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Five suppliers have been given permission to increase charges to fund infrastructure projects across Britain

Water bills are set to rise for millions of households after Ofwat approved £3.4billion of additional infrastructure spending by five suppliers.

The regulator confirmed that companies can charge customers above previously agreed levels to fund projects including new housing infrastructure, data‑centre provision, increased capacity and improvements to drinking‑water safety.

The decision comes as more than two‑thirds of Britain is classified as being in drought, with around half of households currently affected by hosepipe restrictions.

The five companies collectively serve around 20 million customers, meaning the additional charges will affect households across large parts of the country.

Severn Trent, Southern Water, Thames Water, Wessex Water and South East Water have all been given permission to increase bills.

Southern Water, Thames Water and South East Water currently have partial or full hosepipe bans in place.

Southern Water customers will face the largest increase, with annual bills rising by an additional £43 from 2027, falling slightly to £37 by 2029.

Thames Water and Severn Trent customers will see an extra £3 added in 2027, rising to £5 by 2029.

Wessex Water customers will face an additional £4 in 2027, increasing to £7 by 2029. South East Water customers will see an extra £1 added in 2029.

Environment Secretary Angela Eagle acknowledged the pressure on households as water companies receive permission to raise charges.

She said years of underinvestment and weak regulation had contributed to the current situation, adding that infrastructure funding had been ring‑fenced to ensure it is used only to address existing problems.

Ms Eagle said planned reforms would deliver “higher standards, better performance and cleaner waterways”.

Alistair Carmichael, chair of Parliament’s environment committee, questioned whether previous bill increases had delivered the promised improvements, saying responsibility now lay with ministers to ensure money collected from customers reaches frontline services.

Among the largest projects approved is Thames Water’s proposed £6.6billion reservoir in Oxfordshire, which could eventually supply water to up to 15 million people.

Southern Water’s plans include a water‑recycling facility on the Isle of Wight and flood‑prevention works in Hastings.

Water UK defended the additional spending, arguing that the current drought demonstrates the need for investment in the country’s water infrastructure.

A spokesman said the expenditure would safeguard services, unlock new homes and business growth, and replace ageing infrastructure.

The industry body said most customers would not see an immediate impact on bills, with some costs not appearing until after Ofwat’s next price review in 2030.

The regulator rejected £752million of proposed expenditure, partly because some companies had failed to complete work for which they had already received funding.

Helen Campbell, Ofwat’s interim executive director, said the regulator would monitor how the approved money is spent and could claw back expenditure if companies fail to deliver expected improvements.

She said the funding would support new housing development, business growth and improvements to drinking‑water quality, including work to remove PFAS and other “forever chemicals”.

Ofwat’s proposed changes remain subject to a public consultation, which is open until late September.