Water bills are set to increase above the rate of inflation in 2011/2012 to an average of £356 a year, according to the industry regulator Ofwat.
The average water bill will go up by 4.6% but some areas will be see their annual spend increase by up to 8%, nearly double the current rate of inflation.
The price hike is based on the RPI index as measured last November as opposed to the government’s preferred measure of inflation, the CPI index which stood at just 3.3% at this time.
The biggest increase is faced by customers supplied by Northumbrian Water who will see their bills rocket by 7.8% while those living in the Southern Water region will have to find 6.4% more than this year to pay for their water.
Regina Finn, Ofwat’s chief executive officer, 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 is 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 is 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.”
The announcement came days after research from the Joseph Rowntree Foundation, carried out by teams from AEA and the University of Surrey, suggested that low earners are being pushed into “water poverty” by rising prices and new billing and metering practices.
Magnus Benzie, lead author of the report from AEA, said: “The issue of ‘water poverty’ – just like fuel poverty – is extremely important, especially as we start to look into the future and consider how climate change is going to impact society.
“We currently waste a lot of water, so on one level it makes sense to encourage greater efficiency by charging people depending on how much water they use. But some tariffs can put unfair pressure on households that cannot reduce their water consumption, either because of household size, medical needs or an inability to invest in water efficient appliances.
Dame Yve Buckland, chair of the Consumer Council for Water, said: “We recognise that water companies are facing some additional costs in other areas and that there are ’swings and roundabouts’ on this issue. However, many water companies and their shareholders will benefit from higher inflation. Many customers are struggling with rising household and other bills and debt is rising. Already one in six customers tells us that they cannot afford their water bill.”
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