Sir Keir Starmer urges ‘personal responsibility’ at water firms amid bills hikes

Sir Keir Starmer has called for more “personal responsibility” at the top of the water industry, following news of a 21% hike to planned average bills despite the sewage pollution scandal and cost-of-living crisis.

Household water bills in England and Wales are to rise by an average £19 a year over the next five years – a third less than the increase requested by companies, under draft proposals announced by Ofwat.

Speaking to LBC during his trip to the Nato summit in Washington DC, the Prime Minister said the situation around the water industry had got “completely out of hand”.

He said: “We’ve seen a lot of coverage of the sewage and the pollution which we’ve got to get to grips with.”

“So we will have a plan to get to grips with that in terms of governance of water, but that requires us to deal with both the pollution and the bills side of it.

He added: “That doesn’t involve nationalisation, but it does involve making sure the regulations we have are properly enforced, looking at possible further regulation, and something I’m very keen on, which is to have sort of personal responsibility from the top.

“I know from running a big organisation that when there’s personal responsibility at the top it does rather focus the mind.”

Earlier today, Environment Secretary Steve Reed called in representatives of the 16 regional water companies and proposed new measures to reform the sector.

After the meeting, Mr Reed said bosses had signed up to an initial package of reforms “as we work towards cleaning up our water, prioritising the interests of water customers and the environment, and fixing our broken sewage system”.

He also appeared to rule out nationalising any of the water companies, including Thames Water, which has said it only has enough cash to continue trading until May next year.

He said: “Nationalising any of the water companies would cost billions of pounds and take years potentially.”

Regulator Ofwat said water firms had proposed hiking bills by an average of £144 over five years, which it reduced in today’s draft plans.

For example, Thames Water’s planned rise of £191 by 2030 has been cut to £99, while Severn Trent’s proposed increase of £144 has been reduced to £93.

There are significant variations in price changes between suppliers.

Under the plans, Southern Water customers will face a £183 increase over five years, while Dwr Cymru customers’ bills will go up by £137 and Yorkshire Water customers will pay £107 more.

At the other end of the scale, Affinity customers will see just an £11 rise, while SES customers’ bills will fall by £34 on the previous five years.

“These proposals aim to deliver a 44% reduction in spills from storm overflows compared to levels in 2021. We expect all companies to embrace innovation and go further and faster to reduce spills wherever possible.

“Today’s announcement also increases the resilience of our water supplies to the impact of climate change and will reduce how much water is taken from rivers by enabling a range of long-term water supply projects, which includes plans for nine reservoirs.

“Let me be very clear to water companies – we will be closely scrutinising the delivery of their plans and will hold them to account to deliver real improvements to the environment and for customers and on their investment programmes.”

A Water UK spokesman said: “Today’s announcement is the biggest ever cut in investment by Ofwat. If it doesn’t put this right Ofwat will be repeating the mistakes of the past. As a direct result, more housing will be blocked, the recovery of our rivers will be slower and we will fail to deal with the water shortages we know are coming.

“Water companies proposed to invest £105 billion because it is the minimum needed to meet the legitimate concerns we’ve heard from the public about our environment and our economy.

“Ofwat is right to want to ensure customers receive value for money and that is why protections are in place to ensure customers only pay for projects that are new, necessary and value for money.

“But for far too long Ofwat has failed to be realistic about the levels of investment needed and what it will take to deliver and maintain necessary infrastructure. We cannot allow this pattern to repeat itself.

“Water companies are ready to invest in an unprecedented overhaul of the country’s water and sewage infrastructure. Ofwat now needs to let them get on with it.”

“Customers understand investment is urgently needed but they need reassurance that every pound of their money is going to be well spent.

“Trust in water companies has never been lower and that won’t change until people see and experience a difference – whether that’s having the confidence to swim at their favourite beach or receiving help if they are struggling to pay their bill.

“We estimate about two million households in England and Wales currently cannot afford their water bill and, while the increase in financial assistance is welcome, it falls short of what is needed.

“Over the summer we’ll be carrying out research with customers of every water company to gauge whether they feel the regulator’s proposals are affordable and deliver what people want. We expect Ofwat to listen and act on what customers tell us.”

The proposals are part of the 2024 Price Review (PR24) and cover the period from 1 April 2025 to 31 March 2030, ahead of a final decision at the end of the year.

Ofwat said the average 21% bill increase, around £19 per year, follows firms’ proposals to increase their total spending by £29 billion, split between a £5 billion increase in the core costs for running their business and a £24 billion rise in spending to meet requirements set by governments and for other environmental improvements.

Ofwat said its scrutiny of companies’ cost proposals, to ensure they deliver efficiently, has led to a £16 billion reduction.

However the proposed bill increases come amid public 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.

The large amount of water lost to leaks in the system also raises widespread concerns, particularly in dry periods when consumers face hosepipe bans.