Water companies have been given the green light to increase bills for customers by an extra £3.4bn in coming years to meet increased pressures on infrastructure and the environment.
Nearly a third of the extra funding provisionally approved for 13 water companies in England and Wales is earmarked for making sure water services are maintained.
Some of the rest will be used to meet rising demand from housebuilding and data centres and to address pollutants known as “forever chemicals”.
Prime Minister Andy Burnham said the proposal was “real money out of family budgets at a time when they are struggling with the cost of living”, and an environmental group described the decision as “an insult”.
The regulator, Ofwat, said the extra spending would enable the firms to support growth and better environmental outcomes, and ensure important upgrades were not delayed.
“We will track performance to ensure companies are delivering the expected improvements for customers and the environment,” said Helen Campbell, executive director for delivery at Ofwat.
“If they don’t, expenditure can be clawed back.”
Water companies need approval from the regulator, Ofwat, to raise customers’ bills, a process that takes place every five years to set spending budgets for the years ahead.
This decision to allow increased charges comes on top of already-agreed bill rises that were negotiated with the water companies in 2024.
The process allows firms to apply for additional funds for projects that were not known about at the time of the last review.
As part of the outlined increase, Ofwat has approved funding for schemes including provision for new data centres in Manchester, additional wastewater capacity in Newquay and to bring forward work by Wessex Water to tackle PFAS pollutants, originally planned for 2030-35.
However, the decision is provisional. There is a period of public consultation, with a final decision due in December.
Some of the additional spending would be recovered through customer bills before the end of this decade, some would come after 2030.
Bills will rise for customers of five of the 13 water companies before 2030: customers of Severn Trent Water, Southern Water, Thames Water, Wessex Water, and South East Water will experience price rises of £1 to £43 in the 2027/28 and 2029/30 financial years.
Ofwat said water companies had submitted a total of £4.3bn worth of requests, but some of their proposed extra spending had been rejected.
Burnham said he understood why people were angry as they had been asked to pay more for years while pollution incidents and leaks continued.
“Where water companies seek to pass unnecessary costs onto households, they will be challenged,” he said.
Amy Fairman, from campaign group River Action, said: “Ofwat waving through yet more water bill hikes is an insult.”
Water companies had failed to make sufficient investment over the last 30 years, she said, leaving customers with “leaks, pollution and soaring bills”.
There should be greater public control of water companies, she added. “No more blank cheques for failure.”
