Regulators battle over increases in water bills: Rivers body days spending will only maintain quality of water, not improve it. Nicholas Schoon and Mary Fagan report

WATER BILLS have been rising faster than the rate of inflation since the mid-1980s and the upward curve is getting ever steeper. At the same time, few customers will have noticed any difference in the service.

Low income households have been especially hard hit because many used to pay for water as part of weekly council rent and rate payments. Now water is billed separately and the disconnection rate is rising.

Ian Byatt, the industry's economic regulator in England and Wales, soon has to decide how much above the rate of inflation the water companies can raise their bills between 1995 and 2000. He argues that relentless increases driven by ever higher standards for drinking water and the environment are intolerable. And he believes the public are behind him.

But the National Rivers Authority (NRA), the water industry's chief environmental regulator, has been infuriated by some of Mr Byatt's claims.

Michael Howard, the Secretary of State for the Environment, has to make the final judgement and both regulators are making increasingly strident appeals to him.

Up until 1995 water bills will increase by an average of 5 per cent a year above inflation. That cannot be altered. The main reason is that water companies have promised to undertake huge investment programmes required to bring the quality of drinking water and level of effluent from sewage works up to UK and EC standards set more than a decade ago.

Mr Byatt, Ofwat director general, wants to stop water bills rising in the same way in the second half of the 1990s. 'It is not an escalator that the public is prepared to ride,' he said, pointing out that the long-term average growth in household income is only 2 per cent a year above inflation.

The NRA fears the public is being fooled into believing that the current investment in sewage treatment is to meet unnecessarily high standards. Not at all, Lord Crickhowell, NRA chairman and a former Tory Cabinet minister, said in an impassioned letter to Mr Howard last month.

An extensive NRA survey found that the rivers of England and Wales became dirtier between 1985 and 1990. The poor performance of overloaded inland sewage works was one of the main causes. The NRA says the bulk of current spending on these works is needed to sustain river quality, not improve it, and to belatedly meet the requirements of the Control of Pollution Act of 1974.

The Government has also ordered the water companies to meet the standards of the EC's drinking water directive by 1995, 15 years after it should have come into force. That alone requires an investment of more than pounds 2bn between 1990 and 1995. The water companies and Mr Byatt feel the directive sets health standards which cannot be justified scientifically.

This European legislation bans tap water which contains any pesticide above a concentration of one part in 10 billion. When the directive was proposed in the 1970s, no scientific instrument could detect chemicals at a lower concentration. It was the EC's way of saying there should be absolutely no pesticides in drinking water.

The World Health Organisation has maximum levels for pesticides in drinking water below which, in its judgement, there is no threat to human health. The water companies would prefer to use the WHO limit and have begun a campaign, along with their continental colleagues, to have the directive altered.

This is a complex process which will take years of negotiation and require the unanimous consent of EC environment ministers. In Britain, in the meantime, the money will have been spent and the standard met.

Belated compliance with the EC's bathing waters directive is also driving up bills. Hundreds of pipes which discharge sewage a few yards off the beach are being replaced with systems to pipe it further out to sea.