Environment Secretary Owen Patterson gives water companies 'shot across the bows' on prices

Water company bosses are urged by the Environment Secretary to pull back from imposing large increases on bills (AFP/Getty Images)

Water company bosses are urged by the Environment Secretary, Owen Paterson, today to pull back from imposing large increases on bills.

The firms are entitled to request above-inflation rises next year under a formula worked out in 2009. Ofwat, the industry regulator, has asked the companies to consider whether they need to apply for the full amount.

The message was reinforced by Mr Paterson last night in a letter to all the major water companies described by one Whitehall source as a “shot across their bows”.

He also urged them to introduce “social tariffs” for vulnerable customers.

Mr Paterson said: “We know household budgets are under pressure and keeping water bills affordable is a crucial way we can help hardworking people.

“That is why we are pressing hard to make sure customers get a fair deal by encouraging water companies to look closely at any price increases.”

The Department for the Environment acknowledged yesterday that rises in water and sewerage bills, although in line with inflation, have substantially outstripped increases in household income.

In a speech today, Ed Miliband, the Labour leader, will accuse David Cameron of failing to tackle the “cost of living crisis” because of his support for a “privileged few”.

“The cost of living crisis isn’t just an issue for the lowest-paid. It affects the squeezed middle just as much,” he will say.

“It is the issue facing Britain. It is about who our country is run for, how it is run.”