Court Hears Challenge Over Water Bills Funding Sewage Fixes

Published: 04 November 2025. The English Chronicle Desk. The English Chronicle Online.

Campaigners are set to challenge the UK water regulator, Ofwat, in court over claims that it is unlawfully allowing water companies to charge households twice for essential investments aimed at reducing sewage pollution. The legal challenge, brought by River Action, will argue that the regulator’s current approach to approving water company bills means that customers could be paying again for improvements that should have already been funded from previous payments.

At the centre of the dispute is Ofwat’s PR24 decision, a £104 billion funding package intended to improve the country’s water infrastructure and tackle record pollution in rivers and lakes caused by chronic underinvestment over decades. The PR24 settlement allows water companies to inject billions of pounds into their networks to bring sewage treatment systems up to environmental standards, but campaigners insist that much of this funding is being unfairly passed on to customers. According to River Action, the average household could face a bill increase of £123 a year simply to cover costs that should have already been addressed by water companies themselves.

The legal case will highlight stark increases in household water bills, particularly for customers of the poorest-performing companies. Thames Water customers, for example, are facing a 35% increase in bills, rising from £436 to £588 a year, while Southern Water customers are being charged 53% more, increasing from £420 to £642. United Utilities is implementing a 32% rise, pushing average bills to £535. River Action lawyers argue that these charges reflect payment for improvements to historical infrastructure failings—failings that should have been remedied by shareholders rather than by customers.

Emma Dearnaley, head of legal at River Action, stressed the fundamental issue at the heart of the case. “It is unacceptable that the public should be made to pay twice for water companies’ past failures to invest in infrastructure improvements,” she said. “Customers have already contributed via previous bills, yet Ofwat’s current approach means they are being asked to pay again. Meanwhile, rivers and lakes across the country continue to be polluted because infrastructure has been left degraded for decades.”

River Action is expected to use the example of Windermere, the largest natural lake in England, to illustrate the case. Lawyers contend that water companies have historically failed to make the necessary investment to prevent sewage discharges, and now customers are being forced to shoulder the financial burden to achieve compliance with environmental legislation that should have been met years ago. The argument hinges on the principle that water company investments to achieve legal compliance should be funded by the company’s shareholders, not ordinary consumers.

Ricardo Gama, representing River Action at the Manchester civil justice centre, said: “This case demonstrates a fundamental failure by Ofwat to ensure that water bills are used for the right purposes. The money that should have gone to maintain and upgrade essential infrastructure has not been spent properly, and now customers are being asked to cover the same costs a second time. It is a serious issue of fairness and accountability in the water sector.”

The hearings, which are scheduled to take place over two days at the Manchester civil justice centre, will scrutinise whether Ofwat adequately safeguarded customers against double charging. They will examine the way PR24 funding was approved, including whether Ofwat properly distinguished between new investment needed to expand or improve water networks and remedial spending required to rectify historic underinvestment.

Ofwat has responded by rejecting the claims, insisting that the regulator’s processes are robust and that customer protection is a key priority. An Ofwat spokesperson said: “We reject River Action’s claims. The PR24 process carefully scrutinised business plans to ensure that customers were getting fair value and that investments were justified. Customers should not pay twice for companies to regain compliance with environmental permits. Safeguards are included in our PR24 determinations, and we will continue to monitor compliance closely, taking action if required.”

The case has sparked debate about the broader governance of the UK water sector. Critics argue that decades of underinvestment by water companies, compounded by private ownership models, have resulted in a reliance on customers to fund improvements that should have been planned and executed earlier. Environmental campaigners point to repeated incidents of sewage discharge into rivers and lakes, warning that failure to properly maintain infrastructure not only harms ecosystems but also public health and recreational use of waterways.

Historically, UK water companies have faced criticism for prioritising profits and shareholder returns over investment in infrastructure, often leading to deteriorating networks and repeated pollution events. Thames Water, Southern Water, and United Utilities have all been subject to regulatory scrutiny for failing to prevent untreated sewage from entering waterways, particularly during periods of heavy rainfall. River Action lawyers argue that PR24 funding should correct these failures without imposing excessive financial burdens on households.

From the customer perspective, these bill increases are hitting households at a time of economic pressure. Many families are already grappling with energy costs, inflation, and housing challenges, making an additional £100–£150 a year increase a significant burden. Campaigners stress that these costs should not be used to subsidise improvements that companies were legally obliged to make years ago.

Environmental experts also highlight the urgent need for investment in sewage infrastructure to protect rivers, lakes, and ecosystems across the UK. Untreated sewage not only poses a threat to wildlife but also contaminates waterways with harmful bacteria and nutrients, impacting water quality and recreational safety. By raising household bills, Ofwat aims to fund upgrades that will ultimately reduce pollution, but the question of whether customers should bear the financial responsibility for past corporate failings remains central to the legal challenge.

The outcome of this case could have significant implications for the regulatory landscape in the UK water sector. A ruling against Ofwat may force the regulator to reconsider how it approves spending and billing structures, potentially limiting the ability of water companies to pass historical costs onto customers. It could also influence future approaches to environmental compliance and accountability, establishing clearer principles on the responsibilities of companies versus consumers.

Lawyers representing River Action will argue that while the PR24 programme is intended to improve infrastructure, it must not result in unfair double charging. They contend that shareholders should bear the financial burden of correcting historic failures. Emma Dearnaley added: “It is vital that Ofwat enforces fairness in how water bills are set. Customers should pay for new investment to improve services, not to cover past mistakes. The integrity of the regulatory system and public confidence in water companies depends on it.”

The hearing is expected to draw attention from both the environmental community and households affected by rising bills. Campaigners hope that by highlighting the issue in court, Ofwat will be compelled to adopt more rigorous oversight and ensure that investments achieve the intended environmental outcomes without placing undue financial strain on consumers.

In addition to the legal and financial concerns, the case raises broader questions about transparency, corporate responsibility, and environmental protection. It underscores the importance of ensuring that utilities meet their obligations while balancing the interests of consumers, investors, and ecosystems. River Action and other environmental groups hope the court will deliver a decision that reinforces the principle that public funds should not subsidise private failings, and that regulatory bodies must act decisively to safeguard both consumers and the environment.

As the hearing begins at the Manchester civil justice centre, all eyes will be on how the judiciary interprets Ofwat’s responsibilities and the legal obligations of water companies. The case represents a significant test of regulatory accountability and consumer protection in the context of the UK’s water industry. Campaigners, environmentalists, and customers alike will be watching closely to see whether the legal challenge leads to a recalibration of how water infrastructure improvements are funded and whether households are shielded from paying twice for improvements meant to correct long-standing underinvestment.