Water bills set to rise for many after firms permitted extra funding

Breaking news from the markets: Water bills set to rise for many after firms permitted extra fundingImage source, Getty Images/Olga RolenkoByLucy HookerBusiness reporterPublished13 August 2026Water 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". Customers of five water companies - Severn Trent Water, Southern Water, Thames Water, Wessex Water, and South East Water - are facing additional bill rises over the next two years, on top of increases that were already announced in 2024.

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The new increases will vary between firms. Southern, for example, will charge £43 extra next year, while South Eastern will only charge £1 more in 2029. The increases will only come into effect if they are given final approval later this year.

The other eight water firms identified - Anglian Water, Dwr Cymru Welsh Water, Hafren Dyfrdwy, Northumbrian Water, Wouth West Water, United Utiliites, Yorkshire Water, SES Water - would recover their additional spending through customer bills after 2030. Many consumers are angry at being asked to pay anything more against a backdrop of interruptions to supply sometimes lasting for days, and rivers, lakes and beaches too polluted to use safely. But water companies argue that these problems can only be solved by boosting spending to replace pipes, build treatment plants and establish new reservoirs.

Climate change has also increased pressure on the water infrastructure by making heavy rains and heatwaves more frequent. 'Deliver or face clawback'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.

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"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.

Financial markets are tracking the development closely as investors assess the likely impact.