UK Construction and Law
Regulator provisionally allows £3.4bn of extra water spending and attaches clawback to every pound of it
By Staff Writer | 13 August 2026
Draft determinations published on 13 August allow £3.390bn of the £3.533bn found to be within scope, reject £143m for gaps in cost estimates and options analysis, and tie the money to deliverables that return funding to customers if the work does not appear.
Thirteen water companies in England and Wales asked for £4.285bn of additional spending between price reviews. The regulator has provisionally allowed £3.390bn of it. The route was the Cost Change Process, built after the 2024 price review to release funding for priority areas where costs were uncertain or unknown when the final determinations were settled in December 2024, so that work does not wait for the next review.
Of the total requested, £752m was assessed as outside the agreed scope of the process or unsupported by evidence of need. That left £3.533bn in scope, of which 96 per cent has been allowed. The remaining £143m was refused because of gaps in parts of the companies' cost estimates and in the options analysis behind the requests.
The allowance is provisional in a way that matters to anyone pricing the resulting work. Some of it is conditional, and will fall away at the final determinations if the required information is not produced.
Where the money is meant to go
The published breakdown puts £1.2bn into safeguarding services and assets, £477m into meeting growth and unlocking housebuilding and data centre capacity, and £34m into managing PFAS and other forever chemicals so that drinking water supplies remain reliable. The chemicals element follows requirements set by the Drinking Water Inspectorate, which has set guidance levels that companies must meet, if necessary by additional treatment or by blending supplies before they reach customers.
Named schemes give the shape of it. United Utilities is to invest in new water infrastructure to enable data centres in East Manchester. Additional capacity is funded at Flag Fen in Peterborough in the Anglian Water region, and at Newquay wastewater works. Wessex Water will bring forward funding to complete works at one of its water treatment sites that had been planned for the 2030 to 2035 period.
We will track performance to ensure companies are delivering the expected improvements for customers and the environment. If they don't, expenditure can be clawed back.
Helen Campbell, Executive Director for Delivery, Ofwat
Conditions, deliverables and clawback
Price control deliverables will be attached to the allowed requests, setting out what delivery is expected to look like. Where a company fails to deliver the stated outcome or output, the funding returns to customers. That is the mechanism the regulator is relying on rather than trust, and it runs alongside the conditional element of the allowance.
For contractors and their advisers, the practical consequence is that the money arriving in AMP8 programmes now carries a defined output attached to it upstream. Where a client's own funding depends on evidencing a deliverable, the evidence obligations tend to travel down the chain into subcontracts, reporting regimes and payment mechanisms. The place to find out is the contract documents, not the press release.
What customers pay, and when
Between now and 2030, bills rise for customers of five of the thirteen companies. Southern Water, which asked for more than £1bn of the sector total, carries the largest effect at £43 in 2027 to 2028 and £37 in 2029 to 2030. Severn Trent Water is £3 next year rising to £5 by 2030, Thames Water the same, and Wessex Water £4 rising to £7. South East Water shows £1 in 2029 to 2030. Two thirds of Southern's submission related to schemes not fully included in its initial 2024 allowances, among them the Sandown water recycling plant on the Isle of Wight and the Hastings resilience scheme, and a quarter of its overall initial submission was rejected as out of scope.
Consultation on the draft determinations runs until 5pm on 24 September 2026, with final determinations due in December. Until then the figures are proposals, and the £143m already refused is a reminder that a request supported by a thin options appraisal does not survive the review.