WIREDGOV

Ofwat has announced its Final Determinations for 2025 to 2030, setting out how much water companies in England and Wales can charge customers for the funding they need to tackle the challenges the sector faces.

With public trust in the water industry at an all-time low – driven by storm overflow pollution scandals, poor performance and widespread anger over executive pay and dividends – this decision comes at a pivotal time for the industry.

The regulator has allowed the water companies £104 billion of investment – a sum higher than in its own initial draft proposals the summer. This funding is primarily aimed at reducing pollution, protecting the environment and ensuring long-term water security in a world of growing climate pressures. Ofwat has put protections in place to ensure customers get their money back if companies fail to deliver promised improvements, as well as increased compensation for service failures. These are welcome steps. There is a high level of ambition too in some of the service performance targets.

Yet, while Ofwat’s determination aims to secure essential investment AND protect customers from soaring bills, it remains a precarious balancing act. Average water and wastewater bills will rise by an eye watering 53% after inflation by 2030. And there’s an increase of £86 in just the first year for some households – a sharp rise that many may struggle to manage against ongoing cost-of-living pressures. CCW’s research shows that two in five customers already found the proposed bill increases unaffordable under earlier drafts. With steeper hikes now confirmed, that figure will rise. Businesses, facing a range of cost pressures, will also be affected.

Ofwat announced that financial assistance for vulnerable customers will double. This is obviously a positive step in the right direction, but it falls well short of what is needed. Only five companies have committed to eliminating water poverty by 2030, and the current patchwork of support schemes varies massively depending on where customers live. This fragmented approach highlights the urgent need for a single, consistent social tariff to provide more comprehensive and equitable support. Remember, water consumers are in a monopoly industry, they can’t move to another supplier to get a deal that suits their circumstances better.

Ofwat has also set incentives and targets to improve customer satisfaction. But it missed a great opportunity to address the persistently high volume of complaints received by some companies by directly incentivising complaint reduction. Complaints are a key measure of customer experience, so reducing them should be a clear priority for the industry.

Meanwhile, companies and shareholders have received a settlement that more closely aligns with their demands. Ofwat has tied dividends to performance, with fines like the one imposed on Thames Water this week showing it is willing to hold companies accountable. However, it needs to vigilant to ensure there is no return to the excessive shareholder rewards of the past.

To restore the trust of water consumers across England and Wales, water companies must show clear, tangible improvements for the higher bills customers are being forced to pay. Delivering on long-term goals such as reducing pollution, protecting the environment and ensuring reliable services is non-negotiable.

This price review has been tough for customers and less tough on water companies than it might have been. It is now essential that CCW holds water companies accountable for the delivery of high standards of service and push tirelessly for stronger protections for those most at risk of water poverty. With this price review concluded, the hard work of delivering real change for customers is only just beginning.