Water Companies (Investment)

Oral Answers to Questions — Environment – in the House of Commons at 12:00 am on 17th June 1992.

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Photo of Mr Robert Jones Mr Robert Jones , Hertfordshire West 12:00 am, 17th June 1992

To ask the Secretary of State for the Environment what account the Office of Water Services takes in its regulation activities of the amount of investment by water companies.

Photo of David Maclean David Maclean Minister (Department of Environment) (Environment and Countryside)

As the water industry is engaged in a massive capital investment programme estimated to cost £28 billion, the Director General of Water Services, as the independent regulator, has a close interest in ensuring that the investment is carried out on time and in an efficient way.

Photo of Mr Robert Jones Mr Robert Jones , Hertfordshire West

I thank my hon. Friend for that answer. Once again, it underlines the sheer volume of that investment, which amounts to some £960 per household in the years up to 1996. Does he not think, however, that as most of that investment is directed at water quality, it would be appropriate for the Director General of Water Services to consider whether more should be directed at water efficiency and, specifically, at encouraging investment in metering on a voluntary basis in many parts of the country?

Photo of David Maclean David Maclean Minister (Department of Environment) (Environment and Countryside)

My hon. Friend is right to draw attention to the huge investment being made in the water industry at present. As a rough rule of thumb, it is £5,000 for every minute. My prime concern is that water companies should maintain adequate supplies to consumers while properly managing water resources efficiently and not damaging the environment. All of us could do more to conserve water, and that is why I shall shortly issue the consultation paper, which will canvass views on water conservation, management and use. Metering will be one of the options considered.

Photo of Mr Dafydd Wigley Mr Dafydd Wigley Leader and Party President, Plaid Cymru

Will the Minister address the issue of compound interest involved in the formula, RPI plus K, in which over and above inflation there is an increase of up to 6.5 per cent. per annum of compound interest in the charge made? Surely that should be levelled out and, although there may be justification for retaining the RPI element, surely K must be brought to an end.

Photo of David Maclean David Maclean Minister (Department of Environment) (Environment and Countryside)

That is a matter for Ian Byatt, the director general of Ofwat. He has recently issued a consultation paper, and he will consider the matter raised by the hon. Gentleman when undertaking a review of K in the next few years.

Photo of Sir Nicholas Bonsor Sir Nicholas Bonsor , Upminster

My hon. Friend will be aware that, notwithstanding the enormous investment in water supply, there will be a great shortage of water for the foreseeable future in some parts of the country. Does my hon. Friend accept that there is an urgent need for a national water grid as, I am told, the national water supply is perfectly adequate for our overall needs?

Photo of David Maclean David Maclean Minister (Department of Environment) (Environment and Countryside)

The water companies have a prime duty to ensure that consumers are supplied with adequate amounts of healthy, wholesome water. In the past few years, those companies have developed river transfer schemes and the elements of a grid. However, I caution my hon. Friend when he suggests that we should have a national grid pumping thousands of millions of gallons of water around the country. We should be wary of doing that on the basis of the huge amount of energy that it would consume. My hon. Friend should not jump to the conclusion that all parts of the country have more than adequate water supplies. One of the rivers that is under threat and is very low is in the lake district; it supplies Lake Ullswater, which supplies Haweswater, which supplies Manchester.