London's new super sewer could add up to £25 to water bills by the early 2020s

 
Mark Sands
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Abbey Mills Victorian Pumping Station Opens For Sewer Week 2016
The super sewer is expected to cost £4.2bn by the time it is finished. (Source: Getty)

London's new super sewer is set to add up to £25 to water bills in the capital, according to a report from the UK's public spending watchdog.

The Thames Tideway Tunnel is expected to cost a total of £4.2bn, and but the National Audit Office today warned it remains unclear how much Thames Water customers will pay towards the project.

Its costs added £13 a year to Thames Water customers average bills in 2016-17, but it is forecast that charge will almost double to a ceiling of £25 by the early 2020s.

What's more, while the Department for the Environment, Food and Rural Affairs forecasts the project will generate benefits worth up to three times its costs, more than half of these estimated annual benefits will accrue to households outside of Thames Water's service area, although only the providers customers will pay in to the project.

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A Thames Water spokeswoman noted that customers would also benefit from "significant cost savings" in other parts of the business.

"Our average annual overall waste water customer bills are expected to remain at, or very close to, their 2015 level of £370 (before inflation) until at least 2020.

"The cost of any infrastructure improvements is always spread across the entire customer base. This is the fairest way to do it and avoids the anomalies that would occur with local billing. So, for instance, Londoners contribute to the costs of improvements outside London that would otherwise be unaffordable for local communities."

The NAO report also revealed that the government has provided a “contingent support package” for the project, with the public purse on the line for up to £6.6bn in Defra's “reasonable worst case” scenario, with funding going directly to tunnel developer Bazalgette.

The spending watchdog also bemoaned a lack of scrutiny of modelling for the project, noting that the Environment Agency “did not consider that any of the areas of uncertainty with the results were sufficient to justify the costs necessary to any improved data”.

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Some refinements to estimates for the project suggested that ministers could save up to £646m on the project.

“Further refinements could have identified the potential for further capacity reductions, albeit through reducing the diameter of the tunnel, which estimates suggest reduces costs relatively less than reducing the tunnel's length,” the NAO said.

“[Defra] considers that the cost of rectifying a tunnel with inadequate capacity would be prohibitive and that the Tunnel chosen offers greater certainty that it will be future-proof.”

A Defra spokesman said: “London desperately needs an updated sewage system fit to deal with its growing population.

“The Thames Tideway Tunnel will dramatically reduce the amount of sewage overflowing into the river. It is privately financed and delivered, with no public money expected to be spent on its construction, and it will modernise our capital’s ageing sewage system for the next 120 years.”

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