§ Mr. StreeterTo ask the Secretary of State for the Environment what he expects prospects for water bills to be after the announcement by the Director General of Water Services on water pricing policy.
§ Mr. GummerAt present average annual charges for water are around £200 per household—about 55p a day to provide high quality drinking water in unlimited amounts and to treat our sewage. The Director General of Water Services is currently reaching a view on new limits on the extent to which the companies may increase their prices over the next 10 years. He is to announce these on 28 July. He has said that he hopes that nationally it may be possible to limit overall price increases on average to between 0 and 2 per cent. above the rate of inflation. This will supersede the current average ceiling of 4 per cent. above the rate of inflation. In setting price limits he intend to assume that improvements in service are generally financed from efficiency gains, that companies will be able to deliver existing services at lower prices and that companies can both increase the efficiency of their capital programmes and finance them at a lower return on capital. This will have a significant impact on the increases in bills required to finance new obligations. In this way my right hon. Friend the Secretary of State for Wales and I have sought to secure best protection of the environment in a cost-effective way.