Water bills to climb by 3.5pc across UK

Households will pay an average of £388 from April 2013 to March 2014 – 0.5pc above the rate of inflation.

But Severn Trent today claimed that its customers in the West Midlands will continue to have the lowest average combined household water bills in England and Wales over the coming year.

Simon Mullan, the company's credit manager, said: "Any price rise, however small, is unwelcome in the current economic climate, but we have worked hard to keep bills as affordable as possible for our customers. In fact our customers will be paying an average of 92 pence a day – that's less than the average cost for a litre of bottled water."

They said the rise will help to fund an investment programme of £1.3 million a day, which includes work with Centro to construct the new Midland Metro.

Severn Trent Water will invest £4.2 million to move its water and sewer pipe network as part of a £127 million joint project to bring trams back into the heart of Birmingham's city centre.

Ofwat moved today to explain the the rise.

Its chief executive Regina Finn said: "Back in 2009, companies wanted bills rises of 10pc above inflation. That didn't chime with what customers told us they wanted, so we said they could only increase bills in line with inflation. We understand there is huge pressure on household incomes, and any rise is unwelcome. Inflation is driving these increases."

"We will make sure customers get value for money and if companies fall short in delivering their investment promises, we will take action," Mrs Finn added.

The new charges will vary for households depending on their supplier and if they have a water meter, Ofwat said.