If you think January’s bad for bills, just wait until ‘awful’ April ...

We need to invest, the water industry claims. But it’s making bill payers foot the bill for its failures to do that, and they’re getting angry – and no wonder, writes James Moore

If you thought January was misery month, think again. It’s actually April, when the new tax year starts, bills leap like an OIympic class high jumper, and the chancellor’s blows to our personal finances hit home.

The spoonful of sugar to ease the medicine of a wildly unpopular tax-raising budget was to freeze some of the prices that usually go up (rail fares would be one example). This April won’t be as nasty and inflationary as last April, but still, the water industry couldn’t resist the impulse to spoil things.

The average annual water bill in England and Wales is set to rise by £33 to £639 – an increase of 5.4 per cent. In Scotland, it’s even worse. Average bills there are shooting up by 8.7 per cent. One central England company, Affinity, is hiking its charges by a staggering 13 per cent. Note that this just covers the water supply part of the bill, not the sewerage. By comparison, the current inflation rate stands at 3.4 per cent.

At this point, what the industry often likes to do is encourage us to focus on the monthly number, which makes the increase look fairly small. This is deeply disingenuous. Firstly, this is still good money moving from our pockets into theirs for providing a shoddy service. Secondly, it comes on top of last year’s hammer blow when bill payers were told they would be splashing out on an average rise of £123.

This is the sort of financial kicking that might, in some parts of the world, have people out on the streets. But wait, cries trade body Water UK, it’s needed to fund investment.

“Water companies are currently delivering a £104 billion investment programme to secure our water supplies, support economic growth and end sewage entering our rivers and seas. Capital investment is at record levels and up by more than a third in just two years,” a Water UK spokesperson declared.

I encourage you to read that a second time. The line, “End sewage entering our rivers and seas,” raises an obvious question: why is that even happening? And while we’re at it, why were we told last year by the then-environment secretary, Steve Reed, that we might run out of drinking water mid-way through the next decade?

Fun fact: There hasn’t been a new reservoir built since 1992. All that investment we’re supposed to feel good about – I’m not saying it isn’t necessary – should have been done years ago, but the water companies were too busy lining their shareholders' pockets and loading up their balance sheets with debt.

‘Just after Keir Starmer’s first King’s Speech, YouGov found that support for nationalising water had risen to 82 per cent from 59 per cent in 2017, more even than backing nationalising the rail or energy sectors’ (PA Wire)

Dividends are a perfectly legitimate means of rewarding investors for putting up money so companies can deliver the products and services that customers want and need. But the water industry, made up of a group of monopoly providers bill payers are required to use, has been failing to deliver. So yes, it is perfectly legitimate to question its priorities. Ditto regulator Ofwat, which looks like it has been asleep at the wheel, not to mention Britain’s dismal political class, which has been preoccupied with its own pet projects and ideological obsessions. Bill payers are set to keep on getting drenched as Ofwat told the water companies they could pour an extra 36 per cent onto our bills between 2025 and 2030.

All this helps to explain why nationalisation remains such a wildly popular policy. Just after Keir Starmer’s first King’s Speech, YouGov found that support for nationalising water had risen to 82 per cent from 59 per cent in 2017, more even than backing nationalising the rail or energy sectors. That support runs across the political spectrum. The 89 per cent recorded among likely Labour voters probably doesn’t come as a surprise. But 87 per cent of Reform fans said the same thing, as did 70 per cent of likely Conservative voters. Right now, the only place where a solid majority for this is absent is where it counts: in the government. That’s because water nationalisation presents considerably more challenges than, say, the rail nationalisation which is currently underway.

The Department for the Environment, Food & Rural Affairs (Defra) argues that it would be very expensive at a time when Britain’s coffers are basically empty. In a policy paper last September, it floated the figure of £106.7bn, which included water company debt and an estimate of the value of the owners’ equity interests. It is the sort of number that would have Treasury officials reaching for the tranquilisers. However, the estimate was clearly aimed at the public, not the government, in an attempt to scare us and thus pour cold water on the backing for nationalisation. But the figure is disputed. River Action, a pressure group, argues that it is “misleading” and points to rival analyses which offer very different conclusions.

Reports of raw sewage being pumped into seas and rivers, hosepipe bans, warnings that Britain is running out of water, and the lack of any apparent improvement stemming from those extortionate bill increases are all going to keep support high, whatever numbers the government puts out. I do wonder if Labour, having flushed its support down the toilet and finding itself stuck in third or fourth place in the polls, decides to look again at what would be an immensely popular policy.

If the water industry wants to avoid that, it has to show improvement. And fast.