Millions of homes set for bigger jump in water bills in new cost of living blow

Millions of households are set to see bigger jumps in their water bills after five companies were given permission to raise prices by more than previously announced.

The five companies - Anglian Water, Northumbrian Water, South East Water, Southern Water, and Wessex Water - had argued that the original increases set by water regulator Ofwat were not enough.

Ofwat said in December that water firms could raise bills by 36% over the next five years - an average increase of £157 - to help pay for upgrades and reduce sewage discharges.

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The firms launched an appeal in March, which then triggered an investigation by the Competition and Markets Authority (CMA).

The CMA has today said Anglian and Northumbrian should be allowed to increase their bills by a further 1% than what was previously announced, Southern by 3%, South East by 4% and Wessex by 5%.

These companies collectively serve seven million households in the UK. The CMA said the firms had asked to increase bills to create an extra £2.7billion in revenue, but it had only allowed 21% of this, which equates to an additional £556million in revenue.

But consumer groups have today warned that households have already been hit by steep bill increases in April this year, when the average water bill rose by approximately £123 a year.

Kirstin Baker, who chaired the independent group of experts appointed by the CMA to consider the price controls, said: “We’ve found that water companies’ requests for significant bill increases, on top of those allowed by Ofwat, are largely unjustified.

“We understand the real pressure on household budgets and have worked to keep increases to a minimum, while still ensuring there is funding to deliver essential improvements at reasonable cost.”

Mike Keil, Chief Executive of the Consumer Council for Water (CCW), said: "Many customers are still trying to absorb the impact of April’s unprecedented rise in water bills, so any further increases will be very unwelcome.

“CCW’s own analysis suggests there was an opportunity to reduce these five companies’ financing costs, cutting bills by around £41 a year, but instead the CMA has chosen to increase their rate of return.

"There is a danger the customers of these companies will end up paying more, without seeing any additional improvements in return. "

Water minister Emma Hardy said: “I understand the public’s anger over bill rises – that’s why I expect every water company to offer proper support to anyone struggling to pay.

“We’ve made sure that investment cash goes into infrastructure upgrades, not bonuses, and we’re creating a tough new regulator to clean up our waterways and restore trust in the system.

“We are laser-focused on helping ease the cost of living pressure on households: we’ve frozen fuel duty, raised the minimum wage and pensions and brought down mortgage rates — putting more money in people’s pockets.”

How to save money on your water bill

You can't switch water providers - but there are still ways to save money. Using less water is the most obvious way to cut your bills and you don't need to make drastic changes to do this.

For example, reducing your shower time by just one minute or making sure taps are switched off when not in use. You may also be able to save money through installing a water meter.

Martin Lewis suggests, as a general rule of thumb, that you could save cash if you have more or the same number of bedrooms in your house than people. Use the free calculator on the CCW website to check if you'd benefit from a water meter.

Households can also bag a range of free water-saving devices through Save Water Save Money. The gadgets include shower heads which help regulate water usage, tap inserts to regulate water flow, and cistern bags, so each flush uses less water.