Small companies would not get a special business rate

On Thursday, Southern Water will find out if its proposal will be approved by Ofwat, the water industry regulator.

The Federation for Small Businesses (FSB) has said firms, not eligible for business rates, could have to pay over £1,000 extra each year.

Southern Water has said the increase is needed to fund water quality upgrades.

'Stick to word'

It proposed the highest bill increase in the country to fund a £2bn investment programme.

The money would be spent on improving water quality as well as alterations to comply with environmental laws.

FSB Environment Chairman, John Holbrow said: "There are large numbers of small firms, such as laundrettes, farmers and restaurants that are high users of water, yet do not have access to the block tariffs afforded to big companies.

"When Ofwat announced the proposed price increases in May it said that although increases were inevitable, it would ensure that price limits were no higher than necessary to update aging infrastructure.

"The FSB is now calling on the regulator to stay true to its word and stop excessive increases."