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Water firms forced to clean up and cut bills

WATER COMPANIES are to be forced to cut prices and spend many millions of pounds on cleaning up their operations in an unprecedented double strike against one of Britain's most unpopular industries.

Ministers will this week announce the biggest crackdown on the companies' pollution of Britain's rivers, seas and beaches. Discharge of raw sewage to sea will be ended, pollution standards on many beaches will be tightened 20-fold, and hundreds of miles of dirty rivers will be cleaned up. Then Ian Byatt, the water industry regulator, will next month give first indications of the size of the price cuts to be imposed on the companies.

Details of the twin-pronged attack - the result of long negotiations between ministers, Mr Byatt and the Environment Agency - are still being finalised, but it will bring to an end the long financial honeymoon enjoyed by the privatised water companies, which have been able to accumulate large profits by overcharging and delaying environmental improvements. Ministers will claim they are fulfilling election promises to crack down on the industry and to be the "greenest government ever". The environmental clean-up, provisionally scheduled for announcement on Wednesday, includes:

t An end to discharge of raw sewage to the sea. Companies are now allowed to dump it, with minimal treatment, in 41 areas - including around Scarborough, Hastings, Penzance and Workington. Ministers refuse to accept the sea would disperse sewage safely.

t A massive beach clean-up. Nearly 90 per cent of Britain's beaches meet legal minimum pollution limits , but only 40 per cent reach EU "guideline standards", 20 times as strict. Ministers want two-thirds of beaches to meet the tougher standards by 2003.

t A five-year deadline to plug Britain's 4,000 faulty sewer overflows, which spill raw sewage into rivers.

t A major clean-up of Britain's most polluted rivers - mainly in the North-East, the North-West and the Midlands.

t Halving the maximum amount of brain-damaging lead in drinking water. Supplies to one home in 20 exceed the new limits.

Mr Byatt will estimate the cost of these measures before he fixes water prices and present the first indications on 29 October, initiating a year-long process of negotiations with the companies before the substantive cuts are finalised. Ministers have been careful to leave him leeway to make price cuts.