Severn Trent water bills set to rise by 47% as company defends investment programme

A price review decision by the industry regulator means companies are allowed to raise their bills across the country, with the average household facing a £31 a year rise over the next five years.

Severn Trent says the move will give the green light to plans for £15 billion of network investment for it's 4.6 million customers, including plans to reduce water leaks from mains pipes and improve river health by reducing spills from storm overflows.

Ofwat said the increase, which is significantly higher than the £20 per year rise outlined in proposals in July, would pay for a £104 billion upgrade of the water sector to deliver “substantial, lasting, improvements for customers and the environment”.

Today marks a significant moment," said Ofwat chief executive David Black. 

"It provides water companies with an opportunity to regain customers’ trust by using this £104 billion upgrade to turn around their environmental record and improve services to customers.

“Water companies now need to rise to this challenge, customers will rightly expect them to show they can deliver significant improvement over time to justify the increase in bills.

“Alongside the step up in investment, we need to see a transformation in companies’ culture and performance. We will monitor and hold companies to account on their investment programmes and improvements.

“We recognise it is a difficult time for many, and we are acutely aware of the impact that bill increases will have for some customers. That is why it is vital that companies are stepping up their support for customers who struggle to pay.

“We have robustly examined all funding requests to make sure they provide value for money and deliver real improvements, while ensuring the sector can attract the levels of investment it needs to meet environmental requirements." 

Severn Trent Water says its bills are still the second lowest in England, and says the ruling allows the company to "deliver on its ambitious plans, which include improving infrastructure, while keeping bills affordable and supporting local communities".

The investment scheme approved by the regulator sees the company given a total expenditure allowance of £15 billion over the 2025-2030 period, £8 billion more than the current period which runs from 2020-25.

Among the companies plans include a £2 billion scheme to improve river health by reducing sewage outfalls across the region, as well as replacing 865 miles of water mains pipelines in an effort to reduce water leaks. The company says around 7,000 jobs will be created as part of the investment scheme. 

“This is a huge boost for the region with £15 billion of new investment across the Midlands in what matters most to our customers – secure water supplies, cleaner rivers, and affordable bills – while creating thousands of new jobs to strengthen the region’s future," said Liv Garfield, Chief Executive, Severn Trent.

“We’re proud that Ofwat has recognised our ‘Outstanding’ plans as being ambitious. It’s a plan to bring growth and positive change, built on strong foundations given Severn Trent is the sector-leader for environmental performance and financial resilience - with a proven track record for delivering successful large-scale investment projects.

“And whilst it’s great to get the green light for these ambitious plans, we haven't been waiting, and 2024 has seen our biggest year of investment in river health. We’ve delivered over one thousand improvements to cut spills from storm overflows this year alone, and we’re totally committed to going further and faster to deliver for our customers.”

Consumer group the Consumer Council for Water (CCW) warned the increases were “more than what many people can afford”, with CCW chief executive Mike Keil saying customers would be hit "particularly hard" this April due to the front-loading of the charges,

“These bill rises may be less than what water companies wanted but they are still more than what many people can afford," he said.

“We know at least two in five households will find these increases difficult to afford but the support being offered by some water companies lacks ambition.

“People want to see more investment, but this must be coupled with a strong safety net for customers who will struggle to pay.

“The case for a single social tariff to end the current postcode lottery of support has never been more compelling.”