Water companies in England and Wales have been granted provisional approval to raise customer bills by an additional £3.4 billion over the coming years. This funding is intended to address increased pressures on water infrastructure and the environment.

The decision, made by the regulator Ofwat, allows 13 water companies to seek extra funds for projects that were not foreseen during the last five-year pricing review. The increased spending is partly earmarked for maintaining existing water services, meeting rising demand from new housing and data centers, and tackling pollutants such as "forever chemicals".

Customers of five specific companies – Severn Trent Water, Southern Water, Thames Water, Wessex Water, and South East Water – could see these additional charges reflected in their bills within the next two years, on top of previously announced increases. The exact amount will vary, with Southern Water potentially adding £43 next year, while South East Water would see a £1 increase by 2029. The remaining eight companies would recover their costs after 2030.

This move has drawn criticism amid ongoing concerns about service interruptions and pollution levels in the UK's waterways. However, water companies contend that significant investment is necessary to upgrade pipes, build new treatment facilities, and construct reservoirs to cope with climate change impacts like more frequent heatwaves and heavy rainfall.

Ofwat stated that the extra funding would enable companies to support growth, achieve better environmental outcomes, and prevent delays to essential upgrades. The regulator emphasized that performance would be closely monitored, and companies could face clawbacks if they fail to deliver the promised improvements. "We will track performance to ensure companies are delivering the expected improvements for customers and the environment," said Helen Campbell, executive director for delivery at Ofwat. "If they don't, expenditure can be clawed back."

Prime Minister Andy Burnham voiced concerns that the proposed increases represent "real money out of family budgets at a time when they are struggling with the cost of living." Environmental groups have also labelled the decision "an insult" given the current state of water bodies.

The approval process involves a public consultation period, with a final decision expected in December. Water companies require Ofwat's approval every five years to set their spending budgets, but they can apply for additional funds for unforeseen projects.

Examples of approved schemes include funding for new data centers in Manchester, enhanced wastewater capacity in Newquay, and accelerated work by Wessex Water to address PFAS pollutants, which was originally scheduled for a later period.