Ofwat’s letter to small businesses reveals that water bills for these firms are increasing by up to 30%.

Water suppliers have been accused by small businesses of burdening them with the costs of “historic mistakes” made by the bosses of the scandal-hit water industry. It was revealed that their prices may rise by nearly 30% by 2030.

Ofwat has informed businesses that they expect average wholesale charges to rise by 27% over the next five-year period, before inflation. This is more than the expected increase in household bills.

Ofwat wrote to the Federation of Small Businesses to say that water companies will be allowed to increase their costs in order to triple investment and ensure the future of water supplies. The industry is still facing anger due to discharges of raw sewage to waterways.

Shaun Kent, director of the business retail market for Ofwat, said: “We’ve protected our customers by ensuring that price increases are fair to current and future clients, while ensuring that companies don’t overcharge for such an important investment.” Shareholders are also expected to contribute and will be asked to invest £7bn in new equity.

Ofwat sent the letter as it examines the amount that water companies in England Wales can charge domestic customers in the next five year to cover investment for everything from repairing leaks to building new reservoirs.

Ofwat announced in July that it would allow the average household bill to increase by 21% or £94 for investments. The water firms want to be able to charge higher prices. A final decision is expected in December, after a draft was released in July.

campaigners argue many customers have paid for upgrades that have not been completed, and some water companies have been laden with debts while owners have mined dividends from them.

Tina McKenzie is the policy chair of the FSB. She said, “Historic mistakes in management, decisions and performance targets made by water companies, are now being shifted onto small businesses and household bills at a time where the costs to do business are already high.

“Investment and reform are absolutely crucial to create a great water and wastewater system. However, there must be a better compromise between how funds are raised and how unavoidable costs – such as water – can be affordable. This will ensure that the system functions properly and is not out of reach.”

About 30% of water in England is used by non-household consumers. Smaller businesses will be hit harder by the increase in water bills, since some large companies can negotiate lower rates because they use more volume. Ofwat stated in its letter that water suppliers were required to reduce consumption by non-household consumers by 7.7% compared to 2019-20 levels by 2030.

A spokesperson for Ofwat said that the 27% increase was “an estimated rise in wholesale charges and not actual business bills”.A spokesperson said: “This estimation is based upon company plans regarding the allocation of revenue allowed to household and non-household segments.The wholesale charging rules limit how much water companies can recover from household customers in comparison to business customers. Within these rules, each water company is free to decide how much cost they want to allocate between the two segments of customers.

Ofwat stated that it received responses from business groups and other organisations to its draft review. It will “consider these responses carefully”.