Water bills expected ‘to drop by £20 over next five years’

Ofwat said the decision – which confirms a provisional determination in August – would see national average bills for water and sewerage services in England and Wales fall from £396 to £376.

When the process for setting bills began last year, water companies had submitted plans which would on average have cut bills by 2 per cent in real terms.

Ofwat rejected a request by Britain’s biggest water company, Thames Water, to increase household charges by 3 per cent over 2015 to 2020 to help pay for the £4.2bn Thames Tideway Tunnel. It has been told it must instead cut them by 5 per cent. It also said utility firms must improve efforts to tackle water leakage, supply interruptions, sewerage water flooding of properties and see cleaner water at beaches.

By 2020, Ofwat said customers will benefit from substantial improvements in areas of service, including:

• More than 370 million litres a day saved by tackling leakage and promoting water efficiency – enough water saved to serve all of the homes in Birmingham, Manchester and Leeds
• A reduction in the time lost to supply interruptions (down on average 32 per cent)
• Around 4,700 fewer properties flooded by sewer water
• Cleaner water at more than 50 beaches.

‘The hard work begins’

Ofwat chief executive Cathryn Ross said: “With bills held down by five per cent and service driven up over the next five years, customers will get more and pay less. Where companies stepped up to do the best they could for their customers we did not need to intervene. But where companies fell short we stepped in to make sure customers get a good deal. Now the hard work begins.

“Companies will only build trust and confidence with their customers if they deliver. Those who do can look forward to fair returns, while those that don’t will be hit in the pocket and face a tough five years ahead.”

New charges will come into effect in April 2015.

‘Water bills are going up not down’

However, Labour’s shadow environment secretary, Maria Eagle, said that inflation would make customer’s bills rise: “For many people prices are still going to be rising faster than wages and that’s why one in five people are struggling with their water bills. Water companies are allowed to add inflation to these prices and for most people that will put their bills up. The truth is that the water industry isn’t working for consumers and David Cameron has done nothing to address it. It’s unacceptable that some companies paid no tax last year while millions of customers are struggling with the cost-of-living crisis.

It’s time for a new deal with the water companies. Maria Eagle MP

“It’s time for a new deal with the water companies and the next Labour Government will deliver it. We will reform the water industry, creating a national affordability scheme to support those customers who are struggling most with their bills. We’ll also give the regulator tough new powers to cut bills and ensure that water companies play by the rules and put consumers first.”