§ Mrs. Knightasked the Secretary of State for the Environment what external financing limit and financial target will apply to the water authorities in 1981ߝ82; and whether there will be any special arrangements for equalisation of charges as between authorities.
§ Mr. KingThe external financing limit for English regional water authorities will be £424 million in 1981–82; this is similar in real terms to that for 1980–81.
Water authorities are being set financial targets in the form of a rate of current cost operating profit on the current value of their net assets. English water authorities at present earning less than 1½ per cent. will move to that figure over the three years 1981–82 to 1983–84. Those authorities already earning more than 1½ per cent. will continue generally at their present level during the three-year period. The new financial target will increase the level of self-financing, with a limited impact on charges averaging 2 percent. extra over all authorities in 1981–82.
There will be no further special arrangements for equalising charges as between water authorities. The Government consider that it is better from the point of view of efficiency if they charge in accordance with their own costs. The move to current cost accounting and the now form of financial targets should in itself lead to a measure of greater equalisation of charges.
I have emphasised very strongly to water authorities the crucial importance of their examining their budgets for next year in the most rigorous manner to ensure that increases in charges are kept to an absolute minimum.