Millions face steeper bills as Ofwat’s authority erodes in a chaotic, collapsing regulatory system

For 14.7 million water customers in England, the news could hardly be more dispiriting. Bills are rising again—steeply—and while the regulator Ofwat claims a moral victory, few outside its offices will see much to celebrate.

Five of England’s largest suppliers—Anglian, Northumbrian, South East, Southern, and Wessex Water—have been given permission to increase charges even further. It’s the second painful blow for customers whose bills already jumped sharply in April. The Competition and Markets Authority (CMA), which reviewed the companies’ demands, has sided only partially with them, but that will be cold comfort for households already under strain.

The process has been nothing short of bizarre. None of the companies received the full increases they sought, yet all have emerged with more money in their pockets. Southern Water, for instance, had asked to raise the average annual bill to £710. Ofwat had approved £620. The CMA split the difference, landing on £638. Anglian and Northumbrian gained only around 1% more—barely noticeable, but still a win for the firms.

For Ofwat, whose authority has been battered by decades of sewage scandals and spiralling debts in the water sector, this outcome offers the faintest glimmer of vindication. The CMA concluded that most of the companies’ pleas for extra funding were “largely unjustified”, granting them only 21% of the additional sums they sought. Even so, that concession translates into £556 million more extracted from households and businesses.

To the casual observer, the entire affair feels surreal. The CMA was not merely asked to check whether Ofwat had made an obvious blunder. Instead, it had to rerun the entire price-setting process from scratch, replicating four years of regulatory work in a single year. The result is a byzantine exercise that seems to highlight how broken the system has become.

And that system, crucially, is on borrowed time. The government has already announced that Ofwat will be abolished as part of a wider “reset” of the sector, a tacit admission that the model has failed customers, investors, and the environment alike. Yet, before it bows out, Ofwat must watch as another regulator attempts to reapply the very rules that are about to be scrapped.

The CMA’s findings remain provisional, but the absurdities are multiplying. Directors at the five water firms were required to sign off their formal complaints on the grounds that Ofwat’s decisions left them unable to meet regulatory obligations. Now that their appeals have yielded minimal gains, how can they maintain that argument? If they were serious, some might have to resign; yet resignation seems unlikely when profit margins are still intact.

The focus now shifts to Thames Water, the sector’s most troubled operator. The company has until 22 October to decide whether to make its own appeal to the CMA. But that deadline may yet prove meaningless. Thames, burdened by massive debts and public anger over sewage dumping, could soon face special administration—temporary nationalisation in all but name. Bondholders are already circling, and yet another government extension could buy the company time, though not much relief.

If Thames does go ahead with a CMA appeal, a final decision might not come until mid-2026—over a year after the bills in question took effect. For millions of customers, the whole ordeal feels like an endless punishment: a system so contorted that it demands patience while offering only higher costs in return.

Water torture, indeed.