Water Bills to Rise as £3.4bn Extra Spending Approved

Millions of households in England and Wales are set to face higher water bills after the water industry regulator, Ofwat, approved £3.4bn in extra spending for 13 water companies. This additional spending will be used to support new homes and datacentres, as well as to safeguard water services and assets.

The extra spending includes £1.2bn to be used to 'safeguard' water services and assets, and £477m to enable housebuilding and datacentre development. This investment is expected to support the Labour government's promise to build 1.5m new homes across the country, as well as its ambitions for AI growth zones to host massive AI datacentre complexes.

Five companies - Southern Water, Thames Water, Severn Trent, Wessex Water, and South East Water - will be allowed to increase bills more than originally planned before the end of the decade to allow for the extra spending. The remainder will add the costs to bills in the 2030s. Additionally, £34m of extra water company spending has been earmarked to reduce toxic chemicals in the water system.

The investments will top up the regulated spending plans of £104bn that were approved in late 2024 for the period from April 2025 until March 2030. Water bills will rise by 36% over the second half of the decade due to the £104bn programme of investment approved by the regulator.

## Why it matters The decision to allow extra spending comes as the UK faces a housing crisis and a growing demand for datacentres to support AI growth. The additional investment in water infrastructure is expected to support this growth, but it will also lead to higher bills for millions of households. The regulator, Ofwat, has said that it will track performance to ensure companies are delivering the expected improvements for customers and the environment, and that expenditure can be clawed back if they don't.

The decision is provisional, with a period of public consultation due to take place before a final decision is made in December. However, the approval of the extra spending has already been met with criticism from some groups, who argue that it will lead to unaffordable bills for many households.