By Jonathan Davies

Household water bills in England and Wales will fall by an average of 5%, before inflation, according to the regulator Ofwat.

But consumers could still pay more than they are currently, with suppliers able to add on inflation, as measured by the Retail Prices Index (RPI) which is currently 2.3%.

Ofwat said bills would fall by around £20 in real terms, from an average £396 to £376, before inflation.

The Consumer Council for Water (CCW) said it was a good deal for customers, despite the addition of inflation. Tom Smith, CCW chief executive, said: "Most water companies and the regulator have listened to customers and delivered a deal which reflects the services they want, at a price most find acceptable.

Ofwat said the ruling will allow suppliers to invest £44bn over the next five years, or £2,000 per household.

"With bills held down by 5% and service driven up over the next five years, customers will get more and pay less," said Cathryn Ross, Ofwat chief executive.

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