Yorkshire Water to hold open inquiry into drought crisis

Yorkshire Water is to hold a public inquiry into the region's drought crisis, it was announced yesterday.

The company's managing director, Trevor Newton, said he wanted views from Ofwat, the National Rivers Authority and the public. They will be asked how pounds 125m of shareholders' money should be spent on long-term measures to prevent another water shortage.

The move followed a meeting on Monday with John Gummer, Secretary of State for the Environment, in which Yorkshire Water chiefs were asked how the water crisis had arisen.

The company's chairman, Sir Gordon Jones, was asked to provide details of its plight. Mr Gummer, now on a tour of South America, called for a report into the problems facing the firm.

After their meeting, Sir Gordon said he told Mr Gummer the company was doing, and had done, all it could in the face of one of the most severe summers for 500 years.

"A lot now depends on the way people respond to appeals to use less water and on the weather," he said.

Mr Newton said: "The sensible date to start the inquiry is when the immediate emergency is over. We will hold public hearings and we will seek an independent chairman."

Sir Gordon added: "This is not a panic response. It is one that takes account of the particular circumstances."

The inquiry is likely to start next month or November. The company hopes to reduce leakage from 27 per cent to 24 per cent over the next three years. But Sir Gordon warned that if the company was asked to reduce leakage further, customers would have to pay. "It can be done, but the cost of it would be astronomical and there is no way we could fund that out of profits," he said.

The estimated cost of reducing leaking was pounds 40m per 1 per cent saved.

However, Yorkshire regional manager for Ofwat, Paul Taylor, said customers should not have to pay for reducing leakage. "It should have nothing to do with customers' bills. We don't want to see anything passed on," he said.

"They feel they've received a second rate service and they don't want to pay for the solution. Some things have to be borne by the business. What we'd like to see is some appeasement to customers. Yorkshire Water needs to take some of the blame and say