £15.6 billion, about 80% of the value of its business. This makes it the most heavily indebted water supplier across the country. However, it’s not the only supplier drowning in debt. According to Ofwat, in March 2023 the water industry had a total debt of £60.6billion.
There is a criticism that since more than half of the water companies are owned by foreign investors they strip out profits at the cost of investing in the sector. Sagacity’s Dougall suggests that instead of companies servicing their debt by raising customer costs, they could recoup funds from customers who have been incorrectly billed.
She suggests, “Inaccurate occupier data means countless properties in the UK are not billed for their water supply, leaving black holes in companies' budgets. While switching off the taps isn't an option, suppliers can ensure those who can pay do.
“By gaining a better understanding of who is consuming water and their personal situation, suppliers can both protect vulnerable customers, and recover rightful revenue to keep price rises to a minimum.”
Dougall has asked Ofwat to step in and work with suppliers and CCW to regulate price hikes, so that everyone can have fair access to water.
How to cut your water bill
Given the stress we’re all feeling financially, here are some tips to help you stay on top of your household water costs and usage.
1. Get a water meter
This could mean big savings for your household if you live in England or Wales, as you could cut £100s on your household costs. Simply plug your details into CCW’s free water meter calculator to help you get an estimate of your annual water use and decide whether you could be better off switching to a meter.
If you are one of the 40% of households currently on the ‘water rates’ system, you can ask your water supplier to install a meter for free. However, if you find that you’re overpaying with one, you can ask your water supplier to go back to your old billing system. Depending on your supplier, you usually need to do this within one to two years of having the meter fitted (For eg. South West Water’s reverting period is two years).
2. Get an assessed charge bill
If you don’t have a water meter (or can’t get one – many people in flats can’t get a meter), ask for an assessed charge bill. This is a bill that is customised to your situation, based on how many people live in your house, the number of bedrooms and the type of property you live in. It can often make a significant difference to your monthly bill.
3. Wash your car smartly
The next time you wash your car, try using a bucket or a water can instead of a water hose. Not only is it more effective but it also saves you around 100 litres of water each time.
4. Reduce your water usage
Despite popular belief, it’s not very hard to reduce water usage at home. It can be small things like turning off your taps while brushing, spending less time in the shower, taking a bath, avoiding overfilling the kettle, setting your washing machine to 30 degrees Celsius, avoid pre-washing your dishes before loading them into the dishwasher and waiting until it’s full. These are just a few of the many ways you can save chunks of cash while remaining environmentally aware.
5. Maintain your appliances
If you have poorly maintained household appliances, they could end up costing you in the long run and wasting a lot more water. It’s worth doing regular inspections for any leaks or fixes and get them repaired as quickly as you can.
For instance, check if you have leaky taps, whether your shower head needs descaling, use shorter cycles on your washing machines and dishwashers, get an eco shower head and use energy-efficient appliances wherever possible.
6. Use water-saving devices
If you’re looking for more economical ways to reduce your water use, all you have to do is ask your water supplier for some water-saving devices. This can include shower heads, and tap inserts – that help regulate the water flow – along with shower timers and devices to help detect small water leaks.
Here’s how you can check what water-saving devices are available for each water company:
Save Water Save Money: If your water company is Bristol Water or South East Water, you can get freebies via Save Water Save Money or your supplier’s website. Plug in your postcode to see what is available, enter your details and receive them within 28 days.
Get Water Fit: If your water company is Bournemouth Water, Cambridge Water, Dwr Cymru, Guernsey Water, Hafren Dyfrdwy, Portsmouth Water, SES Water, Severn Trent, South Staffs Water, South West Water, Wessex Water, NI Water, Jersey Water, Scottish Water, United Utilities, or Yorkshire Water, you need to use Get Water Fit’s savings calculator for devices such as replacement shower heads along with timers.
Thames Water: Unfortunately, Thames Water no longer offers any freebies.
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Oojal has a background in consumer journalism and is interested in helping people make the most of their money.Oojal has an MA in international journalism from Cardiff University, and before joining MoneyWeek, she worked for Look After My Bills, a personal finance website, where she covered guides on household bills and money-saving deals.Her bylines can be found on Newsquest, Voice Wales, DIVA and Sony Music, and she has explored subjects ranging from politics and LGBTQIA+ issues to food and entertainment.Outside of work, Oojal enjoys travelling, going to the movies and learning Spanish with a little green owl.
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