Water customers could get £240million off bills under Ofwat plans

Yorkshire Water households would receive an average reduction of £27, while Thames Water customers would get around £7 off their bills.

Yorkshire Water would return £75million and Thames Water £46million through bill adjustments starting in April 2027.

Across the sector, £107million of the total net reduction would be passed back to customers through bills in 2027/28.

However, the amount each household receives will vary. Ofwat said bill changes are “affected by a range of factors and the effect will vary by company and customer type”.

A final decision is expected by December 15.

The reductions would not necessarily mean customers pay less overall, as substantial increases have already been approved.

Ofwat has separately allowed water companies to raise annual tariffs by an additional £3.4billion, on top of the average 36 per cent bill increase agreed for the five years to 2030.

The proposed penalties relate to companies failing to meet environmental and customer service targets.

Under a system called outcome delivery incentives, suppliers can face financial penalties for missing commitments or receive additional payments for exceeding them.

Severn Trent and Northumbrian Water are set to receive the largest rewards for outperforming their targets during the 2025/26 financial year.

The incentive payments will take effect on bills from 1 April next year.

Prime Minister Andy Burnham used his Labour Party conference speech last month to announce legislation that could open the door to public ownership of struggling water companies. He pledged a decade-long journey towards a “very different water system” across the UK.

Mr Burnham confirmed that Environment Secretary Dame Angela Eagle would bring a “strengthened Water Bill to Parliament”.

The move has heightened speculation about a potential temporary nationalisation of Thames Water, which is weighed down by significant debt.

The Government is currently considering a £10billion rescue takeover bid from the company’s lenders for Britain’s largest water supplier.

The Prime Minister’s intervention followed Ofwat’s August decision to permit further bill rises, with Mr Burnham insisting that customers “cannot be treated as a blank cheque”.

The water sector remains under sustained criticism over sewage discharges, service failures and executive remuneration, with mounting pressure for companies to be returned to state control.

A Government spokesman said: “This Government won’t allow customers to be treated as a blank cheque, and we are committed to protecting households from cost-of-living pressures.”

He added: “We will always challenge water companies where they seek to pass unnecessary costs onto households. We will deliver a strengthened Water Bill that puts people first, ensuring affordable access to clean water, driving down pollution, and strengthening public control.”

Yorkshire Water acknowledged its shortcomings, with a spokesperson stating: “We recognise that our performance last year fell short of the standards we and our customers expect in some areas, and we remain focused on improving.”

The company pointed to its largest ever environmental investment programme and the recruitment of more than 1,000 additional staff, with upgrades completed at nearly 300 sites across the county.