WATER firms were accused of “government-sanctioned daylight robbery” today after confirming bills would rise at the same time as shareholder dividends.

United Utilities, which serves millions across Manchester and Liverpool, is set to increase bills by 32 per cent over five years, after negotiations with regulator Ofwat.

South West Water, owned by Pennon, will introduce hikes of 23 per cent. 

The firms claim the funds are needed for upgrading infrastructure and cutting pollution, but they also revealed plans to raise dividends this year.

Pennon announced its dividend would rise with inflation, up from £129.3 million for the year ending in March, while United Utilities confirmed a similar hike, following £340m in payouts to investors last year.

Thames Water, which is on the brink of bankruptcy, has also confirmed that bills will increase by up to £19 a month from April.

We Own It lead campaigner Matthew Topham said: “It’s utterly outrageous that after 35 years of bonus scandals and sewage spills, water firms are now being rewarded by Ofwat with huge inflation-busting bill hikes.

“The management of South West Water and United Utilities, in their infinite wisdom, have taken this as a signal to increase dividends to shareholders. 

“It’s little more than government-sanctioned daylight robbery.

“Eighty-two per cent of us want water in public ownership. It’s the norm in 90 per cent of the world. 

“Water should never have been privatised and we are all paying the price now.”

The hikes are projected to raise £22 billion for a programme agreed with regulators, which mandated 24,000 actions to be taken in the next five years to meet environmental requirements.  

Environment Agency chairman Alan Lovell described it as an “unprecedented level of investment” representing a “vital step forward towards ensuring we have clean, safe and abundant water.”

But Josh Harris, from Surfers Against Sewage, told BBC Radio 4 the investment “is just to reach compliance,” adding “we’re doubtful even of that, to be honest with you.”

Asked whether the announcement will help restore trust, he said: “What we’ve seen over the past years and decades shows that our trust in the water industry is well and truly severed, and that’s why we believe that the only solution for government is a transformational reform of the sector — and that’s what we’re calling on them to deliver.”

A Defra spokesperson said: “After years of failure, we are left with record sewage spills and crumbling water infrastructure. For too long, customers’ money has been spent on unjustified bonuses and shareholder payouts, rather than investing in new sewage pipes.

“We have been clear the water sector must deliver for customers and the environment and that customers cannot be expected to pay the price for years of underperformance.

“This is why the Government will ringfence money earmarked for investment so it can only be spent on infrastructure upgrades, not paying bonuses, cleaning up our rivers, lakes and seas for good. Where money is not spent, we will force water companies to return it to customers.”