Water and sewerage bills are to increase by 3.74% from April, Scottish Water said yesterday. The increase is 0.5% less than inflation as measured by the Retail Price Index but it is a higher increase than last year.

Water and sewerage bills are to increase by 3.74% from April, Scottish Water said yesterday.

The increase is 0.5% less than inflation as measured by the Retail Price Index but it is a higher increase than last year when Scottish Water put bills up by just over 3%.

The latest rise means the average household will now have to pay an annual £310 water bill. However, Scottish Water said this was still less than the average bill in England and Wales and lower than the average for seven out of 10 water utilities south of the border.

Scottish Water's interim chief executive Douglas Millican said: "This below-inflation rise in water charges will pay for the investment programme which is delivering increasing value for money.

"Millions of people will get clearer, fresher drinking water, a cleaner environment and improved customer service."

Scottish Water said it was running the water industry in Scotland at £3m a week less than when it was formed in 2002, while delivering improvements.

Alan Sutherland, Water Industry Commission chief executive, said: "This announcement is in line with price caps we set for Scottish Water in November 2005.

"We allowed prices to increase at 0.5% less than the retail price index each year between 2006 and 2010.

"These price caps reflect Scottish Water's excellent progress in reducing its running costs, which are now 40% lower than in 2002."

The water rise follows news that families in Scotland would be cushioned against the worst of gas and electricity price increases announced earlier this month and from council tax rises which will be frozen in Scotland this year.

Liberal Democrat Shadow Cabinet Secretary for the Environment, Mike Rumbles MSP, said: "Council tax payers who are expecting a council tax freeze will be shocked when they receive their bills.

"Water and sewerage charges are set to go up by an inflation-busting 3.74%, not much of a freeze here."

Alex Johnstone MSP, the Conservative infrastructure spokesman, said he believed the best way to keep prices down and still provide the highest-quality water services was privatisation.

He said: "If Scottish Water is to deliver the high-quality service the public deserves and if it is to attract the investment needed, then it must be taken out of state control."

Scottish Water's annual report showed it spent £413m on the network in the last financial year.