Water companies told to refund £260m to customers.

But in spite of these underperformance payments, customers are experiencing significant rises to bills.

In April, they rose by an average of 26% in England and Wales, after Ofwat approved water company plans for billions of pounds of investment.

And they are due to rise further until at least 2030 to help upgrade water supplies and reducing the amount of sewage being spilled.

Ofwat described overall performance in 2024/25 as “mixed”. It acknowledged progress in some areas like internal sewer flooding, where water from a sewer enters buildings.

But it said “there remain areas where companies and the sector must do more”, including pollution and supply interruptions for some.

In its report, the Environment Agency (EA) gave England’s main water and sewerage companies their worst ever combined score for environmental performance in 2024 since their ratings began in 2011.

In his foreword, the EA’s chair, Alan Lovell, wrote: “Many companies tell us how focussed they are on environmental improvement. But the results are not visible in the data.”

The EA’s collective rating for the nine companies was 19 stars – down from 25 stars in 2023. No year had previously got fewer than 22 stars.

The EA says its assessment criteria has been tightened over time, so its ratings do “not mean performance has declined since 2011” and it had seen “some improvement” up to 2023.

But Mr Lovell said: “This year’s results are poor and must serve as a clear and urgent signal for change.”

The EA gave seven companies two stars – “requiring improvement” – and Thames one star. Only seven one-star ratings had ever been previously given.

And only Severn Trent got the top rating of four stars.