Firms in England and Wales seek to fund measures including supporting new homes and datacentres<\/p>\n
Millions of households in England and Wales face higher bills after water companies were given the green light to spend \u00a33.4bn more than planned, including to support new homes and datacentres.<\/p>\n
The new spending will come on top of the \u00a3104bn programme of investment approved by the regulator that had already meant water bills will rise by 36% over the second half of the decade.<\/p>\n
On Thursday, the water industry regulator, Ofwat, said 13 companies had requested to spend \u00a34.3bn on top of what had been agreed in 2024 owing to unforeseen costs and it had allowed \u00a33.4bn.<\/p>\n
The extra spending includes \u00a31.2bn to be used to \u201csafeguard\u201d water services and assets, and \u00a3477m to enable housebuilding and datacentre development.<\/p>\n
Five companies \u2013 Southern Water, Thames Water, Severn Trent, Wessex Water and South East Water \u2013 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.<\/p>\n
The Labour government has promised to build 1.5m new homes across the country to help solve the country\u2019s housing crisis. It has also set out ambitions for AI growth zones to host massive AI datacentre complexes, raising questions over whether the UK has sufficient water and energy resources to support the government\u2019s growth agenda.<\/p>\n
Another \u00a334m of extra water company spending has been earmarked to reduce toxic chemicals in the water system to help improve drinking water. The allowance was announced days after government data revealed that every single English water body is polluted with toxic chemicals.<\/p>\n
The investments will top up the regulated spending plans of \u00a3104bn that were approved in late 2024 for the period from April 2025 until March 2030 to just below the industry\u2019s initial request to spend \u00a3108bn over the five-year period.<\/p>\n
At the time, Ofwat said it would allow extra funding requests for spending \u201cwhere costs were uncertain or unknown\u201d. These included allowances for United Utilities to invest in new water infrastructure to enable datacentres in East Manchester and investments in Newquay Wastewater Works which to benefit residents and support growing tourism in the area.<\/p>\n
Helen Campbell, the executive director for delivery at Ofwat, said allowing the water companies to spend more would allow them to deliver \u201cwithout delay\u201d.<\/p>\n
\u201cThe newly agreed funding will help unlock much-needed new housing development and boost business growth across a range of sectors, as well as improving drinking water quality and the removal of Pfas and forever chemicals,\u201d Campbell said.<\/p>\n
Campbell added that the regulator would track the performance of the water companies to make sure they are \u201cdelivering the expected improvements for customers and the environment\u201d.<\/p>\n
\u201cIf they don\u2019t, expenditure can be clawed back,\u201d she said.<\/p>\n
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