Investment narrative takes centre stage in annual bill announcement

(by Karma Loveday)

The investment that higher water charges will pay for was very much front and centre of this year’s annual bill announcement.

Water UK said household water bills in England and Wales will rise by an average of 5.4% — around £33 a year, or approximately £2.70 per month — from April, to pay for £20bn of investment in upgrading water and wastewater infrastructure in 2026/27. The rise is two percentage points above December’s official inflation figure and takes the average bill in the year ahead to £639.

The regional variation in averages was pronounced as usual. The highest percentage increase for a combined bill was at Severn Trent (up 10% or £52), with the lowest at Thames (up just 0.4% or £3). The highest average combined bill for 2026/27 will be at Southern at £759 and the lowest at Northumbrian at £535. Of the water-only companies, Portsmouth’s bills remain by far the cheapest at an average £162, compared to the highest at Essex and Suffolk Water at £333.

Water UK’s announcement included examples of what each company will be investing in across the coming year.

Ofwat supported the investment narrative, with interim chief executive Chris Walters commenting: "By April 2027, we are expecting water companies to have installed more than 8m water meters in homes to help customers manage their bills; to have replaced almost 3,000km of piping that will ensure customers experience fewer supply disruptions; and reduce sewage spills from storm overflows by 30% from 2024 levels. These are just three examples that will help us reach our collective goal of cleaner rivers and seas, more resilient water supplies, and better services for customers and the environment.”

Ofwat also provided the context that this year’s 5.4% increase is significantly smaller than the 27% increase seen in 2025-26, reflecting PR24 front-loading.

Both companies and regulator also highlighted that spending will be ring fenced (neatly articulated by Water UK as “a money-back guarantee which means that if improvements are not delivered, customer bills will automatically be refunded by the regulator”), and that help for those who struggle to pay has doubled. Water UK said 300,000 more households will receive support in the year ahead, taking the total to around 2.5m. The average bill discount will be around 40%, with £4.1bn in total being spent on support in the 2025–2030 period.

The Consumer Council for Water acknowledged all these factors, and repeated its call for a single social tariff to replace the current system of help. Chief executive Mike Keil said: “The postcode lottery of financial assistance created by existing water company social tariffs is unfair and unsustainable in the face of rising water bills.” The watchdog added that the patchwork system leaves some companies exposed to breaking their public commitment to end water poverty by 2030.