Ofwat Ruling: Qualified backing for cap on water prices: Labour says clampdown on bills 'inadequate' - One company gives notice of appeal over limit linked to inflation

CONSUMER groups yesterday gave qualified approval to the move by Ofwat, the water industry watchdog, to clamp down on soaring water bills, but the Labour Party described the sanctions as inadequate.

The reaction from the water firms was mixed. Most have become resigned to the tougher regime, but at least one, South West Water, has said it will go to the Monopolies and Mergers Commission rather than accept the price cap.

Water bills, which have risen by 5 per cent above inflation for the last five years, will be capped to an average of inflation plus 1 per cent between 1995 and 2005. The effect will be to increase the average household bill by pounds 23 over the 10 years, or about pounds 2 a year averaged over 10 years. Ofwat said the companies must accept lower profits in the interests of customers.

The Consumers' Association said: 'The companies' easiest option has always been to dip into consumers' pockets. That licence has now been curtailed. It is hardly surprising some water companies are wriggling.'

The National Consumer Council said it believed the regulator had done what he could to stop spiralling bills, although it would have preferred to see some real price cuts.

It added that the Government must act to help those on lower incomes who would still see real price increases, albeit at a lower rate than in recent years.

The NCC attacked the decision by South West Water to go the Monopolies and Mergers Commission, on the grounds that the company's customers have suffered some of the highest price increases since the industry was privatised. Because of environmental requirements, South West Water has been able to increase prices by 11 per cent above inflation for the last three years.

An NCC spokesman said: 'South West want to use the MMC to get even more money from their customers. This is the last company that should be going to the Monopolies and Mergers Commission.' He said it would be prepared to give evidence to that effect.

Nigel Griffiths, Labour's spokesman for consumer affairs, said that many consumers would still see staggering price increases. He said that Mr Byatt should have forced a real price cut on the companies and he called for the regulator to resign. 'He has presided over obscene salary increases to water industry executives and massive handouts to shareholders. This statement on prices should be his last,' he said. Chris Smith, Labour's environment spokesman, said Mr Byatt had been too soft and had 'ducked the issue'.

Ian Byatt, the director general of Ofwat, said that water quality would continue to improve and that companies would have to maintain their standards of service. He said that companies must in future absorb large amounts of their costs by accepting a lower return on their investments and by increasing efficiency.

Mr Byatt estimated that without the new regime, the average household bill would increase by pounds 47 rather than pounds 23 over the period.

'The companies' profitability and the returns to their shareholders will depend on their ability to reduce costs,' he said.

(Photograph omitted)

Start your day with The Independent, sign up for daily news emails
News
news
New Articles
tvDownton Abbey Christmas special
Arts and Entertainment
Wolf (Nathan McMullen), Ian (Dan Starky), The Doctor (Peter Capaldi), Clara (Jenna Coleman), Santa Claus (Nick Frost) in the Doctor Who Christmas Special (BBC/Photographer: David Venni)
tvOur review of the Doctor Who Christmas Special
News
peopleIt seems you can't silence Katie Hopkins, even on Christmas Day...
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
News
i100
Arts and Entertainment
Jenna Coleman as Clara Oswald in the Doctor Who Christmas special
tvForget the rumours that Clara Oswald would be quitting the Tardis
Arts and Entertainment
Japanese artist Megumi Igarashi showing a small mascot shaped like a vagina
art
Life and Style
fashion
Arts and Entertainment
Left to right: Stanley Tucci, Sophie Grabol and Christopher Eccleston in ‘Fortitude’
tvSo Sky Atlantic arrived in Iceland to film their new and supposedly snow-bound series 'Fortitude'...
Arts and Entertainment
tv
News
The Queen delivers her Christmas message
newsTwitter reacts to Her Majesty's Christmas Message
Sport
sport
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Ashdown Group: Marketing Manager/Marketing Controller (Financial Services)

£70000 - £75000 per annum + benefits: Ashdown Group: Marketing Manager/Marketi...

Recruitment Genius: Account Manager

£20000 - £35000 per annum: Recruitment Genius: This full service social media ...

Recruitment Genius: Data Analyst - Online Marketing

£24000 - £35000 per annum: Recruitment Genius: We are 'Changemakers in retail'...

Austen Lloyd: Senior Residential Conveyancer

Very Competitive: Austen Lloyd: Senior Conveyancer - South West We are see...

Day In a Page

A Christmas without hope: Fears grow in Gaza that the conflict with Israel will soon reignite

Christmas without hope

Gaza fears grow that conflict with Israel will soon reignite
After 150 years, you can finally visit the grisliest museum in the country

The 'Black Museum'

After 150 years, you can finally visit Britain's grisliest museum
No ho-ho-hos with Nick Frost's badass Santa

No ho-ho-hos with Nick Frost's badass Santa

Doctor Who Christmas Special TV review
Chilly Christmas: Swimmers take festive dip for charity

Chilly Christmas

Swimmers dive into freezing British waters for charity
Veterans' hostel 'overwhelmed by kindness' for festive dinner

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect
Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

Clocks, rifles, swords, frogmen’s uniforms

Surrounded by high-rise flats is a little house filled with Lebanon’s history
Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

Four months after the bombardment, Gaza’s wounds are yet to heal

Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
Gastric surgery: Is it really the answer to the UK's obesity epidemic?

Is gastric surgery really the answer to the UK's obesity epidemic?

Critics argue that it’s crazy to operate on healthy people just to stop them eating
Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

Homeless Veterans appeal: Christmas charity auction

Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
Pantomime rings the changes to welcome autistic theatre-goers

Autism-friendly theatre

Pantomime leads the pack in quest to welcome all