Anglian Water has been ordered to refund customers more than £38m for failing to meet targets.

Water industry regulator Ofwat has said water firms in England and Wales must pay back £157.6m to customers for missing performance targets, which include reducing pollution, leaks and supply interruptions. 

Anglian Water fell into the lowest category in the regulator's annual review and will have to refund customers £38.1m. This will be delivered in the form of lower bills next year. 

Despite water companies committing to reduce pollution incidents by 30pc, there has only been a 2pc reduction.

For the second year in a row no company achieved the regulator's top rating, although four companies showed an improvement from last year.

Thames Water will have to pay £56.8 million, the biggest fine, for the fourth year in a row.

Anglian Water, Welsh Water and Southern Water all fell into the lowest category of 'lagging', while the remaining ten water companies were rated 'average'.

Ofwat said customer bills will be slashed in 2025-26 to reflect the penalties, with the total rebates calculated in December.

An Anglian Water spokesman said: “We know that our performance needs to improve and, with the arrival of our new CEO this summer, we are focussed on a dedicated programme to accelerate results.

"We now need to secure the necessary investment from Ofwat to deliver the right outcomes for customers and the environment.” 

David Black, chief executive of Ofwat, said: “This year’s performance report is stark evidence that money alone will not bring the sustained improvements that customers rightly expect.

“It is clear that companies need to change and that has to start with addressing issues of culture and leadership. Too often we hear that weather, third parties or external factors are blamed for shortcomings.

“Companies must implement actions now to improve performance, be more dynamic, agile and on the front foot of issues. And not wait until the government or regulators tell them to act.

“As we look towards the next price control, the challenge for water companies is to match the investment with the changes in company culture and performance that are essential to deliver lasting change.”