Water bills to see ‘small, steady' rise despite reform plans, says Reed

Independent

20-07-2025

Households will continue to face rising water bills despite an overhaul of how the sector is regulated, the Environment Secretary has said, but increases will be 'small' and 'steady'.
Steve Reed is expected to set out plans for 'root and branch reform' of the water sector on Monday, following the publication of a landmark review of the industry.
Those plans are thought to include action to tackle sewage spills, invest in water infrastructure and the abolition of the industry's beleaguered regulator Ofwat as ministers seek to avoid a repeat of this year's 26% increase in bills.
But while Mr Reed has promised that families will never again see 'huge shock hikes' to their bills, he was unable on Sunday to rule out further above-inflation increases.
Although he told Sky News's Sunday Morning With Trevor Phillips that bills should be 'as low as possible', he added that there needed to be 'appropriate bill rises' to secure 'appropriate levels of investment'.
He said: 'A small, steady increase in bills is what people expect.'
Government sources have argued that the recent large rise in bills was necessary to pay for investment in long-neglected infrastructure, but expect Mr Reed's promised reforms to make further rises unnecessary.
Asked about the possibility of expanding social tariffs to help households struggling with bills – a move that could see wealthier families pay more – Mr Reed said he had 'not been convinced yet' that this was necessary.
Earlier on Sunday, Mr Reed had pledged to halve sewage pollution in England by 2030, after the Environment Agency said serious pollution incidents had risen by 60% in 2024.
Mr Reed said the measures the Government was taking would enable it to significantly reduce pollution, with the aim of completely eliminating it by 2035 should it be re-elected.
He also suggested to the BBC that he would resign if the 2030 target was not achieved, provided he was still in the same job by then.
His comments come before a major report by former Bank of England deputy governor Sir Jon Cunliffe, which is expected to recommend sweeping reform to water regulation on Monday.
Sir Jon has been widely reported to be preparing to recommend the abolition of Ofwat, which has faced criticism over its handling of sewage spills and allowing water companies to pay large dividends while taking on significant debt and missing targets for investing in infrastructure.
On Sunday, Mr Reed would not say whether he would scrap Ofwat, but also declined to say he had confidence in the regulator.
He told the BBC's Sunday With Laura Kuenssberg: 'The regulator is clearly failing.'
Sir Jon's interim report criticised regulation of the water sector, which is split between economic regulator Ofwat, the Environment Agency and the Drinking Water Inspectorate.
But on Sunday, Conservative shadow communities secretary Kevin Hollinrake said he would be concerned any changes 'might just be shuffling the deckchairs on the Titanic'.
He told the BBC: 'It's really important the regulator's effective, and we put in a lot of measures to give Ofwat more powers to regulate the water industry and a lot of those things were very effective.'
Liberal Democrat leader Sir Ed Davey said he backed scrapping Ofwat, calling for a new Clean Water Authority to 'hold these water companies to account'.
Sir Ed has also called for the Government to go further and aim to eliminate sewage pollution entirely by 2030, saying voters were 'fed up with empty promises from ministers while Britain's waterways continue to be ruined by sewage'.
He added: 'For years water companies have paid out millions in dividends and bonuses. It would be deeply unfair if customers are now made to pick up the tab for this scandal through higher bills.'
Although sweeping regulatory reform is likely to be on the table, full nationalisation of the industry will not be after the Government excluded it from Sir Jon's terms of reference.
Smaller parties such as the Greens have called for nationalisation, while on Sunday Reform UK's Nigel Farage said he would look to strike a deal with the private sector to bring 50% of the water industry under public ownership.
Mr Reed argued that nationalisation would cost 'upwards of £100 billion', diverting resources from the NHS and taking years during which pollution would get worse.