They might have to cut bills, but water firms should still count their blessings

From the point of view of the water companies, it could have been worse. ​OfWat’s long-awaited final determination on customers’ bills, investment returns allowed and investment required has confirmed a demand that the industry reduce what people pay for their water by an average of £50 over five years.

In that, it is broadly similar to what was first outlined in July. In the intervening period, the watchdog has squeezed the allowed return on capital a little bit more than in its first proposal, and made some allowances for individual companies based on the evidence in their submissions.

As well as the bill reductions, the price review confirms a £51bn investment programme. Water companies will also be required to cut leaks by 16 per cent. There are incentives for those that comply, penalties for those that don’t.

Shares in the three quoted water companies, Pennon, Severn Trent and United Utilities, leapt on Friday in the wake of Labour’s defeat bringing the curtain down on any threat to nationalise them for at least the next five years.

They issued holding statements in response to the announcement while their shares held on to their gains and added some more for good measure as investors digested OfWat’s ruling. I would be surprised if they were among those to kick up a fuss.

The threatened “blizzard of challenges” to the watchdog’s decision will likely come within the coterie of privately held companies, some of which have been bleating about OfWat’s allegedly “political” motivations.

They may very well feel emboldened by the election result. If so, they should have a care.

Since privatisation, the water industry has loaded up on debt (£51bn) while lavishing dividends on its investors (£56bn). These figures have seeped into the public’s consciousness, further fuelling the perception that the money men have been partying while customers have got the short end of the stick.

The industry’s reputation has, meanwhile, been further knocked by a series of scandals that have left customers looking on in frustration, which has sometimes (justifiably) turned into outright fury, notably during the the “Beast from the East” cold snap last year.

It left more than 200,000 customers in England and Wales without water for more than four hours, and more than 60,000 going dry for more than 12 hours. A minority had no supplies for a week. OfWat produced a sharply critical report in response, noting that some companies failed to have appropriate plans in place to deal with such an event.

The regulator has fiercely denied its decisions over pricing and investment are politically motivated. But events like that have certainly provided it with political cover to take a much tougher stance with the industry. And about time too. If Britain’s water companies have been enjoying life on easy street, the previous weakness of its regulator is one of the main reasons why.

There would appear to be little value to the Johnson government in withdrawing that cover unless, that is, it’s keen to confirm its critics’ allegations that it’s running Britain at the behest of wealthy hedge fund managers and casino capitalists, some of whom are to be found among the owners of these unloved businesses.

The idea of nationalisation may have been parked for now, but it has by no means gone away, not least because Labour’s proposals polled well among voters, who liked the idea of public ownership a lot more than they did the party’s leader, Jeremy Corbyn, who vocally championed it.

The industry would be better served by complying with OfWat’s demand to “do better” rather than running to another regulator – in this case the Competition & Markets Authority – with their lawyers and their challenges and their complaints that they’re being harshly treated. They are not.

You can quite easily make the case that OfWat could – and should – have been harsher still.