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Water companies reveal additional £8 billion investment with bills kept down again

Water companies in England and Wales will invest more than £8 billion in 2019-20. The investment comes in the fifth year of a £44 billion spending commitment from 2015 to 2020.

Over that 5-year period more than 370 million litres of water a day will be prevented from leaking from pipes, nearly 5000 fewer properties will be flooded with sewer water, and more than 50 beaches will have cleaner water. Water companies are also on track to deliver on a 5-year commitment to deliver financial support to an additional 1 million people (459,000 households) by 2020, with all companies having social tariffs in place to provide reduced water bills for customers who struggle to pay.

In addition, the investment plans for the next business period from 2020 to 2025 propose spending more than £50 billion spent on improving services – a 13% increase on current investment levels. It will deliver a significant cut in leakage of 16%, an overall real-term reduction in bills of more than 4%, and a 90% increase in help for people who have difficulty paying their bill. The investment will also fund a new environmental programme which will clean and improve 8000 km of rivers.

Although overall investment continues at high levels, the average household water and sewerage bill in England and Wales for 2019-20 has been kept down – the average bill will change by less than inflation for the sixth year in a row. The new average bill will be £415 – a below inflation rise of £8 (2%) compared with the figure for last year. Overall, it means bills are going down by more than 5% in real terms between 2015 and 2020, and by 2025 there will have been over a decade of falling bills once inflation is taken into account. Customers will continue to pay around £1 a day for world-class drinking water, reliable sewerage services and protection of the environment. Full details about the new average bills can be found on the Discover Water website here.

Commenting on the new investment and bills figures Water UK Chief Executive Michael Roberts said:

“We’re on course to see extra investment and a decade of falling bills, showing a water industry that is dynamic and passionate about delivering real benefits for customers, the environment and the country as a whole. The water industry’s record has been good over the past 30 years – cutting leakage, keeping bills affordable, improving water quality, and cleaning up rivers – but it’s clear that water companies have higher ambitions for the future of water with customers right at the heart of everything that they do.”

The water industry in England and Wales has spent around £150 billion improving pipes, pumping stations, sewers and treatment centres since privatisation 30 years ago. Customers are now 5 times less likely to suffer from supply interruptions, 8 times less likely to suffer from sewer flooding, and 100 times less likely to have low water pressure. Water companies have also reduced leakage by a third since the 1990s, and it continues to be a top priority. Well over £2.5 billion has been spent since the 1990s to protect UK bathing waters and as a result two thirds of UK beaches are now classed as excellent, compared with less than a third 25 years ago.

Some examples of what the 2019-20 investment by water companies will deliver include:

Northumbrian Water: £46m of investment work will continue at the Horsley water treatment works this year. The project will protect the treatment process and will make sure the company continues to supply clean, clear drinking water to over 1 million customers in Tyneside now and well into the future.

United Utilities: Conclusion of a £300m scheme to connect communities in West Cumbria to water supplies from Thirlmere Reservoir that started in 2015. The scheme involves building 100km of new pipeline, a new water treatment plant, two new service reservoirs and a new pumping station. The project will ensure a secure, long term supply of water for customers while protecting sensitive environments such as the River Ehen near Ennerdale.

Severn Trent Water: The creation of a new back-up water supply for Birmingham and surrounding areas will keep water flowing for over a million customers today and for future generations. For over 100 years Birmingham’s water has travelled 72 miles from Wales through the Elan Valley Aqueduct. After decades of use the aqueduct needs care and maintenance to keep it in service. To carry out repair work, Severn Trent Water will take the aqueduct out of action for a few weeks each year. During these times a back-up supply, sourced from across their region, will be used to keep water flowing for customers.

Yorkshire Water: £30m is being invested in its waste water treatment works in Saltend, Hull to improve the site’s operation. The work, which started last December, will be completed late Autumn 2020, will help the firm produce more sludge. Sludge is a by-product of waste water treatment and the anaerobic digestion process produces bio-gas which is used to fuel a Combined Heat and Power engine which heats water for the process and generates electricity. This electricity will be used to power the site and any surplus electricity will be transferred to the electricity grid.

Average bills for 2019-20 are estimates based on forecast data provided by water companies. The average household bill is, by definition, an average across all customers. Individual customers’ bills may be more or less than the average because of their particular characteristics – for example, whether they have a water meter. Changes to customers’ bills will vary according to which company supplies them. Some customers receive their water services from one company and receive their sewerage services from another. To calculate the average combined bill, you must add the average water bill to the average sewerage bill.

Every five years, Ofwat, the economic regulator, sets the package of investment that companies must deliver – and controls on the prices companies can charge to fund this investment. This is done in real terms (i.e after taking into account inflation). Each year companies are allowed by Ofwat to add up to the Retail Price Index (RPI) rate of inflation to the wholesale element of their charges. The reference inflation figure for this year is 3.2%, the RPI annual figure for the year to November 2018, as released by the Office of National Statistics in December 2018.

Since April 2013, household customers served by South West Water have benefited from a Government contribution, which reduces the bill for all households by £50 per year.  This £50 reduction is applied to the combined average bill in this table.  Without the Government Contribution, South West Water’s combined average bill would be around £541.

Thames Water’s average water bill and combined bill for 2019-20 includes a £7 rebate as a result of Ofwat’s investigation into their leakage performance.

The national average bill figure for England and Wales of £415 is weighted to reflect the number of customers served by individual companies. It does not factor in the Government Contribution to South West Water’s household bills or Thames Water’s rebate. The national average bill figure therefore incorporates an average South West Water household bill of £541 and a Thames Water bill of £405.

All figures have been rounded to the nearest whole number.  Some numbers may not add up due to rounding.

For more information contact the Water UK Communications team on comms@water.org.uk or 0207 344 1805