Sewage crisis: water industry says plans to cap bills could mean stopping sewage discharges is unaffordable

In a letter to Ofwat chief executive David Black yesterday, the group also warned that the bill cap will drive away investors needed for a multi billion-pound spending plan to bring Britain’s water infrastructure up to scratch.

Water UK boss David Henderson wrote: “Ofwat’s approach would make it impossible for the water sector to attract the level of investment that it needs and will reduce the UK’s attractiveness to international investment.”

The stark warning came on the deadline day for firms and other stakeholders to respond to Ofwat’s initial proposals, which will determine the sector’s bill increases, spending plans and returns for investors over the five years to 2030.

Ofwat proposed in its draft determination in July that water firms should be allowed to increase bills by a third less than they had requested on average.

Water firms had put forward plans for increases averaging £144 over five years, although there were significant variations in price changes between suppliers.

There has been mounting public and political fury around firms’ polluting of waterways with sewage spills as they continue to hand dividends to shareholders, and bonuses to executives – something which Labour has pledged to clamp down on.

Sewage spills into England’s rivers and seas more than doubled in 2023.

Tom Gordon is the Liberal Democrat MP for Harrogate and Knaresborough, where 10 times the normal level of E.coli was found in the River Nidd at the Lido.

He told the Yorkshire Post: “What’s pretty clear is that Water UK is attempting to pass the buck, blaming other people for the water sector’s failure.

“We have seen record profits in the sector, particularly in Yorkshire Water, and massive pay-outs for chief executives, and bonuses and dividends too.

“We need a water regulator in Ofwat that is actually going to stand up to the water companies.”

His party has called for Ofwat to be replaced, saying it is “not fit for purpose”.

“It’s an absolute outrage that British families face sky high bills that continue to rise, whilst water firm CEOs pocket millions of pounds in bonuses, and all the while filthy sewage continues to destroy our seas and rivers,” the party’s environment spokesman Tim Farron said.

“It’s clear to see that the current regulator Ofwat is not fit for purpose, and it’s high time they were replaced. 

“That is why the Liberal Democrats have been calling for a new regulator to crack down on water companies and hold them accountable to end this sewage scandal once and for all.”

This comes in the same month as Ofwat announced a £47 million fine for Yorkshire Water for a “catalogue of failures”.

Earlier in August, it was revealed that chief executive Nicola Shaw received a £371,000 annual bonus for 2023-24 financial year.

A Freedom of Information request by the Liberal Democrats also found that the number of permit breaches by Yorkshire Water doubled in just two years.