Millions of households face 37pc jump in water bills

Liv Garfield
Severn Trent boss, Liv Garfield, promised the cost increase would transform the company’s network and result in fewer leaks - Tayfun Salci

Millions of Severn Trent customers will see their water bills surge by more than £100 a year after the company launched a £12.9bn turnaround plan.

The utility giant on Friday confirmed plans to raise bills by 37pc by the end of the decade as it looks to raise cash to invest in reducing sewage spills and fixing pipes across its network.

Severn Trent’s plan will mean 4.2 million customers across the Midlands and Wales will have to pay an extra £139 a year on average by the end of the decade.

The announcement is the first in what is likely to be an industry-wise jump in bills.

All 17 water companies across England and Wales have until midday on Monday to submit their five-year business plans to the regulator Ofwat, which are expected to include increases in bills to cover the costs of environmental works.

Martin Young, senior analyst at Investec, said: “Severn Trent is probably at the bottom end of the range because they started off with a cheaper bill.”

Documents leaked to the Times over the summer showed that some water companies were planning to raise bills by as much as 56pc.

Mr Young said the documents suggested average bills will rise from £441 to £570. However, these figures do not account for inflation.

Mike Keil, chief executive of the Consumer Council for Water (CCW), said: “Water companies have already indicated that there are likely to be some substantial bill rises over the next five years to fund the investment that customers want to see in improving services and protecting the environment.”

Under Severn Trent’s proposals, which will be submitted to water regulator Ofwat on Monday, annual bills will rise from £379 in 2024-25 to £518 by 2029-30.

It announced the planned increase to help fund a £12.9bn investment in its ailing infrastructure.

The water company will invest billions into reducing pollution across UK rivers and has targeted reducing sewage spills by a third by 2030.

Severn Trent was one of four water companies fined a collective total of £94m by the Environment Agency for dumping sewage between 2018 and 2022.

It has also become the first UK water supplier to face a class action lawsuit over sewage pollution, although it has rejected the allegations.

As well as increasing bills, the company on Friday announced plans to raise £1bn selling shares to help fund its plans. It included a £500m investment from Qatar’s sovereign wealth fund, which was already one of the company’s biggest shareholders.

The Qatar Investment Authority becomes Severn Trent’s second-largest shareholder after the investment. The Middle Eastern nation first took a £200m stake in the supplier in 2019.

Severn Trent said that although customers would be paying an extra £139 per year, this would be roughly in line with the expected increase in household incomes.

Chief executive Liv Garfield said: “By 2030 we will have transformed our network to provide our customers with the very best service.

“At the heart of this ambition is a commitment to a sustainable future – from healthier rivers, to providing thousands of jobs, fewer leaks and a water supply ready for the impacts of climate change and population growth.”

Debt-laden water companies have been battling increased financial pressures over the past year, as the cost of cleaning up rivers coincided with higher interest rates.

Earlier this year concerns about Thames Water’s £14bn debt pile sparked emergency talks between the Government and Ofwat, as they considered possibly nationalising Britain’s largest supplier.

Severn Trent, which has nearly £7bn of debts, was not involved in the talks.

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