Water customers are not a ‘blank cheque’, Burnham tells suppliers

Companies in England and Wales get green light for extra spending that will add billions to bills

Andy Burnham has said he is angry with water companies for treating their customers as a “bottomless source of funding” after more than a dozen firms were given the green light to raise bills even higher.

The prime minister said the companies must not be allowed to treat bill payers like a “blank cheque”, after Ofwat, the regulator, approved proposals for billions of pounds of spending on repairs and infrastructure.

Five companies – Southern Water, Thames Water, Severn Trent, Wessex Water and South East Water – 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.

The prime minister’s comments are an escalation of his warnings to utility companies that he is looking at options for more public control over water companies, which are under fire for paying millions in dividends while failing to deal adequately with pollution and leaks.

His team have already been examining the possibility of taking Thames Water into public ownership, as it grapples with overwhelming debt.

Ofwat gave approval on Thursday for 13 companies to spend £3.4bn more than planned, including to support new homes and datacentres. It said the companies had asked to spend £4.3bn on top of what had been agreed in 2024 owing to unforeseen costs, and it had allowed £3.4bn.

The new spending will come on top of the £104bn programme of investment approved by the regulator that had already meant water bills will rise by 36% over the second half of the decade.

The prime minister said he was “angry” that households “have been asked to pay more for years, yet serious pollution incidents are at record levels and the pipes are still leaking.

“None of which is the bill payers’ fault, who should not be treated as a bottomless source of funding for other people’s failures,” Burnham said.

He added: “Customers cannot be treated as a blank cheque. Where water companies seek to pass unnecessary costs on to households, they will be challenged.”

Burnham also repeated a promise that the government would study “how we can give the public more control and help keep bills as low as possible”.

The Ofwat proposals immediately sparked further calls for nationalisation of the industry and for Burnham to reject Ofwat’s approval for the extra spending.

Clive Lewis, a Labour MP on the left, who supported Burnham for the leadership, said: “I’ll bet you these projects will never see a large chunk of that money. We pay for the system through our bills. Yet almost third of them go to returns for investors and creditors.

“We pay for the infrastructure, for the debt, for the profits. And they keep asking for more. The only way to end this is public ownership.”

Tim Farron, the LibDem environment spokesperson, said Ofwat was “merely a rubber stamp for failure”, and that hard-working families are “being forced to cough up another £3.4bn to fix a broken water network that greedy executives have neglected for decades”.

He said: “How many times do we have to call for the toothless Ofwat to be scrapped before the government actually do it? They made the commitment, but they can’t seem to follow through. It is a total disgrace to reward this environmental vandalism. There must be no more blank cheques for failure.”

Cliff Roney, an activist with the GMB union and a former water worker, said: “Put simply, any bill hike from Thames Water would be an insult. Thames Water spills sewage and leaks millions of litres of water while its senior management enjoy golden handshakes and bonuses.

“Meanwhile, customers are yet again being asked to pick up the tab for this company’s many failures. The only way to stop the betrayal of consumers and water workers is to renationalise our water.”

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Amy Fairman, head of campaigns at River Action, said Ofwat “waving through yet more water bill hikes is an insult” when there has been a lack of investment for 30 years while tens of billions went to investors and essential water and sewage works were neglected. “We got leaks, pollution and soaring bills,” she added.

The extra spending includes £1.2bn to be used to “safeguard” water services and assets, and £477m to enable housebuilding and datacentre development.

The government has promised to build 1.5m new homes across the country to help solve the housing crisis. It has also set out ambitions for AI growth zones to host massive AI datacentre complexes, raising questions about whether the UK has sufficient water and energy resources to support the government’s growth agenda.

Another £34m of extra water company spending has been earmarked to reduce toxic chemicals in the water system to improve drinking water. The allowance was announced days after government data revealed that every English water body is polluted with toxic chemicals.

The investments will top up the regulated spending plans of £104bn that were approved in late 2024 for the period from April 2025 until March 2030 to just below the industry’s initial request to spend £108bn over the five-year period.

At the time, Ofwat said it would allow extra funding requests for spending “where costs were uncertain or unknown”. These included allowances for United Utilities to invest in new water infrastructure to enable datacentres in east Manchester and investments in Newquay Wastewater Works to benefit residents and support growing tourism in the area.

Helen Campbell, executive director for delivery at Ofwat, said allowing the water companies to spend more would allow them to deliver “without delay”.

She added that the regulator would track the performance of the water companies to make sure they are “delivering the expected improvements for customers and the environment. If they don’t, expenditure can be clawed back,” she said.

Under the new process, United Utilities was allowed to spend an extra £995m compared with its request for £1.11bn of extra spending, while Severn Trent was granted £329m of its request for £481m. South West Water was allowed an extra £180m of spending compared with a request for new allowances of £239m.

The extra spending is expected to pile further pressure on water bills. In 2024, the biggest increase was allowed for Southern Water, whose customers will pay 53% more by 2030, at £642. Bills will rise by 47% for customers of Severn Trent, and there will be a 42% increase for customers of the Welsh water companies Dŵr Cymru and Hafren Dyfrdwy. A 35% rise was approved at Thames Water.

On Thursday, Ofwat said a further £80 would be added to Southern Water bills, £8 for Thames and Severn Trent, £11 for Wessex Water and £1 for South East Water.

Angela Eagle, the environment secretary, said: “I know that households across the country are watching every pound and I share their frustration that years of underinvestment and toothless regulation has led to this.”