A water company is facing criticism from MPs and members of the public for increasing its average bills by 7.1%.

Severn Trent, which supplies water to eight million people in the Midlands, said it had schemes available to support customers who needed it.

But Conservative and Labour MPs from the region said the rise was one of the biggest in the country.

The government said bill rises were carefully scrutinised by a regulator.

Severn Trent said the rise would mean average household bills would increase by £26 per year.

“That’s a big difference,” Peter Lee, from East Leake, in Nottinghamshire, told the BBC.

“We’ll have to start cutting down on other things. Perhaps we won’t go on holiday in future. We’ve got one booked in August but, after that, I really don’t know.

“What we can do about it… I don’t think the government can do a great deal, other than giving rebates and things like that, but who pays for that – us?”

Water customers had to make more than two million calls to resolve problems last year as progress by companies on service “stalled”, figures show.

The number of customers who had to phone their water company to resolve an issue increased by more than 40,000, up to 2.14 million, the Consumer Council for Water (CCWater) said.

The watchdog’s annual report shows that 12 out of the 21 water companies in England and Wales saw a fall in the number of written complaints from customers over the last 12 months, with overall written complaints down by 11 per cent to 95,274.

Billing and charges accounted for more than half (57 per cent) of customers’ written complaints, ahead of concerns about water supplies (17 per cent) and sewerage (12 per cent).

The UK’s largest water company is accused of “ripping off the taxpayer” after revealing it paid no corporation tax and pocketed a £5m credit from the Treasury in a year when it made £550m in profits.

Thames Water, which serves more than a quarter of the population and had a turnover of £1.8bn, saw pre-tax profits slide 9% from £604m the previous year.

At the same time bills went up 6.7%, 646m litres of water a day were lost through leaky pipes and hundreds of ratepayers saw their homes flooded with sewage.

In a year when the utility admitted that its customer service was “still far from desirable”, chief executive Martin Baggs was awarded a pay rise of 5.9%, taking his basic salary to £450,000.

Baggs also scooped a bonus of £274,000 as part of a scheme to “reward significant improvement in the group’s financial and corporate performance” and next month will pick up a further £366,000 in shares under the company’s long-term incentive plan.

Thames Water said in its annual financial statement on Monday that it had not paid any corporation tax in the year to the end of March 2013. During this period, turnover rose 6% to £1.8bn.

The company said it paid £150m in business rates, national insurance and other taxes. It is currently seeking government support for the planned £4.1bn “super sewer” under the Thames.

The tax disclosure came as Jonson Cox, chairman of regulator Ofwat, wrote in an article in the Daily Telegraph that the high profits and tax-reducing strategies of some water companies were “morally questionable”.