Water industry lambasted for price rises plan

Consumer Groups yesterday rounded on the water industry, which has warned that prices will have to go up under the regulatory review now underway.

Any price increases above the rate of inflation would not be easily justified, consumer representatives said. WaterVoice, a statutory consumer body, refused to accept that there was a need for across-the-board prices rises.

Last week, the water companies submitted their business plans to Ofwat for the next five-year period the water regulator will oversee, running from April 2005. Water UK, the industry organisation, said over the weekend that massive investment in water infrastructure was needed, which will have to be funded by charging consumers more.

In a phrase that particularly angered consumer groups, Water UK compared the state of the water network to that of Railtrack, the failed rail infrastructure group.

Pete Bowler, director of WaterWatch, a campaigning group, said the companies were deliberately talking up the need for price rises as they entered negotiation with the regulator. "Railtrack paid huge dividends to shareholders and failed to invest in its infrastructure. If water is now saying it's like Railtrack, then the Government ought to be looking at taking water also back under public ownership," he said.

Mr Bowler said that maintaining and upgrading the pipe infrastructure was a cost that shareholders should bear, not consumers.

Maurice Terry, chairman of WaterVoice, said consumers would find it hard to see the need for yet more money spent on improving the network and that some of the work deemed necessary by the industry should be pushed out to the 2010-15 period. "Consumers will say, hang on, we're told we have the cleanest river water for 100 years, the highest levels of drinking water quality. Consumers want to see further improvements but at a pace that is affordable," he said.

Maxine Holdsworth, of the National Consumer Council, said that if prices are to rise, the industry must help poorer consumers paying for it.