WATER bills are set to rise almost £10 a year for some customers.

The annual rise of 3.6 per cent plus inflation imposed by Yorkshire Water is to meet the cost of European environmental legislation and a "significant" rise in Government taxes the company must pay.

The company also plans to spend £1.3bn over five years on improvements to services for its 4.7 million customers.

Some of the cost will be met by the price rise, which will begin in 2005, and some will come from company savings.

The firm said people will still pay among the lowest rates in the UK for their water services.

Managing director Kevin Whiteman said: "We have worked hard to minimise the impact on customers' bills.

"The price rises we are proposing are among the lowest in the industry however, and will help us to build on the significant improvements we have made over recent years."

The investment is expected to reduce the number of incidents of sewer flooding, improve river and bathing water quality, and deliver better tap-water to people.

However, in the York area, people's bills will be cut by 15 per cent next year.

It follows a promise to cut bills made by Yorkshire Water when its parent company, Kelda, took over the York Waterworks in 1999, and the completion of a £4m improvement project.

The price cut will be a one-off, although the differential will be maintained in the future.