This documentation describes the water bills projection and uprating methodology used in PolicyEngine UK.
Overview¶
gov.economic_assumptions.yoy_growth.ofwat.water_bills is nominal growth in the average household water and sewerage bill in England and Wales. Each year is the charging year starting in April, so 2025 is 2025-26. policyengine_uk/utils/water/forecast_water_bills.py derives the values that are not published outturn, and policyengine_uk/tests/test_water_bills_growth.py checks the stored values against it.
Growth rates¶
| Year | Growth rate | Source |
|---|---|---|
| 2022 | 5.2% | Ofwat average bills, real bills converted to nominal with CPIH |
| 2023 | 9.2% | As above |
| 2024 | 4.4% | As above |
| 2025 | 27% | Ofwat statement, 29 January 2026 (later figure; Ofwat’s 30 January 2025 statement forecast 26%) |
| 2026 | 5.4% | Water UK, 28 January 2026: national average £639, up £33 |
| 2027 | 5.5% | Projection from the PR24 final determinations, below |
| 2028 | 5.0% | As above |
| 2029 | 4.9% | As above |
Projection for 2027-28 to 2029-30¶
Ofwat’s PR24 final determinations (19 December 2024, sector summary page 21) set the average water and wastewater company bill at £440 in 2024-25 and £597 in 2029-30, before inflation: real growth of 597 / 440 = 1.3568 over five years. The table is committed as policyengine_uk/utils/water/pr24_final_determination_bills.csv.
Real growth already realised: the published 2025-26 and 2026-27 nominal increases less CPIH, 1.27 / 1.0327 × 1.054 / 1.0388 = 1.2478.
Real growth left: 1.3568 / 1.2478 = 1.0874, spread evenly over three years, 2.83% a year.
Inflation added back from
yoy_growth.obr.cpih(the OBR’s October 2026 forecast). Ofwat indexes bills to CPIH in the November before the charging year, so charging year t takes calendar year t-1: 1.0283 × 1.0324 = 6.2% for 2027-28, × 1.0330 = 6.2% for 2028-29, × 1.0214 = 5.0% for 2029-30.
After any change to these values, rerun policyengine_uk/utils/create_ahc_deflator.py: the after housing costs CPI removes water charges, and policyengine_uk/tests/test_ahc_deflator.py fails until its stored values are updated.
Scotland and Northern Ireland¶
Ofwat’s bills cover England and Wales. When a dataset is projected forward, each household’s water_and_sewerage_charges grows by its own country’s series (uprate_water_and_sewerage_charges in policyengine_uk/data/economic_assumptions.py):
England and Wales, and households with an unknown region, take
ofwat.water_bills.Scotland takes
scottish_water.water_bills. Scottish Water sets household charges within limits from the Water Industry Commission for Scotland (WICS), and every council tax band’s charge is a fixed fraction of Band D, so each band rises by the same percentage.Northern Ireland has no domestic water charges, so any charge a dataset gives its households is held flat.
This holds to the end of the dataset projection (2032). After it, policyengine-core grows every household’s charge by the index the variable declares, Ofwat’s England and Wales series, as it did before this split.
| Year | Scottish Water growth | Source |
|---|---|---|
| 2022 | 4.2% | WICS, charges scheme 2022-23 |
| 2023 | 5.0% | WICS, charges scheme 2023-24 |
| 2024 | 8.8% | WICS, charges scheme 2024-25 |
| 2025 | 9.9% | Scottish Water, 28 January 2025 |
| 2026 | 8.67% | Scottish Water, 22 January 2026 |
| 2027 | 3.9% | WICS Draft Determination 2027-33: the CPI + 2% core cap (para. 9.1.3) with WICS’s CPI forecast of 1.9% (Table 68) |
| 2028 | 3.9% | As above |
| 2029 | 4.1% | As above, with CPI at 2.1% |
Each year is the charging year starting in April, so 2025 is 2025-26. Later years to 2032 hold the 2029-30 rate. WICS publishes its Final Determination for 2027-33 on 29 October 2026; the 2027-2029 values should then be replaced with it.
policyengine_uk/utils/create_ahc_deflator.py still reads the England and Wales index. It is a standalone script that the model does not run.