OFWAT PROPOSES £240M WATER BILL CUT FOR UNDERPERFORMANCE

Water regulator Ofwat has proposed cutting household and business bills by £240 million by 2029-30, after finding that several suppliers failed to meet environmental and customer service targets in the 2025-26 financial year. Of that sum, £107 million would be returned through bills in 2027-28, the regulator said. Ofwat is due to make a final decision on the payments, known as outcome delivery incentives, by 15 December, taking effect on bills from 1 April next year. The regulator sets five-year performance targets for water companies to 2030, with penalties for underperformance and rewards for exceeding them.

Yorkshire Water faces the largest deduction, at £75 million, followed by Thames Water at £46 million, with both reductions due on bills in April 2027, Ofwat said. Severn Trent and Northumbrian Water are set to receive the largest outperformance payments, according to the regulator. Ofwat said the effect on bills would vary by company and customer type. It has separately proposed letting water companies raise bills by an extra £3.4 billion on top of the 36% average increase agreed for the five years to 2030, likely offsetting the cuts for many customers.

The announcement follows a speech by Prime Minister Andy Burnham at the Labour Party conference last month, setting out plans for new laws allowing public ownership of failing water companies and describing a ten-year path towards what he called a "very different water system". Mr Burnham said Environment Secretary Dame Angela Eagle would bring a "strengthened Water Bill" before Parliament. The plans have raised the possibility of temporary nationalisation of Thames Water, which was described as debt-laden. The bill reductions form part of wider scrutiny of water companies' performance as those reforms are developed.