Water bills to fall between £15 and £25 from 2020

Britain's water regulator has pledged to reduce household water bills across England and Wales by between £15 and £25 a year from 2020 until 2025.

Households have seen the cost of using water rocket by about 40% above inflation since privatisation in 1989. Ofwat came under fire last year when a government committee found it had overestimated water firms' costs.

However, the regulator said its upcoming industry review will limit the room afforded to water companies to recover the cost of debts and equity from their customers.

"We have an early view on the financing costs that we're going to enable companies to recover from their customers," said Ofwat's chief executive, Cathryn Ross.

"That's the biggest single driver of the bill. Financing costs are about a third of the average bill.

"The next decade will see profound changes in customers' expectations and we are pushing the water sector to be at the very forefront of that."

Ross added that those financing costs had fallen from 3.74% to 2.4% over the last three years, which meant the difference could now be passed on to customers.

"We will cut the financing costs they can recover from customers and with this lower guaranteed return they will need to more efficient and innovative than ever before," she added.

"I've no doubt that the sector can step up and meet the challenges we've laid before them today."

However, the bills might not reflect the difference as sharply, given water providers are allowed to add the cost of inflation on to bills.

That means that while from 2020 customers will be paying less than they would have been paying had limits not been set, rising inflation could offset the impact of the new regulation.

Along with the rail industry, water companies are under pressure to improve their performance and image after customers' complaints have become an all too familiar routine.

Labour leader Jeremy Corbyn has earmarked the water industry as one among those he would nationalise should Labour win the next General Election.