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Water firms promise price cuts and fewer leaks

Water companies have outlined plans for 2020-2025 (PA) Photo: PA Archive/PA Images

Water companies United Utilities and Severn Trent have pledged to slash bills for millions of customers and tackle leaks as part of fresh business plans.

United Utilities said it would cut average bills by 10.5% in real terms between 2020 and 2025, amounting to a reduction of £45 per customer.

The North West-focused firm also said it will invest £750 million in delivering a “major water resilience scheme” for customers in Manchester and the Pennines.

The company will aim to deliver a 15% reduction in leaks by 2025, according to its five-year business plan released to regulator Ofwat.

As part of Ofwat’s 2019 price review, water companies are required to outline a detailed business plan, demonstrating how they will meet the needs of their customers from 2020 to 2025.

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United Utilities boss Steve Mogford said: “We are cutting bills such that they will be lower in real terms in 2025 than they were 15 years ago, whilst also delivering higher standards of service, increasing resilience, delivering innovation and investing for the long-term.”

The utilities firm also said it will reduce capital expenditure by over £1 billion to £5.4 billion from 2020 to 2025.

Meanwhile, Severn Trent said it will introduce a real-terms bill reduction of 5%, the largest price cut in two decades.

To facilitate the reduction, Severn Trent said it will use “innovation and commercial pipelines” to deliver a 13% efficiency in spending, with total expenditure of £6.6 billion planned over the five-year period.

In addition, Severn Trent is proposing a new “community dividend” of 1% of profits each year, to support communities in the region.

Thames Water, meanwhile, said it would keep bills flat but spend £11.7 billion on upgrades, including £2.1 billion to “boost resilience and reduce leakage”.

In June, the company – which supplies more than 15 million people – was ordered to pay a total of £120 million to compensate customers over leakage failures.

The water regulator will assess the business plans and publish its findings in January.

Ofwat senior director John Russell said: “We’ve reached a key milestone in our price review process.

“From now until January 2019, we’ll pore over each and every business plan and we’ll be looking for evidence that they are robust, ambitious and, crucially, that they have been shaped by customers.

“All companies have had an opportunity to develop high-quality plans, but where plans aren’t sufficiently ambitious or stretching, we’ll step in to protect customers and the environment.”