HC Deb 24 January 2000 vol 343 cc135-6W
Mr. Coaker

To ask the Secretary of State for the Environment, Transport and the Regions what representations he has received concerning the impact of Ofwat's price review on employment at Severn Trent Water. [106043]

Mr. Mullin

[holding answer 20 January 2000]: The Department has received a number of representations on this issue, including correspondence from the Managing Director and employees of Severn Trent Water, local union representatives and hon. Members whose constituencies fall within the Severn Trent area. The representations expressed concern that Severn Trent Water might make some staff redundant following the decisions of the Director General of Water Services on price limits for water companies, to apply from April 2000.

Setting price limits, at the price review, is a matter for the Director General of Water Services. He has a statutory duty to secure that water companies properly carry out their functions and are able to finance them. These functions must be carried out in full compliance with all legal requirements, including drinking water quality (regulated by the Drinking Water Inspectorate), health and safety (regulated by the Health and Safety Executive), environmental standards (regulated by the Environment Agency) and customer service and continuity of supply (regulated by the Director General himself). The Director General expects companies to improve on efficiency savings that they have already achieved. It will be for water and sewerage undertakers to ensure that they maintain the necessary staff and other resources to meet these obligations in full.

In deciding how to meet price limits set by the Director General, companies will need to consider the range of measures open to them, including factors such as dividend policy, as well as the option of making staff redundant.

The Government believe that it is possible to deliver substantial quality improvements and reductions in customers' bills, for the benefit of consumers. The environmental and water quality improvement programmes will create significant new employment opportunities, although my Department has not undertaken or commissioned research on employment in the water industry.