Ministers will make an unprecedented intervention in water bills and how companies prioritise investment, directing bosses to bring down costs and stop leaks and sewage overflows.

Angela Eagle, the environment secretary, has told suppliers in England and Wales she plans to intervene in the next price review – conducted by the water regulator, Ofwat.

Sources at the Department for Environment, Food and Rural Affairs (Defra) said Andy Burnham’s 10-year plan, which will follow next week’s budget, would hand the government more robust powers to keep bills affordable and direct local investment. But sources close to Eagle said there also needed to be immediate action as companies began to make decisions before the next price-setting process, expected to conclude in 2029.

There has never been government intervention in the five-year review process.…