Water companies say household bills need to rise by an average of £15 a year.

They said the increases were necessary to fund vital maintenance work and improvements.

The proposals unveiled by Water UK, which represents the 22 water companies in England and Wales, are part of a pricing review which will determine how much bills can rise between 2005 and 2010.

Each of the firms will announce their plans in the coming days. A final decision will be made by the water regulator, Ofwat, in November 2004.

Water UK said £21 billion was needed between 2005 and 2010 to pay for what it called "capital investment".

This includes £8.5 billion to replace ageing pipes and sewers, about £7 billion to improve water quality and the environment and £4 billion to satisfy future demand.

The result was the average annual household bill of £240 would need to rise by £15 a year.

Pamela Taylor, chief executive of Water UK, said: "The industry has achieved dramatic improvements in rivers, bathing water, drinking water quality and in our capacity to disappoint cynics who were expecting hosepipe bans in the heatwave at the start of the month.

"For the sake of our customers, the economy and the environment we can't let things slip."

Andrew George, Liberal Democrat environment spokes-man, said: "Ofwat must scrutinise the proposals line by line.

"Poor families and pensioners should not be made to struggle simply to protect shareholders."

Friday August 29, 2003