Billpayers are to fund a £100 million national campaign to encourage people to use less water, the chief executive of Ofwat has said.

The regulator announced its intention to develop the fund in July, with chief executive David Black now telling MPs that billpayers will provide the money.

Each person in the UK uses about 144 litres per day and the Government wants to reduce this to 122 litres by 2038 and 110 litres by 2050.

It also wants water companies to cut the amount of water lost through leaky pipes, which is currently about 20% of the total supply.

A major new reservoir is expensive, we're talking about perhaps £2 billion or more so it's absolutely right that we look at the demand side as well

Climate change and a growing population means water demand is increasing at a time when reserves are becoming more stressed, and the Government and Ofwat have said reducing the amount of water people use is necessary to protect continuity of supply.

The Government estimates that there will be four billion more litres per day needed by 2050 and it wants to cut demand as well as fund new reservoirs and encourage water recycling as a way to plug this gap.

Speaking to the Public Accounts Committee on Monday, Mr Black said: “We’re establishing a fund of £100 million for the next price review period which will be from customers to help the sector get to a much better place on water demand.

“We haven’t seen progress from the sector in the current period nor in the previous period. The Government set challenging targets, we think the sector needs to rise to the challenge of delivering on that.

“It is cheaper if that works than the alternatives of building major new sources of supply.

“A major new reservoir is expensive, we’re talking about perhaps £2 billion or more, so it’s absolutely right that we look at the demand side as well.”

What Anglian Water are saying is once you get it down to those sort of levels you can't take the foot off the gas, you've got to continue to reinforce it, as over time it will get back up

Ofwat said households can save about £500 a year by reducing water use and the fund will begin paying for a public information campaign by April 2025.

Questioning Mr Black and Ofwat’s chairman Iain Coucher, MPs were sceptical of the success that water companies would have in convincing people to use less water and that the £100 million may not be enough.

When asked how it will make a difference, Mr Coucher said: “Anglian Water has been leading the charge on this, they’ve been quite aggressive in trying to drive down water consumption, they’ve had quite a few successful areas.

“We sort of know the types of actions it takes to get consumption down, how to target it, what sort of sums of money are involved in doing that.

“What Anglian Water are saying is, once you get it down to those sort of levels you can’t take the foot off the gas, you’ve got to continue to reinforce it, as over time it will get back up.”