Households’ annual water bills could rise to £2,000 within 25 years, according to the regulator Ofwat.
Rises in April took the average cost in England to £603 a year. Some companies were already expected to raise prices by 53 per cent by 2030, but Ofwat has forecasted that the average could balloon to more than £1,000 by 2050 — rising to about £2,000 after taking inflation into account.
The regulator said the anticipated increase was needed to pay for up to £400 billion of investment between now and 2050 to clean up waterways, reduce the amount of water drawn from rivers, and build new transfers and reservoirs to avoid a potential shortfall of 5 billion litres of water a day.
Bills have risen 67 per cent in real terms since the water industry was privatised in 1989, though the regulator noted that average bills had slightly fallen between 2009 and last year.
The prospect of £2,000 water bills was seized upon by campaigners who want the industry to be nationalised. Such a move has been excluded from a government commission reviewing water regulation.
Matthew Topham, the lead campaigner at We Own It, a group which campaigns against privatisation, said: “If the commission had been allowed to consider public ownership — the solution used in nearly every other country — it could keep bills far lower … 82 per cent of Brits want water in public hands, but all the government is doing is sitting on its hands and hoping the problem will go away.”
The charity River Action said the 2050 projection exposed “decades of regulatory failure”, adding: “Polluters must pay.”
The £2,000 figure was revealed in Ofwat’s submission to the water commission led by Sir Jon Cunliffe, a former deputy governor of the Bank of England. He is expected to report his findings in June.
Ofwat also called for reform of the planning system, which is one reason why no new reservoir has been built in the UK since 1992. Planning processes have “been slow to enable the development of water resources”, it said, which had “increased the risk of water scarcity”, particularly in the east and southeast of England.
The regulator welcomed plans to develop more water supplies but said it had concerns about some companies’ plans for desalination plants, which turn seawater into drinking water. “They have significant environmental impact, including the impact of brine discharge on marine wildlife, high power usage, and high operating costs, as well as operational issues if the plants are only needed to manage occasional very dry periods,” Ofwat said, in an apparent reference to Thames Water’s desalination plant being offline during the hot, dry summer of 2022.
It also said it wanted to see a greater use of the financial model used to support Thames Tideway, the £5 billion sewer recently completed in London.
The bosses of Thames Water, the UK’s biggest water firm, will be questioned by the Commons environment, food and rural affairs select committee next week. MPs are expected to ask about bill rises, executive pay and the future of the debt-laden company.