Southern Water to increase household water bills by 53 per cent over five years in Hampshire - highest in UK
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Household water costs across England and Wales will increase by an average £31 a year over the next half decade, regulator Ofwat has announced. Southern Water requested an even higher increase than the 53 per cent figure, with Ofwat having to slash their five-year increase by 16 per cent (£126).
The increase is significantly higher than the expected average rise of around £20 a year per household, outlined in the regulator’s draft proposals in July. Ofwat said the increase would pay for a £104bn upgrade of the water sector to deliver “substantial, lasting, improvements for customers and the environment”.
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However, despite the average £31 a year increase figure, households will face a heavy average hike of £86 or 20 per cent in the next year, excluding inflation, with smaller percentage increases in each of the next four years. The average bill will rise by a total of £157 or 36 per cent over the next five years.
Ofwat chief executive David Black said: “Today marks a significant moment. It provides water companies with an opportunity to regain customers’ trust by using this £104bn upgrade to turn around their environmental record and improve services to customers. Water companies now need to rise to this challenge, customers will rightly expect them to show they can deliver significant improvement over time to justify the increase in bills.
“Alongside the step up in investment, we need to see a transformation in companies’ culture and performance. We will monitor and hold companies to account on their investment programmes and improvements. We recognise it is a difficult time for many, and we are acutely aware of the impact that bill increases will have for some customers.
“That is why it is vital that companies are stepping up their support for customers who struggle to pay. We have robustly examined all funding requests to make sure they provide value for money and deliver real improvements, while ensuring the sector can attract the levels of investment it needs to meet environmental requirements. This has seen us remove £8bn of unjustified costs compared with companies most recent requests. In addition, our approach to setting a rate of return has saved customers £2.8bn.”
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Hide AdSouthern Water has faced several problems which have knocked public confidence. A technical issue at the Testwood Water Supply Works meant some customers were cut off from supply, or had low pressure in their houses. The company was fined £31.9m for missing targets on reducing pollution, leaks and supply interruptions, with customer satisfaction also falling.
Local complaints levelled against the company over the past year include the disruption caused in Portsmouth as a result of the burst sewer pipe which runs along Eastern Road, as well as sewage discharges into the Solent which has impacted water quality. Ofwat place Southern Water’s performance into the lowest category of “lagging”.
Industry body Water UK said the money will crucially be spent on supporting the natural environment. They added: “After a decade of cuts Ofwat has finally listened to public anger and agreed a much-needed quadrupling of investment in our aging infrastructure. This will be the largest amount of money ever spent on the natural environment, and will help to support economic growth, build more homes, secure our water supplies and end sewage entering our rivers and seas.
“Each water company will now need to take time to assess what Ofwat’s decision means for them. We understand increasing bills is never welcome. To protect vulnerable customers, companies will triple the number of households receiving support with their bills to three million over the next five years.”
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Hide AdEnergy secretary Steve Reed, Labour MP for Streatham and Croydon North, was left angry by the announcement. “Under the Conservatives, our sewage system crumbled,” he said. “They irresponsibly let water companies divert customers’ money to line the pockets of their bosses and shareholders.
“The public are right to be angry after they have been left to pay the price of Conservative failure. This Labour Government will ringfence money earmarked for investment so it can never be diverted for bonuses and shareholder pay-outs. We will clean up our rivers, lakes and seas for good.”
The Consumer Council for Water (CCW) warned the increases were “more than what many people can afford”. Chief Executive Mike Kell said: “These bill rises may be less than what water companies wanted but they are still more than what many people can afford. Customers will be hit particularly hard from April with a large chunk of these increases frontloaded into next year – on top of inflation.
“We know at least two in five households will find these increases difficult to afford but the support being offered by some water companies lacks ambition. People want to see more investment, but this must be coupled with a strong safety net for customers who will struggle to pay. The case for a single social tariff to end the current postcode lottery of support has never been more compelling.”
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Hide AdTom MacInnes, director of policy at Citizens Advice, said: “These price rises will hit many households hard. While it’s encouraging to see help for customers increasing, the current dysfunctional approach to bill support in this industry means that people will continue to miss out. We found that more than two fifths (42 per cent) of those likely to be eligible aren’t aware that water social tariffs exist. The Government and suppliers must work together to ensure that no one is missing out on the support they’re entitled to.”
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