Millions of households will see their water bills rise by an average of 2.2% above previously announced hikes after a critical ruling by the UK’s competition watchdog, a decision that grants water companies a fraction of the extra funding they argued was essential to tackle pollution and secure supplies.
The final decision by an independent group at the Competition and Markets Authority (CMA) affects five companies: Anglian Water, Northumbrian Water, South East Water, Southern Water, and Wessex Water, which together serve around 14 million people. The ruling allows them to increase customer charges by an average of 2.2% on top of the substantial 24% average increase already approved by the industry regulator, Ofwat, for the period from 2025 to 2030.
In practice, this means annual bills will now reach an average of £602 for Anglian Water customers (a 2% rise on Ofwat’s decision), £641 for Southern Water (up 3%), £614 for Wessex Water (up 3%), and £284 for South East Water (up 4%). Northumbrian Water saw no overall change from Ofwat’s original determination, with bills remaining at £488.
The Appeal and the Reduction
The CMA became involved after the five companies appealed Ofwat’s price control settlement, known as PR24, which was set in December 2024. The companies contended that the funding limits imposed by Ofwat left them unable to meet their regulatory obligations. They had asked the CMA for an additional £2.7 billion in revenue over the five-year period.
The CMA’s group, however, granted just £463 million—only 17% of what was requested. This was even less than the £556 million it had provisionally indicated last October. The group stated that nearly half of the resultant 2.2% average bill increase is driven by market movements affecting financing costs, with the remainder earmarked for service improvements, pollution reduction, and infrastructure investment.
Kirstin Baker, the chair of the independent CMA group, said: “We’ve rejected most of the bill increases water companies asked for but allowed limited extra funding where that’s genuinely needed, balancing concerns about affordability with the need to secure our water supplies and cut pollution.” Baker, a former HM Treasury finance director awarded a CBE for her work during the banking crisis, has been a CMA Panel Inquiry Chair since 2018.
Balancing Investment Against Affordability
The ruling sits at the heart of a fierce tension in the water sector. On one side, companies face immense pressure to invest billions in upgrading aging Victorian infrastructure, reduce sewage spills, and improve water security amid climate change. Government targets include halving sewage pollution by 2030 and reducing phosphorus from treated wastewater by 80% by 2038, with projections warning of potential water supply shortfalls by 2055.
On the other side, the rising cost to consumers is provoking a crisis of affordability. The Consumer Council for Water (CCW) stated that the additional increases sanctioned by the CMA are “still more than what many customers can afford or will consider fair.” The consumer body reported a near tripling in complaints about affordability over the past year, with many vulnerable households forced to cut back on essentials to pay their water bill.
This CMA process is a specific, legally-mandated review of appealed price controls, separate from broader discussions about the future of the water industry. The government has acknowledged the need for “root and branch reform” of the system, with an Independent Water Commission examining more fundamental changes. Today’s decision, while granting limited relief to the companies, underscores the ongoing struggle to reconcile essential long-term investment with the immediate financial strain on millions of bill-payers.
