Water firms 'cheating' over pipe repairs

Many water companies appear to have pocketed cash earmarked for pipe repairs, the main industry watchdog said yesterday.

A report by the regulator, the Office of Water Services (Ofwat), says that leakage reduction targets have not been met even though firms had been given permission to increase prices to pay for them.

Labour immediately called on Ofwat to name the guilty firms, saying companies were "coining money but failing to discharge their responsibilities".

But Ofwat refused to name firms individually - although each company is being told that it must meet the reduction targets set without asking for more money.

The Ofwat report said officials had been looking more closely at companies' leakage forecasts made when the industry was privatised in 1989.

"In many cases reductions planned, and paid for, in the price limits set in 1989 have not been achieved," it said.

Ian Byatt, head of Ofwat, said: "We have been looking closely at whether companies achieved the leakage targets which were allowed for in price limits.

"Customers expect more vigorous action by companies in reducing leaks - and better monitoring of the position.

He added: "Customers are also concerned about who pays for leakage reduction. Companies should concentrate on reducing leakage where it is economic to do so, but customers do not expect to see increases in prices as a result."

Frank Dobson, Labour's environment spokesman, said that firms were breaking promises made in 1989 - and attacked the Government for failing to monitor their performance properly.

"This report shows that Ofwat and the Government have fallen down on the job. Neither ... appears to have noticed that the companies were failing to deliver on promises made at privatisation," Mr Dobson said.

"It shows that water companies have taken money from customers in exchange for mending leaks without actually mending the leaks."

The new attack came a day after Yorkshire Water caused outrage by announcing that it had made half-year profits of nearly pounds 100m - even though taps across the county are run- ning dry.