Water bills for millions of English households will rise more than expected after the Competition and Markets Authority provisionally approved extra increases for five suppliers. An independent panel said the companies could collectively charge customers an additional £556 million over the next five years, around 21% of the £2.7 billion initially sought.
What the CMA decided
The decision covers Anglian Water, Northumbrian Water, Southern Water, Wessex Water, and South East Water, which together serve 14.7m customers. On average, the ruling adds about 3% to bills, on top of the 24% already allowed by the industry regulator, Ofwat. The firms appealed to the CMA in February, arguing that higher charges were needed to meet environmental obligations and deliver infrastructure upgrades.
Ofwat sets prices for England and Wales’ mostly private water companies in five-year control periods. In December, Ofwat said average annual household bills could rise by 36% to £597 by 2030 to help fund a record £104bn investment programme, which consumers would pay. The CMA panel largely upheld Ofwat’s position on spending for new activities and projects, rejecting most of the companies’ extra funding requests. However, it did permit a higher allowance for investor returns to reflect sustained high interest rates since Ofwat’s original determination.
Ministers and consumer groups responded with caution. The water minister, Emma Hardy, said she understood public anger over bill increases and expected companies to support customers who struggle to pay properly. She said investment should go into infrastructure upgrades, not bonuses, and pointed to plans for a tougher regulator to restore trust in the system.
Consumer advocates warned that further rises would be unwelcome during a continuing squeeze on household budgets. The Consumer Council for Water questioned whether allowing higher returns for investors was justified without firmer guarantees of improved performance. There is a risk, they argued, that customers pay more without seeing tangible service gains.
Environmental campaigners were also sceptical. They criticised the continued payment of cash to shareholders while pollution incidents persist, citing extensive sewage discharges reported during 2024 across the five companies. Campaigners argued that households are again being asked to shoulder the cost of years of underinvestment and poor stewardship.
How individual bills are affected
The outcomes vary by company. Anglian Water sought to lift the average annual bill to £649, a 10% rise, and was allowed £599, approximately 1% higher than before. Northumbrian Water requested £515, a 6% increase, and was granted £495, about 1% higher. South East Water, which provides drinking water but not wastewater services, asked for an 18% rise to £322 and was allowed a 4% increase to £286.
Southern Water aimed for £710, a 15% increase that would have produced the highest average bill in England and Wales. It will be permitted 3%, to £638. Wessex Water sought an 8% increase to £642 and received the most significant proportional uplift on appeal, 5% to £622.
The CMA said the panel weighed affordability against the need to fund essential improvements. It concluded that significant extra bill increases, beyond those already allowed by Ofwat, were not justified. A modest uplift in financing costs was approved to help ensure delivery of required programmes at a reasonable cost.
Thames Water, the largest supplier with 16 million customers, will closely watch the ruling. Thames initially appealed but paused its case while negotiating a restructuring with Ofwat and creditors to address its debt burden and avoid temporary government control. It is still considering whether to seek an additional £4bn, arguing that Ofwat’s approach left it without sufficient funding to improve pollution performance.
For households served by the five companies, the increases are smaller than the firms wanted, yet still add pressure to the cost of living. The real test will be whether the extra revenue translates into faster environmental progress and better service. Clear support for vulnerable customers, visible investment on the ground and measurable reductions in pollution incidents will be the key markers that determine whether public trust starts to recover.
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