The plan to hike the annual cost of water for households was announced on Monday.

It came as a surprise for many - it was only a week ago that the industry regulator, Ofwat, found the majority of firms in England and Wales have been underperforming.

Ofwat even ordered companies to give millions of pounds back to customers.

Now the same regulator is being asked to approve an increase in household bills.

That's despite the headlines about sewage overflows spoiling beaches and rivers, fuelling public disgust - which earlier this year forced firms to apologise and pledge to clean up their act.

Even the government itself may have broken environmental laws on the spillages, a watchdog recently revealed.

With all of this going on - and not to mention a cost of living crisis - how can an increase in bills be justified?

The case for higher bills and better water services

Industry body Water UK, which represents the country's water companies, said the business plans put forward by its members are aimed at tackling problems that need fixing - including shortages and sewage leaks.

It said the plans - paid for by increasing household bills - would create a lot of improvements for customers and are necessary for the future.

Money from the bill hike would fund 10 new reservoirs, cut leaks and stop the equivalent of 6,800 Olympic swimming pools worth of sewage spills, firms insist.

Water UK said the scale of the work meant that the average bill in England would likely rise by £7 per month by 2025, rising to £13 by 2030.

That would be equivalent to £156 more per year.

Water companies said they were planning to more than double the number of households eligible for financial support, rising to 3.2 million from two million currently, to help offset the bigger bills.

And David Henderson, chief executive of Water UK, insisted investment is "essential" for a changing climate and a growing population - while stressing firms were working to fix leaks and spills.

Critics argue, however, that the water industry isn't just wasteful with spillages but with its money, too.

They don't dispute that investment is needed but have been scathing about the idea that consumers should pay for it.

Below, we take a look at some of the stand-out statistics from previous years which have led to widespread criticism of the companies.

A track record of debt

David Hall, a visiting professor at the University of Greenwich, published a report for the Public Services International Research Unit (PSIRU) last year which included a breakdown of the water companies' debt figures.

Here's a look at what the total debt reported by each of the UK's biggest water companies was between 1991 and 2019, as highlighted in the report:

Thames Water: £11.7bn
United Utilities: £7.5bn
Anglian Water: £7.2bn
Severn Trent Water: £6.2bn
South West Water: £4.8bn
Yorkshire Water: £4.3bn
Northumbrian Water: £2.9bn
Wessex Water: £2.1bn
Southern Water: £2.1bn

Water companies have argued that their debt exists to finance investment, much of which is going into upgrading water quality and cutting down on leakage.

Billions paid to shareholders

The same report looked at the amounts of money paid out to shareholders by the water industry.

Since privatisation, it's been an average of £2bn every year.

That's added up to at least £66bn to shareholders in dividends since 1989 - over £10bn more than the total amount of debt the industry is in.

Prof Hall's report included a breakdown of all dividends paid by England's water and sewerage companies between 2010 and 2021 - a total of roughly £18.9bn.

Here's a look at how the report says each water company contributed to that number:

Anglian Water: £5.1bn
United Utilities: £3.1bn
Severn Trent Water: £2.3bn
Thames Water: £1.9bn
South West: £1.5bn
Yorkshire Water: £1.4bn
Northumbrian Water: £1.4bn
Wessex Water: £1.2bn
Southern Water: £902m

The companies themselves point out the industry paid an average return of 3.8% on shareholders' investment in 2021 - half the average for utilities and less than the regulator had allowed, while three companies made a loss.

Water firms also argue that without investment from shareholders, improvements to the water industry would not be funded, or would have to be financed by the Treasury.

Does money from bills end up going to shareholders?

The most up-to-date figures from the Competition & Markets Authority suggest 20% of water bills each year is used to pay dividends and interest.

The PSIRU breaks this down further, saying dividends cost each household an average of £69 per year between 2010 and 2021.

Water companies say the scale of proposed improvements to the industry is too vast for governments or billpayers to meet alone, which is why it's important to keep the industry attractive to investors.

They also say the water system is funded by investors making a downpayment on the infrastructure, which is then recouped through bills over many decades, with "a small return".

Big bonuses for water company bosses despite spills

Even if you accept the industry's arguments on the need for investors and the reasons for debt, campaigners highlight how senior figures at water firms are still pocketing massive payouts, while expecting the public to pay more.

Political parties are getting increasingly involved.

Water company executives have been paid around £40m in bonuses, benefits and incentives over the past three years, according to an analysis by the Liberal Democrats of 10 firms in England and Wales.

Here's what the Lib Dems say were the total bonuses paid to bosses each year by the major English water companies, along with Dwr Cymru Welsh Water, which supplies some bordering areas of England.

2020/21: £16.3m
2021/22: £15.1m
2022/23: £9.7m

The Lib Dems, along with other vocal industry critics, have heavily criticised firms for being generous with executive bonuses despite a high number of sewage spills across the country.

But the companies say the bonuses were paid to executives based on their performances - and say that the number of sewage spillages decreased each year between 2020 and 2023.

Government figures show that there were 301,091 spills throughout 2022, which was down from 372,533 in 2021 - but the Environment Agency largely put the improvement down to a decrease in rainfall.

The water companies have also apparently assured customers that none of their money was used to pay the bonuses in 2022/23.

The latest figure is lower because half of the 26 executives took no bonus.

What does the water industry say?

Water UK says the amount of investment by firms so far stands at £200bn over the past three decades.

"This investment has transformed the quality of our drinking water; cut pollution from sewage works by up to three quarters; and a sevenfold increase in the number of beaches achieving 'excellent' ratings since the 1990s," it said.

On the potential water bill hike from 2025, a Water UK spokesperson said: "These record-breaking investment proposals represent a completely new ambition, going well beyond any previous plans to secure our water supply as we deal with a changing climate and a growing population.

"While increasing bills is never welcome, this investment in our country's infrastructure is essential and nothing will be funded through bills that has already been paid for.

"Water companies are seeking regulatory approval to reduce overflow spills into rivers and seas as fast as possible and to more than double the number of households receiving support to pay their bills, with two million more households set to receive help."