A new report by the Green Alliance think tank is warning that recently announced reductions to water bills will be cancelled out by the rising costs of dealing with long term water shortages unless the UK gets better at using water.

The research study has concluded that water efficiency could save households as much as £78 a year, equivalent to 20 per cent of the current combined water and wastewater bill.

The average combined UK water and sewerage bill is £385, with water a significant household expense, particularly for the poorest households. According to the Green Alliance,  prices are likely to rise further as water companies build expensive infrastructure such as reservoirs in response to rising pressures on water supply.

The report’s findings include:

• Cutting water use by 42 litres per property per day could save an average metered household as much as £78 per year across their water and energy bills.
• Simple measures, like dual flush toilets, could save 7,000 litres of water per person per year and help avoid future water shortages. Yet nearly 60 per cent of homes still have standard single flush toilets.
• Planned new infrastructure includes an extension to the Arlington Reservoir in East Sussex, costing £127 million, and a new reservoir at Broad Oak near Canterbury, costing £77 million.
• Average water use in the UK is around 150 litres per person per day, fifty per cent higher than in some countries in northern Europe.

 The report recommends integrating water efficiency with existing energy efficiency programmes like the Green Deal and ECO, and calls for better use of the consumer water label.

 It also recommends regulatory changes to ensure that water is priced properly, introducing variable tariffs for householders along with support for the poorest households.

 Commenting on the research, Sue Armstrong Brown, policy director of Green Alliance said:

 “Current patterns of water use damage the environment and contribute to bills that now householders hundreds of pounds a year. These costs are only likely to go up without a much greater focus on water saving. We’ve identified some easy wins that would build on existing programmes to deliver real benefits to households. To make water efficiency a permanent solution we can learn much from the energy sector where a  stop-start  approach to efficiency incentives has slowed the development of a ‘savings’ market. The water sector has the opportunity to build a stable investment regime in water saving and create downward pressure on household bills.”

According to the Alliance, the UK is facing what it describes as "poorly-understood water challenges" with demand set to outstrip the available supply in the south east in the coming years. The independent think tank has been running a programme over the past year in partnership with Southern Water to identify ways in which policy could help drive down water demand and water bills

 Matthew Wright, Chief Executive of Southern Water, said:

 "The water sector will be investing more than ever before in water efficiency over the next five years. This will improve the resilience of the water system and help reduce our customers’ bills. However pressures on water resources will only get more intense, as a result of abstraction licence changes, climate change and population growth. Water companies need to keep looking for new, innovative ways to bring down demand for water, working together with customers, government and regulators."