Water bills could go up by more than £200 a year in the latest blow to household budgets amid the cost-of-living crisis.
Against the backdrop of high energy bills and soaring mortgage repayments, England’s privatised water companies are drawing up plans that could increase bills by 40 per cent to tackle the sewage crisis and the impact of climate change, according to The Times.
The increases are due to be announced next year and could drive annual bills up from an average of £450 to £680 in parts of the country by the end of the decade.
Why are water bills going up?
Last month, the utility firms promised the biggest modernisation of English sewers “since the Victorian era” amid the growing public anger over raw sewage being dumped into the sea and rivers when the system cannot cope with heavy rain.
But buried in the detail was the revelation that while the upfront payment will be made by the water companies, it would be recuperated from consumers by gradually raising their bills over time.
The process works by regulator Ofwat asking water companies to submit their proposals for bill increases. It will then analyse the plans, and give a final announcement later. Key to the investment package will be improving so-called storm overflows, which have been discharging sewage near designated bathing spots and nature sites.
What other costs are families facing?
Last week, the Bank of England raised interest rates for the 13th month in a row after data showed the downward trajectory of inflation has stalled at 8.7%.
The base rate hike to 5% – a 15-year high – will cause misery for homeowners who have to refinance their mortgages in the coming months, and raised fears that the British economy is heading for a recession.
While spiralling energy costs have fallen, a typical household will still pay £2,074 a year on its gas and electricity bill, Ofgem has said – well above the average bill before Russia’s invasion of Ukraine.
Meanwhile, Britain had the highest rate of food price inflation in Western Europe during the 12 months to May at 18.7%, according to official data. Prices for milk, cheese and eggs are up 27.4% versus last year.
Is anything being done?
The government is under intense pressure to show it is acting to help consumers squeezed by rising household bills.
On Wednesday, chancellor Jeremy Hunt met regulators to ensure consumers are being treated fairly and that those who are struggling to make payments receive help.
Following Hunt’s meeting with the heads of the telecoms, energy, water and financial services regulators, as well as the competition watchdog, the Treasury said: “Jeremy Hunt made clear his expectation that regulators work at pace to guarantee markets are working properly.
The steps agreed included the Competition and Markets Authority publishing its review of road fuel profit margins in supermarkets and other retailers on Monday, and bringing forward its update on competition and pricing in the grocery sector to earlier next month than had been planned.