Millions were saved on low interest rates Getty

Private water companies have made a combined £800m profits windfall at the expense of their customers across the UK, according to a national watchdog. The National Audit Office (NAO) said that the Water Services Regulation Authority, better known as Ofwat, failed to properly regulate the privatised sector.

Lower than expected corporation tax rates are estimated to have saved the water companies a total of £410m (€550m, $628m) while the historically low interest rates, which have been standing at just 0.5% for more than six years, saved them a further £840m, although this was partially offset by absorbed costs and the discounts given to customers, which cost the water companies £435m between them.

"Customers, however, have not seen enough of the benefits of companies' unexpected financial gains from factors such as falls in corporation tax rates," Amyas Morse, head of the National Audit Office, commented. "Ofwat made significant improvements in 2014, but its price cap regime is not yet achieving the value for money that it should."

The average water bill for UK families in the year between 2014 and 2015 was £396, an increase of 40% in real terms since the 1989 privatisation, which the NAO attributed to the improvement of water quality, helped by the regulation of Ofwat. Water providers in the UK were sold off along with other utilities, such as gas and electricity, as part of the wave of privatisations under Margaret Thatcher's Conservative governments, and have since been regulated by Ofwat, in order to protect the customer. There are around 16 individual water companies.

"Since privatisation, Ofwat and Defra (Department for Environment, Food and Rural Affairs) have overseen major improvements in water quality and service quality," Morse said. "Ofwat's 2014 price review committed companies to improving services further over the next five years while cutting customer bills, increasing value for money for consumers."