Household water bills to rise by average of 4.6pc

The coming financial year is the second of a five-year policy under which prices will be allowed to rise roughly in line with inflation.

The policy, first announced by Ofwat in 2009, lasts from 2010 to 2015.

Ofwat said the profits generated by higher prices would help to finance £22bn of spending on improved services.

Chief executive Regina Finn said: “People can shop around for the best deal on many things, but not water. Our job is to do this for them.

“No-one wants to see bills increasing, particular in tough economic times. When we set limits on prices, we listened to customers and challenged companies hard.

“That’s why average bills are set to remain broadly in line with inflation up until 2015 while companies are investing more than ever before, £22bn. That’s more than £935 for every property in England and Wales.

“This will deliver real benefits to consumers – from almost 10 million people’s water supplies being better protected from events such as flooding to cleaner rivers and beaches.

“If companies don’t deliver for customers, we will take action.”

The exact bills that households receive will vary according to their local water company and whether or not they are on a water meter.

The average figure is not a uniform rise for all firms and disguises wide variations from one part of the country to another.

The smallest forecast increase among the major companies this year, according to Ofwat’s figures, is likely to be 2.7 per cent, or £11, for customers of Welsh Water.

Customers of Northumbrian Water will face the largest rise of 7.8 per cent, or £24.