Taxman loses out as water firms give investors £11bn in a decade but pay just £1.7bn in tax: Figures emerge as regulator tries to curb rising bills Six biggest firms paid out five times as much to investors as they did in tax Meanwhile water bills have leapt 55 per cent to an average of £384 per year Comes as watchdog Ofwat prepares to crack down on rising prices By Rob Davies Dividends: Over the past decade, water companies have paid out more than five times as much in dividends as they have paid in tax Water companies have handed their owners £11billion in dividends over the past decade but have paid only £1.7billion in tax, figures show. In the same period, customers" bills have risen by up to 55 per cent to an average of £384 a year. Details of the water industry's meagre contribution to the nation's coffers emerged as Britain's chief water regulator prepares to crack down on rising bills. Jonson Cox, chairman of Ofwat, will today outline the regulator's view on how much water firms should be allowed to hike bills by between 2015 and 2020. He is widely expected to place a tighter cap on what the owners of water companies are allowed to make from their investment, in a bid to curb rising bills. Mr Cox's review comes with water firms under intense scrutiny over their tax affairs, in the light of the huge rewards on offer to the investors who own them. Six water firms paid out more than five times as much to their investors as they did to British taxpayers in the past ten years, according to analysis of their accounts by The Sunday Times. The top six - United Utilities, Severn Trent, Thames Water, Yorkshire Water, Anglian Water and Southern Water - have paid just £1.7bn in tax between them since 2004. At the same time, they paid out £11billion in dividends to investors including pension funds, private equity houses and even foreign governments. The same six firms, which meet three quarters of Britain's water needs, generated profits of £1.75billion between them last year alone, but paid just £45million to the Treasury. The contribution amounts to a 2.6 per cent rate of tax, compared to the headline UK corporation tax rate of 23 per cent. All but two of them - Southern United and United Utilities - paid nothing at all. Water firms have been able to slash the amount they pay in to the Exchequer by racking up huge debts, and writing off interest payments on the debt against corporation tax. But critics, including Ofwat chairman Mr Cox, have attacked this debt-heavy model, saying it is designed to avoid tax artificially. In some cases, water firms borrow money from finance divisions owned by their own investors. Low expectation: Thames Water has said it expects to pay no corporation tax for a decade This means that they end up paying interest to the people who own them, while simultaneously reducing their UK tax obligations. In a lecture last year, Mr Cox criticised the water giants, saying their debt-fuelled business plans were designed 'purely for shareholder gain without advantage to customers'. Britain's biggest water supplier, Thames Water, admitted late last year that it did not expect to pay any corporation tax for up to a decade. The company said tax breaks for investment in infrastructure, including a £4.2billion on a new 'super-sewer' underneath London, had helped it to reduce its tax bill. But Margaret Hodge, chairman of the House of Commons Public Accounts Committee, said the situation was 'deeply unfair'. Like many water companies, Thames Water is owned from abroad. Its largest investor is Australian bank Macquarie, while the investment funds of Abu Dhabi and China have also got large stakes in the company. The owners of Anglian Water - two Australian pension funds, private equity group 3i and the Canada Pension Plan - took home £188million in dividends over 18 months, while the company paid no corporation tax. Southern Water and Yorkshire Water, both of which are owned by international consortiums, have also come in for criticism from Tory MP and tax lawyer Charles Elphicke, who accused them of 'abusing' the system. Industry body Water UK said: 'Companies have invested well over £100billion in water and sewerage services in the past 25 years.' 'This has hugely benefited customers, society and the environment,' it added. Our water supplies are even more reliable, our drinking water remains the best in the world and our rivers and beaches become even cleaner than ever before. One industry source said UK pension funds should be encouraged to invest in water firms if regulators want an alternative to foreign investors with little concern for household bills. 'It's really only coming from abroad at the moment, Malaysia, Australia and China,' said the source. 'It could be great if more UK pension funds investment but they don't, so we need to get money from other places.'