Households are facing an increase in water bills at more than twice the rate of inflation, the water regulator announced this morning.

Ofwat said that bills are expected to rise by 7 per cent on average. Inflation fell to 2.7 per cent in January.

Regina Finn, the chief executive of Ofwat, said that the increases were essential and were driven in part by significant environmental improvements.

The regulator said that the 7 per cent rise represented a 3.1 per cent increase above its RPI measure of inflation, taken to be 3.9 per cent in November 2006. The average bill will increase by £20 to £312.

Some water consumers will be affected more heavily than others, with those in the South West of England expected to see the heaviest rises.

Unmetered customers of South West Water can expect a 10 per cent rise in their bills, equivalent to a £44 increase, while those of Severn Trent will see their bills rise by an average of 5.7 per cent, or £15 per typical household.

Customers of Tendring Hundred, in Essex, will see a reduction in their bills because of an accounting error made by the company in the 2005-06 and 2006-07 financial years.

The average charge for metered users is lower in each instance, largely because of the nature of the metering system, which proves attractive to users of relatively low volumes of water.

The new charges will come into effect on April 1.

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