Video report by ITV News Consumer Editor Chris Choi
Customers will see their water bills cut by £50 and firms must invest an extra £6 million every day over the next five years under plans unveiled by the water watchdog.
Ofwat said its latest five-year price review is the “most far-reaching” ever undertaken and will see £12 billion invested over and above the usual costs and business spend.
It said firms must provide better services and increased investment at the same time as cutting water bills by an average of £50 before inflation.
Other new targets set under the review include cutting pollution incidents by more than a third, reducing supply interruptions by almost two-thirds, helping 1.5 million customers who are struggling to pay and reducing leaks.
Anne Dacey, Environment Agency Deputy Director for Water said:“Water companies are custodians of the environment. We expect them to deliver on the promised £4.6bn investment to protect and enhance rivers and beaches, as well as redouble their efforts to reduce pollution, protect more properties from sewer flooding and increase resilience to drought.
“Whilst we are pleased with this ambition, and the plans do broadly include our recommendations for environmental improvements, we will review the finer detail before challenging the companies on any further changes needed.”
Ofwat said the review has been laid out for 14 of the 17 water firms across England and Wales, with three firms – Severn Trent, South West Water and United Utilities – having already seen their price plans for the next five years given the initial green light.
Ofwat chief executive Rachel Fletcher said: “The package we are unveiling today signals a brighter future for customers, with better services, a healthier natural environment and lower bills.”
She added: “These are seriously stretching goals for the sector, but we know they can be achieved.
“We have seen three water companies leading the way and we now want the rest to show the ambition and drive to deliver this new era for customers and the environment.”
Tony Smith, chief executive of the Consumer Council for Water, said while the headline figure was good news for most customers, not everyone will see a drop in bills, once inflation had been factored in.
"Customers need to be told how much Ofwat's financial rewards for companies could hit them in the pocket," he said.
"Only about half of the 3 million households who struggle to afford their water bills will receive financial assistance under these plans, so more companies should use their own profits to boost this support and not rely on the goodwill of other customers to fund these schemes."