Ofwat has provisionally approved an extra £3.4bn in funding for 13 water companies across England and Wales, a move that will translate into higher bills for many households in the coming years. The regulator says the money is needed to cope with mounting pressure on infrastructure and the environment, including demand from new housing, data centres and efforts to tackle so-called "forever chemicals".
Roughly a third of the newly sanctioned funding is intended to guarantee that existing water services keep running reliably. The remainder will go toward meeting rising demand linked to housebuilding and data centre expansion, as well as addressing pollution from PFAS chemicals.
Prime Minister Andy Burnham criticised the timing of the decision, saying it represented real money out of family budgets at a time when they are struggling with the cost of living. An environmental campaign group went further, branding the move an insult to consumers.
Why is Ofwat allowing further bill increases?
Ofwat requires water companies to seek its approval before raising customer charges, a process repeated every five years to set spending plans for the period ahead. This latest provisional approval sits on top of bill increases already agreed with water firms back in 2024, and reflects a separate mechanism that lets companies apply mid-cycle for extra funding to cover costs that were not foreseeable at the time of the original settlement.
Helen Campbell, Ofwat's executive director for delivery, said the additional spending would let firms support growth and deliver better environmental outcomes without delaying essential upgrades.
"We will track performance to ensure companies are delivering the expected improvements for customers and the environment," said Helen Campbell, executive director for delivery at Ofwat.
"If they don't, expenditure can be clawed back."
Which specific projects will the funding cover?
Among the schemes approved for funding are provisions to support new data centres in Manchester, additional wastewater capacity to serve Newquay, and accelerated work by Wessex Water to tackle PFAS contamination that had originally been scheduled for the 2030-35 period.
The decision remains provisional. A public consultation period will run before Ofwat issues its final ruling, expected in December 2026.
How much will customers actually pay, and when?
Some of the additional costs will be recovered from customers before the end of the decade, while other charges will only begin after 2030. Customers of five companies — Severn Trent Water, Southern Water, Thames Water, Wessex Water and South East Water — will see bills rise by amounts ranging from £1 to £43 during the 2027/28 and 2029/30 financial years.
Ofwat noted that water companies collectively requested £4.3bn in additional funding, meaning a portion of what firms asked for was rejected. Burnham said customers should not be treated as a source of unlimited funds.
"Where water companies seek to pass unnecessary costs onto households, they will be challenged," he said.
Amy Fairman, head of campaigns at River Action, argued that decades of underinvestment by water companies had left customers footing the bill for failing infrastructure.
"Ofwat waving through yet more water bill hikes is an insult."
She said companies had failed to invest adequately over the past 30 years, leaving customers with leaks, pollution and soaring bills, and called for greater public control of the sector, adding: "No more blank cheques for failure."
What other price decisions have been made recently?
Separately, on 13 August 2026, a government announcement confirmed that Ofwat had reached a final decision on a longstanding dispute over price controls affecting five water companies — Anglian Water, Northumbrian Water, South East Water, Southern Water and Wessex Water — after they challenged Ofwat's 2024 price review through the Competition and Markets Authority.
According to that announcement, the five companies had jointly requested £2.7bn in additional revenue through the dispute process, but Ofwat approved only 17% of that figure, equal to £463m. Separately, a national newspaper's report and the government's own figures both describe a wider approved package totalling roughly £3.4bn, made up of £1.2bn for safeguarding services and assets and £477m for housebuilding and data centre development — though it is not entirely clear how this disputed-process total relates to the £3.4bn figure covering the broader 13-company provisional review described above, and both figures are reported here as given by their respective sources.
The government said the funding agreed through this disputed process would add an average of 2.2% to bills for customers of the five companies, on top of a 24% increase already approved under Ofwat's original price control settlement. For Anglian Water specifically, the final decision set average bills at £602, compared with £591 under Ofwat's original 2024 price review and the £649 the company had originally sought.
How does this fit with other recent water sector news?
South East Water, one of the firms facing bill rises under the newly approved funding, was separately ordered to pay £30.5m over supply failures that affected thousands of customers across Kent and Sussex, after Ofwat investigations found inadequate communication and support during outages. Thames Water, another company due to raise bills under the current decision, recently returned to profit following a 40% bill increase, reporting a £113m post-tax gain even as its net debt climbed to £18.5bn.
What happens next?
The provisional approval covering the 13 companies remains subject to public consultation, with Ofwat's final decision due in December 2026. Meanwhile, the separate final decision on the five-company dispute has already taken effect following its own consultation period, with the resulting bill changes now flowing through those companies' arrangements for the 2025-2030 price period.
- Ofwat has provisionally approved £3.4bn in extra funding for 13 water companies in England and Wales.
- Bills for customers of five companies — Severn Trent, Southern Water, Thames Water, Wessex Water and South East Water — will rise by £1 to £43 in 2027/28 and 2029/30.
- A separate final decision on disputed price controls for Anglian, Northumbrian, South East, Southern and Wessex Water took effect on 13 August 2026 following a Competition and Markets Authority referral.
- Ofwat's final decision on the broader 13-company review is expected in December 2026.
- Water companies had requested £4.3bn in total additional funding, of which a portion was rejected.
