Water bills set to soar 10%

WATER bills could rise by 10% next spring - the likely run-up to a General Election. The prospect is already causing concern in Downing Street.

The real worry is that a blizzard of higher household bills for petrol, gas, electricity and council tax will cloud Labour's re-election campaign.

Water companies have submitted plans to watchdog Ofwat for £22bn capital spending over five years. That implies that bills will rise by 30% plus inflation, or 40% in all. Ofwat will give its draft response on 5 August, its final verdict on 2 December.

Higher bills will hit doormats between February and April. The election must be held by mid-2006, but is expected a year earlier.

If a 40% rise in water bills is evenly spread over five years, the first rise would be 8%. But the need to invest suggests a 'front-loaded' rise of 10% is probable, adding £25 to the average bill.

Water UK chief executive Pamela Taylor says capital spending needs have kept rising, driven by environmental concerns.

Spending doubled to £3bn a year after privatisation in 1989. Now it is heading towards more than £4bn annually. The biggest part is to replace the ageing water and sewer pipe network.

The Government could ease environmental requirements, or lessen the 'front loading' of price rises. But bills still seem sure to rise substantially.