Utilities regulator Ofwat has rebuffed tax-dodging Thames Water's attempt at a £29 surcharge on top of its annual price rises.

The company had sought Ofwat officials' sign-off on the scheme, which would boost the average household bill by 8 per cent in light of what a spokesman called "a tough time financially."

Thames Water had already raised its bills by 6.7 per cent in the last financial year, only to come under fire in June for manipulating inter-company loans and deferring tax payments in order to cut its corporation tax to zero.