The water regulator, Ofwat, has set out its price review for 2020 to 2025, forcing water companies to reduce customer bills by an average of £50 (before inflation) as part of a major package of investment.

The £51bn spending package over the next five years includes £13bn earmarked to help with the growing population and climate change.

They will also need to cut leakages by 16%, saving enough water to meet the needs of the population of Birmingham, Bristol, Cardiff, Leeds, Liverpool and Sheffield.

Water companies in England and Wales will also need to help an additional two million customers in need of extra support, reduce pollution into rivers and streams by a third, and invest over £1bn to protect communities from flooding.

The investment – equivalent to £6m every day till 2025 – will also see a new reservoir built in Hampshire and the construction of a pipeline connecting water supplies from North Lincolnshire to Essex.

Ofwat chief executive, Rachel Fletcher, said: “Today we’re firing the starting gun on the transformation of the water industry backed by a major investment programme to deliver new, improved services for customers and the environment and resilience for generations to come. Now water companies need to crack on, turn this into a reality and transform their performance for everyone.

“They will be investing the equivalent of an extra £6 million each and every day to overhaul services, strengthen their infrastructure and improve our natural environment. And at the same time, customers’ bills will fall by an average of £50 before inflation.”