Minister limits water environment budgets

By Michael Harrison
Friday 12 March 2004 01:00

The Government gave the go-ahead yesterday for a huge programme of environmental improvements within the water industry which will herald a big rise in domestic bills in the likely run-up to the next general election.

Margaret Beckett, the Secretary of State for the Environment, sanctioned a wide- ranging programme of quality improvements which will result in total expenditure by water companies of at least £20bn over the next five years.

That will feed through to increases in household bills averaging 30 per cent from next April, the likely time for Britain to go to the polls.

In some areas of the country, such as the North-west, bills could rise by as much as 70 per cent over the five-year period. The average household bill this year is £234. This could rise to just over £300 by 2009-10.

The water regulator, Phillip Fletcher of Ofwat, had suggested a reduced investment programme of about £15bn over the period 2005-10, which would have involved a cut of about £3bn in spending on environmental improvements.

But Mrs Beckett has decided on an investment programme which, if anything, is larger than that put forward initially by the industry.

Despite the size of the overall expenditure plan, the environmental lobby said it was disappointed the Government had not gone further. Under the guidance issued by Mrs Beckett to Ofwat yesterday, Britain will still only meet the minimum standards required by Brussels on bathing and river water quality.

Schemes designed to safeguard shellfish fisheries will also have to be scaled back.

Only two-thirds of the 4,700 individual schemes proposed by the Environment Agency are to be implemented. "These costs are being deferred, not avoided," said Sir John Harmon, the agency's chairman.

Announcing the spending guidelines, Mrs Beckett said: "I am concerned about the effect of water bills, especially on those least able to pay.

Changes to our policies on drinking water and the environment cannot avert increases, but in a climate of rising water bills I have closely scrutinised the need for and benefits of further policies to improve water company standards.''

The programme approved by ministers includes action to tackle sewage overflows into streams and rivers, protect wetland wildlife sites, control water leakage and curb phosphorus levels in lakes such as Lake Windermere, where levels of the chemical threaten serious ecological damage.

The 22 water companies in England and Wales will now submit final business plans to Ofwat based on Mrs Beckett's guidance, and Mr Fletcher will announce in July by how much water bills will need to rise from next year.

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