Ofwat is urging the water sector to deliver a “game change” on leakage, as it denies reports which claim the regulator wants to see consumption return to 1960s levels.

Rachel Fletcher, Ofwat’s chief executive said its role is “not to regulate customers’ water use” and instead it is challenging the sector to better tackle leakage.

The Sunday Times reported that Ofwat “would like to see” consumption return to the levels of the 1960s, when it was “around 85 litres per person a day”. The news followed the sector being criticised for implementing hosepipe bans while water continues to leak from networks.

Water companies have been urging customers to use water wisely to ensure supply can keep up with demand during the hot weather.

Ofwat has challenged the water sector to reduce leakage by 15 per cent by 2025 and said it will take tough action against companies which do not meet their leakage commitments.

Fletcher said: “Ofwat wants to see a game change on leakage in the water sector. We’ve thrown down the gauntlet for water companies to cut down on leakage by 170 billion litres a year – enough to meet the yearly needs of everyone in the cities of Birmingham, Leeds, Manchester, Liverpool and Cardiff combined – 3.1 million people.”

“Our role is to regulate water companies and not customers’ water use. That is why we have set a challenging target on companies to reduce leakage and have shown that we will take tough action those that fail to meet their leakage commitments.”

She added: “We have not said that water consumption should return to the levels of the 1960s.  Water is an essential service and water companies must be prepared for whatever the weather brings. As well as reducing leakage we expect water companies to do much more to provide customers with the tools they need to use water wisely.”

Tackling leakage is one of the water sector’s “top priorities”, according to trade body Water UK.

Its chief executive, Michael Roberts, said: “We know how important it is for customers, and since the mid-1990s companies have successfully managed to reduce leakage levels by a third. We know there is more to do, which is why water companies are currently developing ambitious plans to cut leakage even further.”

Tony Smith, chief executive of the Consumer Council for Water, added: “Consumers see leakage as a dreadful waste and we know it also dampens their own motivation to use water wisely if they don’t think their water company is pulling its weight. We’ve repeatedly called for the water industry to show more ambition in reducing leakage and to be set much tougher targets by the regulator.”

United Utilities was criticised earlier this month by the GMB Union for plans to implement a hosepipe ban from 5 August. GMB highlighted United Utilities loses “400 million litres” of water a day. The water company has also applied for drought permits to abstract more water from sources in the Lake District.

A spokesperson for United Utilities, said: “For the past 12 years UU has met or beaten those [leakage] targets, and we are set to do so again for this 13th year. We are going above and beyond this target and have doubled the number of leakage and repair teams, completing 83 per cent of all repairs within three days.”

Responding to Ofwat’s announcement, Nicci Russell, managing director of Waterwise, said: “We agree with Ofwat that there’s much more water companies can do to help their customers waste less water – as well as tackling leakage from their own pipes.

“We think every water company should be supporting every customer on water efficiency, including through approaches such as money off water-efficient dishwashers and washing machines, and community rewards which communities can spend as they choose. We want to see really ambitious water use targets per head set by water companies, on water companies – and more and more support to customers to help meet these, for the sake of society, the economy and the environment.”