Regulator tells water firms to cut bills by £50 by 2025

Customers will see a reduction in average bills of about £50 before inflation. Photo: Getty

Customers in England and Wales will see an average reduction of £50 in their water bills before inflation by 2025, according to regulator Ofwat.

Ofwat says the reduction will come about in part because it demanded greater efficiency from water companies and promoted innovation in the sector.

The reduction in bills will coincide with a £51bn spending package over the next five years.

Around a quarter of this — roughly £13bn — will be invested in “providing resilient services and a better environment in the face of a growing population and climate change”, Ofwat said on Monday.

READ MORE: Mike Ashley's Sports Direct report a 160% rise in pre-tax profit

The regulator has asked water companies to cut leaks by 16%, a move that would save enough water to meet the needs of everyone in Birmingham, Bristol, Cardiff, Leeds, Liverpool, and Sheffield combined.

The announcement comes amid speculation that water companies may be planning on appealing against the targets.

Ofwat CEO Rachel Fletcher told the BBC’s Today programme on Monday that it was time for “companies to shape up for a challenging future”, noting that climate change and population growth were putting pressure on them.

“So it's not surprising that we're seeing some companies grumbling,” she said.

Companies will also be asked to identify and help a further two million customers who need “extra support” and to invest more than £1bn in communities at risk of flooding.

READ MORE: UK startup create pork from animal cells, not slaughtered meat

Further, Ofwat has told companies to reduce pollution in rivers and streams by almost a third, and told them to invest £450m to explore new water resources as part of a drive to prepare for drier weather.

Ofwat also said that Thames Water, which provides water services in London, will bid for up to £480m to deliver improved service resilience in the city and surrounding areas.

“Today we’re firing the starting gun on the transformation of the water industry backed by a major investment programme to deliver new, improved services for customers and the environment and resilience for generations to come,” Fletcher said in a statement.

“Now water companies need to crack on, turn this into a reality and transform their performance for everyone.”