RED-faced bosses at Southern Water are having to refund thousands of pounds for double-billing two Hampshire homes and the Ministry of Defence for a leaking pipe.

An MoD water firm has paid Southern Water £20,000 at commercial rates for water haemorrhaging at almost three-quarters of a tonne an hour from the pipe in Calshot.

Southern Water and the MoD, which formerly owned the land hosting the pipe, failed to repair it amid a row over who was responsible. Residents claim the leak was decades old.

It comes just weeks after Southern Water issued a hosepipe and sprinkler ban across Sussex, Kent and the Isle of Wight following 16 months of below average rainfall.

Geoffrey Harris, 63, of Calshot Road, who in January moved into one of two ex-military homes fed by the pipe, said: "I think its absolutely disgusting that something like this has been left for so many years. The water metre was whizzing round. It was unbelievable."

Another neighbour, who did not want to be named, said Southern Water had been repeatedly notified about the leak in recent years but failed to act.

Water was seeping from the underground service pipe and apparently flowing into a stagnant pond and across a nearby road.

Annual bill

The residents pay an annual bill of about £350 based on the value of their homes. But Southern Water was also double-billing the MoD through a water meter. Technicians from Brey Utilities, contracted to provide water and sewerage services to the MoD under a private finance (PFI) contract since December 2003, found water gushing out at 625 litres per hour. They were sent to investigate after new computer systems flagged up suspiciously high charges.

An MoD spokesman said Brey was now seeking to recover £20,051 in wrongly paid charges.

"Brey cannot determine when the leak started as our leakage monitoring systems have only been recently commissioned,"

He said the pipe was on private land recently sold off at auction to an unknown developer.

A spokesman for Southern Water said: "The leak occurred in a service pipe which is not Southern Water's responsibility.

"Naturally, we want to do all we can to help so, when the matter was reported to us, we sent a team to dig a trial hole. This allowed us to detect a leak which we then repaired."

The spokesman said further investigation revealed it had been double-billing the homeowners and Brey, who will no longer be charged.

"We apologise to Brey services."