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The Government's view

When the New Labour Government came to power in 1997, public concern over the water industry in England and Wales was at a high. There had been water shortages in some areas in 1995. Leakage was running at around a billion gallons every day. Yet industry profits and directors' pay seemed unreasonably high to a public enduring annual increases in bills above the rate of inflation.

Within a few weeks of the election John Prescott called a water summit. We agreed with the industry a 10-point action plan, to ensure that water is distributed reliably and efficiently and that customers are helped to use water wisely.

I am pleased that the industry recognised the need to take effective action and responded positively to the action plan. If targets are met for the current year, leakage will be down by over a quarter compared to 1996-97. A free leakage detection and repair service for householders' pipes is now available to nearly all customers in England and Wales. All companies have incorporated in their licences a requirement to provide compensation to customers affected by drought-related restrictions.

There is, of course, some way to go. Companies must now comply with legislation to protect householders from disconnection and the misery that brings. We want to see cleaner beaches and rivers; and, while our drinking water quality is now the best ever, we want to see further improvements. We have, therefore, made clear that we want an ambitious investment programme taken forward between 2000 and 2005, coupled with substantial price cuts for consumers.

I believe the industry can respond positively to this challenge, as it did to the water summit. Together, we can create a world-class water industry - one which provides services in tune with customers' wishes and which makes its full contribution to our sustainable development objectives.

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