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Defra defends South West Water subsidy plans

A senior government official was yesterday forced to defend the government’s decision to subsidise South West Water’s infrastructure costs, when she came under fire from an audience of water industry figures.

Department for Environment, Food and Rural Affairs water availability and quality programme deputy director Gabrielle Edwards told delegates at a Westminster Energy, Environment and Transport Forum seminar that the government was right to give the water company extra help.

In the Budget, in March this year, chancellor George Osborne announced that the government would bring forward public money to reduce water bills in the South West of England where unique geography means water bills are exceptionally high.

Edwards stood firm in the face of repeated questioning from the audience as to why the company should be subsidised. Delegates argued that variations in water costs according to different geographical regions were a fact of life because water is simply more scarce in some places.

Edwards said the public money was deserved not because of water scarcity but because of disproportionate wastewater treatment costs, and the fact that those costs were not properly accounted for when a government dowry was distributed two decades ago.

The share that South West Water received from the £1.5bn “green dowry” offered to all water companies by the government at the privatisation of the water industry in 1989 was inadequate in comparison with other water companies, Edwards said. She said ministers are now keen to correct the error.

“It is not about the availability of the resource. It is an issue that has been around for years that various governments have thought about,” she said.

“Final decisions have not been taken. But the Budget announcement was pretty clear.”

A South West Water spokesman told NCE in March that water infrastructure costs in the region are disproportionately high because of its “unique geography”, which means the company must spend large amounts on sewage and water treatment infrastructure despite its relatively small number of customers.

The extensive coastline of the south west means it accounts for a disproportionately high number (144) of the nation’s 500 bathing waters monitored by the Environment Agency under the Bathing Water Directive while the region homes just 3% of the nation’s population. Most of the 144 are required to meet the EU’s “good” standard, and are recommended to meet the “excellent” standard.

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