Millions of households across England are bracing for the possibility of even steeper water bill increases, as the Competition and Markets Authority (CMA) prepares to issue a crucial verdict on water industry spending plans. This decision could have far-reaching implications not just for consumers, but for the state of the nation’s rivers, the health of its infrastructure, and the political fortunes of the country’s newest environment secretary, Emma Reynolds.
Between April 2022 and October 2023, Anglian Water was fined a staggering £3,085,000 for a series of pollution incidents in its region, according to Lincolnshire World. This hefty penalty is now being put to work: local groups have already launched ten restoration projects in East Anglia, including a significant £1,185,957 allocation for the Upper Witham River and Floodplain Restoration Project. The goal? To restore and enhance natural environments damaged by years of mismanagement and pollution.
But Anglian Water’s fine is just the tip of the iceberg. In total, more than £10 million in fines have been levied against major water companies—Thames Water, South West Water, Anglian Water, United Utilities, and Yorkshire Water. This money is now fueling 51 different projects across England, each aimed at tackling water pollution, managing flood risk, and boosting biodiversity. Communities are, quite literally, reinvesting the proceeds of water company wrongdoing back into their own local environments.
Environment Secretary Emma Reynolds voiced the frustration felt by many: “I share people’s anger at the damage caused by sewage pollution in East Anglia and want the local community to once again feel they can take pride in their environment.” She emphasized that the fines would be “directed back into projects to tackle pollution and support long-term plans for nature restoration.” Reynolds added, “Under our Plan for Change we’re resetting the water industry – holding water companies to account and reinvesting in areas harmed by their rule breaking.”
Yet, even as these restoration efforts get underway, a much larger financial storm is brewing for England’s water customers. As The Guardian reported, the CMA is on the verge of deciding whether five major water companies—Anglian, Northumbrian, Southern, Wessex, and South East Water, serving a combined 14.7 million customers—can raise bills higher than previously allowed by the industry regulator, Ofwat. Thames Water, the nation’s largest supplier with 16 million customers, initially joined the appeal but has since paused its efforts amid ongoing negotiations to reduce its massive debt burden.
Ofwat, which oversees England and Wales’s largely privatized water system, had set in December 2024 that average annual household water bills could rise by 36% to £597 by 2030. This increase was intended to support much-needed investment in the country’s aging water infrastructure. However, the water companies have argued that even more spending is necessary to pay for urgent upgrades, especially to prevent leaks and stop sewage overflows. Any additional spending granted by the CMA would be passed directly onto customers’ bills.
Industry insiders believe the CMA is more likely to permit higher spending than to reduce it, given the pressing need for investment. S&P Global Ratings, a respected financial agency, noted that water companies are seeking as much as £2 billion in extra spending on top of the £104 billion already approved over the next five years. However, the agency also cautioned that there’s considerable uncertainty about what the CMA will ultimately decide.
The CMA’s provisional determinations were initially expected by mid-September 2025 but have slipped to early October, with water companies now awaiting an announcement that could come any day. According to Martin Young, a former investment bank analyst now running the Aquaicity consultancy, "We could see upwards movement in the allowed spend" for companies like Southern, South East, and Wessex, largely because of the significant gaps between what they originally requested and what Ofwat granted last December. Young also pointed out that Ofwat’s assumptions about the cost of equity—the returns given to shareholders—were lower than those used by Ofgem, the regulator for energy companies. This difference could nudge the CMA toward allowing more spending.
But the politics of water pricing are fraught. A water industry source told The Guardian that the CMA would be under considerable political pressure to avoid major price hikes, especially as the government considers replacing Ofwat with a new regulator. The previous environment secretary, Steve Reed, had declared in July that households should be “never again hit by the shocking bill hikes we saw last year.”
Emma Reynolds, for her part, has sought to reassure the public. At the Labour party conference, she promised there would be “no more ripping off the British people,” but she also insisted on the need for investment that would be “good for jobs, consumers, and good for growth.” So far, however, she has not spelled out how she intends to balance the competing demands of keeping bills low and funding the upgrades necessary to prevent leaks and sewage overflows. According to The Guardian, Reynolds postponed a meeting with water company bosses just last week, a sign of the delicate tightrope she must walk.
The scale of the challenge is daunting. Thames Water’s effective owners recently admitted that cleaning up sewage pollution in rivers could take as long as 15 years, given the sheer scale of investment required. One person involved in the company’s restructuring criticized Ofwat’s “blinkered approach” to setting spending allowances, suggesting that regulatory inflexibility could be hampering progress. Thames Water could resume its appeal to the CMA for higher bills if the government does not grant it the regulatory leniency it seeks, although this is not its preferred path.
The government, meanwhile, has sought to place blame on previous administrations. A spokesperson said, “This government inherited full water system failure which has left our infrastructure crumbling and sewage spilling into our rivers. This failure was not dealt with, and the public rightly feel frustration at seeing bills increase. We are fixing the system to prevent future price hikes.”
As the CMA’s decision looms, the pressure is on all sides—consumers facing higher bills, companies needing billions in investment, politicians wary of public anger, and communities desperate to see their rivers and landscapes restored. The outcome will shape not just the bills people pay, but the future health of England’s waterways for years to come.
