Water utilities forced to swallow price cuts

Britain’s water companies have been forced to cut bills by an average of 5 per dent over the next five years and spend an extra £44bn to improve services.

The demands from the regulator Ofwat follow pressure from politicians and consumer groups, who claim that the utilities, mostly owned by foreign companies, have profited unfairly from cheap financing during the present five-year bills settlement.

Only three of Britain’s water firms – Pennon, Severn Trent and United Utilities – are still listed on the London stock market. Of those three, Pennon’s South West Water was told to cut bills by 7 per cent, Severn Trent by 5 per cent, and the northern-focused United Utilities by 3 per cent.

For now, Ofwat has ruled that its customers should see annual bills fall by almost £20 to £353 by 2020, stripping out the impact of inflation. But that could change: the new pricing includes the cost of the preparatory works for the 25km Thames Tideway sewer, but not the construction.