Water bills are set to increase by an average of £2 across England and Wales in 2016-17, water companies have announced.

The average annual household water and sewerage bill will increase by 1% on 1 April, bringing it to £389. The water regulator Ofwat says as the 1% increase is below the rate of inflation, suppliers are still on track to meet a target of a 5% drop in real-term prices between 2015 and 2020.

For ways to slash your water bills – including how to switch to a meter – see our Cut your water bills guide.

How bills in England and Wales will change

While average bills will rise slightly, the actual impact on your bill will depend on whether you have a water meter and which firm is responsible for your water supply. While the majority of companies are increasing prices, customers in some regions will actually see bills fall. Here are some examples of how prices will change:

  • Combined water and sewerage customers: Northumbrian North-East customers will see the largest proportional increase of 2% – the average cost will go up by £7/yr to £378/yr. In comparison Southern Water customers will pay an average £411/yr (down £5/yr). Those in Yorkshire will see an average increase of £5/yr, but at £366/yr are still benefitting from the cheapest rates.

  • Water-only customers: Those supplied by Dee Valley will see their bills increase by 5% this year, taking their average annual water bill to £145. The average bill in the South West will be £4/yr less, falling to £219/yr. The cheapest area currently is Portsmouth, where despite a 1% increase customers will still only be charged an average £98/yr.

  • Sewerage-only customers: Sewerage-only customers with Southern Water will pay an average £9/yr less, taking the average bill to £264/yr. South West customers will end up paying an extra £8/yr on average with annual bills coming to £319.

For a full breakdown of price cuts by region, see our Water Bills guide.

Water UK, which represents Britain's water suppliers, says the increase will help water companies invest £44 billion over five years in better services, greater resilience and environmental improvements.

Water UK chief executive Michael Roberts says: "Water companies understand the pressures on customers’ pockets and are committed to keeping household bills as low as possible while still investing in vital improvements."

What about Scotland and Northern Ireland?

In Scotland, water and sewerage prices depend on the council tax band for your home and are covered by a 'combined service charge'.

For 2016-17 the combined service charge will rise 1.6% – that means from 1 April, those in tax band A, for example, will pay £282.60/yr while those in tax band D will pay £423.90.

Currently householders in Northern Ireland don't have to pay for water – costs are paid on their behalf by the Department for Regional Development.

What if I can’t afford my bill?

The most important thing to do if you can’t afford to pay your water bill is to immediately get in touch with your supplier – it may be able to help you with your financial difficulties. A number of regional suppliers operate schemes targeted at customers who are struggling.

The following firms offer lower 'social tariff' schemes: Affinity Water, Anglian Water, Bristol Water, Dwr Cymru Welsh Water, Essex and Suffolk Water, Northumbrian Water, Severn Trent, South East Water, Southern Water, South West Water, Sutton and East Surrey Water, Thames Water, United Utilities, Wessex Water and Yorkshire Water.

All water companies also operate a WaterSure scheme. This scheme caps the bills of low-income customers on meters who use a lot of water for essential purposes.

If you think you may be eligible for the WaterSure scheme or a social tariff contact your water supplier immediately.

How to cut water costs

1. Think about switching to a water meter. Our general rule of thumb is if there are more bedrooms in your house than people, or the same number, you should consider getting a water meter.

You can calculate whether you can save by switching using the Consumer Council for Water's calculator. Meters are installed free of charge in England and Wales.

2. Use less water. Fixing dripping taps, installing water-saving devices, taking showers rather than baths and collecting rainwater for use in the garden are all great ways to be more water-efficient and to save money.

3. Check your sewerage bill. If you have a soakaway, which drains rainwater into the ground rather than into the public sewerage system, you can apply to your local sewerage company to have surface water drainage charges removed, saving you about £20-£50 each year.

If you have a septic tank or cesspit, you don't have to pay sewerage charges. This only applies to a few people, but you should query any charges for sewerage services if your property isn't connected to the main sewerage system.

See our Cut Water Bills guide for more tips.