Government to make unprecedented intervention on UK water bill prices

Ministers will make a historic intervention in setting water charges, with Environment Secretary Dame Angela Eagle expected to involve herself in the regulator’s upcoming price review process.

Pledging to end "business as usual", Dame Angela said she was "drawing a line under years of failure".

She said she had written directly to Ofwat and water providers to set out her expectations for the industry.

"The water sector is a symbol of everything that went wrong under the old status quo, and today I’m drawing a line under years of failure," she said.

“This is not business as usual.

“I have given the regulators and the water sector clear direction, and I expect them to act on it now, as part of a 10-year journey to a different and more radical system.”

The Guardian reported that she would intervene in the five-year review conducted by regulator Ofwat, which was expected to conclude in 2029 and set bill increases for 2030-35, the first time ministers have become involved in the process.

Prime Minister Andy Burnham has signalled he wants radical reform of the water industry, with a plan to repeal Margaret Thatcher’s ban on public ownership and give regional mayors greater control.

In the last price review in 2024, Ofwat said it would allow water firms to raise bills by an average of £157, or 36 per cent, over the next five years to help finance investment into crumbling infrastructure.

Dame Angela is also expected to decide on requests by two drought-hit water firms to impose non-essential use bans which could result in swimming pools being closed.

The Telegraph reported a decision would be made within days on the applications by South West Water and South East Water.

As well as restrictions on filling and maintaining swimming pools and ponds, the order would cover activities including car washing, cleaning business premises and watering plants on commercial properties.

Last week, it was reported that Ofwat had announced that water bills across the country were expected to be reduced by £240 million by 2030 as penalties were levied against underperforming suppliers.

Under draft proposals from the watchdog, several companies were to face financial penalties for failing to meet environmental and customer service targets during the 2025-26 financial year, with the money handed back to domestic and business customers through reduced charges.

The provisional framework outlined a total net bill reduction of £240 million up to 2029-30, including £107 million to be returned to billpayers in 2027-28.

However, it was likely to be swallowed up for many households by separate Ofwat plans permitting suppliers to raise annual bills by an additional £3.4 billion — on top of that average 36 per cent price increase already approved over the five years to 2030.