Has the price of water simply been too cheap asks Dalcour Maclaren Managing Director Andrew Barker

Yesterday, 18 December 2024, OFWAT approved a 36% increase in prices over the next five years – not quite the 44% requested by water companies, but a fair jump for the consumer.

There will no doubt be a split in opinion between the industry and the consumer. The consumer will see this as another squeeze on their finances on top of the increasing energy prices, with the price cap increasing in January.

Investment is needed to guarantee water quality

But what is clear, is that every UK water company has an enormous task ahead of them, as pressure rises to improve water quality, increase water efficiency, reduce leakage and prepare for future droughts. And all this comes at a substantial cost. Public expectations, and vocal celebrities are adding to this pressure to improve water quality and so the answer has to be to spend more money – wisely.

Has enough been invested to date?

Water companies have poured billions into infrastructure – £9 billion last year – but it hasn’t been enough as climate change and a growing population increases the enormity of the task.

Some argue the high dividend payouts have diverted funds away from the required investment. But the water sector was privatised in 1989 to attract private investors, who need to make a return – since 2020, dividends have averaged 2.7%, a figure which OFWAT will no doubt be watching very carefully.

Why are price hikes the solution?

So, to fix the problem, water companies need to borrow more to invest. They need to afford that borrowing and the results need to reward the investors and deliver for the consumer. This is an incredibly challenging balancing act, but yesterday’s price increase is essential to get the water industry back on track – so long as the money is invested in a way that maximises results.

There’s a huge opportunity ahead for the water Industry and helping our clients make deliver cleaner and safer water courses in the UK is a priority.

Dalcour Maclaren has been working within the water sector since 2003. Our 75+ strong team delivers:

Land consenting
Property management
Environmental and planning advice
Geomatics services

Over the years, we’ve built a fantastic team of water sector specialists who understand our clients and their customers’ needs, always taking a pragmatic and proactive approach.

If you would like to talk to one of our team about our land, property, E&P or Geomatics services for the water sector, please email: [email protected]