Water bills look set to rise further as the budget for the soon-to-be scrapped industry regulator has soared by nearly a third.
Ofwat’s costs have jumped to £72 million up from £56.1 million in 2024-25, a 28 per cent increase, despite plans to abolish it.
The increase also means that Ofwat’s budget has more than doubled since 2020–21, when it stood at £32.1 million.
The hike will anger households already bracing for bigger bills to rebuild crumbling infrastructure and clean up pollution in rivers, lakes and seas.
The Ofwat budget is ultimately paid for by households and so any increase in their budget will mean customers’ bills going up accordingly.
Earlier this year, ministers said Ofwat would be abolished as part of an overhaul of the ‘broken’ regulatory system.
Then environment secretary Steve Reed said he would junk Ofwat after telling MPs that the water industry was ‘failing’.
A new single regulator will replace several smaller bodies and will have a clear mandate to ‘stand firmly on the side of customers, investors and the environment’, he said.
Water bills to rise further as regulator costs soar to £72 million despite plans to abolish it
‘Water companies have been allowed to profit at the expense of the British people when they should have been investing to fix our broken water pipes,’ he told MPs.
‘They got away with this because of a broken regulatory system that has failed customers and failed the environment.’
Despite this, families will be expected to pay for an increase of nearly a third in its budget during the transition to a new regulator.
A source close to the industry said: ‘It’s a mystery why Ofwat’s budget has been doubled. I’m sure the price of removal men has gone up but this is a bit ridiculous.
‘Ofwat should be hiring skips not bureaucrats.’
Earlier this year, the Daily Mail revealed that the regulator had expanded its headcount and was still advertising for new roles at the organisation.
These jobs include technical water roles, policy leads, economist positions and marketing roles as well as recruiting a management consultancy to help it set up the new regulator.
It was also recently reported that Ofwat had increased its internal bonus budget by 119per cent which was attributed to a 25per cent increase in staff headcount.
The proposals to overhaul the industry include abolishing Ofwat, which oversees how much water companies in England and Wales can charge for services and the Drinking Water Inspectorate (DWI), which ensures that public water supplies are safe.
It would also end the regulatory roles of the Environment Agency and Natural England, which monitor the sector’s impact on nature, such as companies illegally dumping sewage into waterways.
An Ofwat spokesman said: ‘The government has set out a new direction for the water sector with the formation of new water regulators, which_ _marks an opportunity to reset the sector so that it delivers better outcomes for customers and the environment.
‘Until the new regulators for England and Wales are in place, we will keep working hard to drive water companies to improve performance and deliver maximum value for customers, communities, and the environment.’
Sources said that the transition to a new regulator would take two years and staff could not just ‘down tools’ during that time.
