Water Bills to Rise as Ofwat Budget Doubles

Water bills are anticipated to rise significantly as the budget for the existing industry regulator, Ofwat, has surged by 28% to £72 million for the 2024-25 period. This substantial increase follows a trend, with Ofwat's budget more than doubling since 2020-21, when it stood at £32.1 million. This growing expenditure, ultimately funded by households, comes at a time when consumers are already facing increased costs for essential water infrastructure repairs and environmental clean-ups.

Despite plans announced earlier this year to abolish Ofwat as part of a wider overhaul of the regulatory system, its budget has ballooned. Environment secretary Steve Reed had stated his intention to scrap Ofwat, citing its failure to ensure adequate investment by water companies. A new, singular regulator is planned to replace several bodies, with a mandate to prioritize customers, investors, and the environment. However, families are now expected to subsidize nearly a third increase in Ofwat's budget during this transition period.

The transition to a new regulatory framework is expected to take approximately two years. During this time, staff cannot cease operations. Recent reports indicated Ofwat had expanded its headcount, advertised for new roles including technical and policy positions, and hired a consultancy to aid in establishing the new regulator. Furthermore, Ofwat reportedly increased its internal bonus budget by 119%, attributed to a 25% rise in staff numbers.