Water bills look set to rise after environment secretary Margaret Beckett said that she had already accepted the case for "significant real price increases".

Government Response: Department for Environment, Food and Rural Affairs

Environment secretary Margaret Beckett said:"The programme of work set out in today's principal guidance is part of a long-term process. It builds on the work undertaken in previous periodic reviews to again raise the standards of our drinking water and of water in our environment even further. I now look to Ofwat, the other regulators and the water companies to work together to deliver the policies set out in this guidance in a cost effective manner.

"I am concerned about the effect of water bills, especially on those least able to pay. Changes to our policies on drinking water and the environment cannot avert increases, but in a climate of rising water bills I have closely scrutinised the need for and benefits of further policies to improve water companies' standards."

Forum Response: Thames Water

John Sexton, managing director of Thames Water Utilities, said: “We welcome the government’s clear recognition of the importance of maintaining and modernising existing water mains and sewer networks.

“This will be essential for us to be able to provide customers with an efficient and reliable service in the years ahead – a challenge made all the greater by climate change and the prospect of London’s population growing by up to 800,000 people by 2016, the equivalent of the population of Leeds arriving in the capital. "

Forum Response: Construction Products Association

Jean Emblin, external affairs director at the Construction Products Association said: "One of our members, the Society of British Water and Wastewater industries (SBWWI), has, I know, been waiting with baited breath since the end of January for the ministerial guidance to be issued. As indeed has the rest of the water industry.

"According to SBWWI, the proposed increases in consumer water bills is not a surprise, as Philip Fletcher, the director general, has already indicated that this may happen, based on the water companies' draft business plan submissions for PR04 (2005-2010).

"It is certainly gratifying to hear that the government is planning for the long term and expects that the water industry regulators and the water/wastewater companies will do the same. I know that SBWWI has made its views known on the 'peaks and troughs' which generally accompany the five year review cycle, and the consequent impact on both their manufacturer and contractor members.

"The 'Early Start' process introduced by Philip Fletcher is applauded and we hope that this will create a smoother transition between AMP3 and AMP4."

Forum Response: English Nature

Dr Andy Brown, chief executive of English Nature, said: “A healthy environment with unpolluted water is essential to life – something we can too often take for granted. If OFWAT fully implements the Secretary of State’s advice, people will be able to see the difference as they walk alongside a river on a sunny afternoon, enjoying an attractive and fascinating environment full of wonderful plants and animals.