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UK water regulator Ofwat will allow utilities in England and Wales to increase customer bills by an average of 36 per cent by 2030, a bigger increase than previously indicated, but still less than increases requested by troubled companies such as Thames Water. .

ofwat announced the increase in the bill in its "final specification" on the complex set of measures and standards that will govern Britain's private water companies for the next five years.

"Water companies need to rise to the challenge now, customers will rightly expect them to demonstrate that they can make significant improvements over time to justify rising bills," said David Black, chief executive of Ofwat. can provide

The regulator has also imposed a penalty Thames water £18mn after finding that the company's dividend payments last year breached its license conditions.

The increase in the bill is higher than the average 21 per cent rise that Ofwat allowed earlier this year. The increase means bills will rise by an average of £31 a year before inflation between now and 2030.

Thames Water will be allowed a 35 percent bill increase, far below the 53 percent increase requested by the near-insolvent utility.

Water companies are locked in talks with Ofwat over how high bills could rise between 2025 and 2030. The industry has pushed for huge increases, saying they need to fund investments in ailing infrastructure.

Since the privatization of the industry in 1989, water companies have been required to come up with an agreement with the regulator every five years about bill hikes, how much they can invest and what returns their investors can make.

A prolonged crisis at Thames Water threatens to drive investors away from the industry, raising the stakes for Ofwater. Thames Water, the UK's biggest water company, warned that an adverse decision would jeopardize its efforts to raise new equity from investors.

Problems with UK water companies and the pollution of rivers and coastal areas have also sparked public anger.

Steve Reid, the environment secretary, said the public was "right to be angry" about the performance of the water industry and blamed the previous Conservative government.

"They irresponsibly allow water companies to divert customer money to line the pockets of their owners and shareholders," he said.

A Labor government would "ringfence the money earmarked for investment so it can never be diverted to bonuses and shareholder payments", Reid added.