Lessons in how to run water

The companies may let it leak away, but many of us are wasting a scarce resource, says Matthew Taylor

The privatisation of the water industry, a natural monopoly, inevitably brought new problems for the both water users and the environment. In particular, there have been disproportionate increases in water charges in some regions. The consumer has been forced to pay an unfair proportion of the costs of investment in infrastructure and environmental measures. New investment has been and will be needed to maintain quality standards. However, while water bills and water shortages have risen, so too have water company profits, top-level salaries and dividends. It is no wonder that people are angry.

Unlike the Conservatives, the Labour government has at least recognised that the water industry isn't operating in a sustainable way, and something needs to change. Today's water summit must mark the start of a change in direction, and the Liberal Democrats welcome this move as the first step. The summit brings together the great and the good from the Environment Agency, from respected environmental groups, and from the industry to explore ways of dealing with long-term problems. There is much to discuss.

But what of solutions? Many of Labour's proposals are not new but reflect changes already initiated by the industry, the Environment Agency and the regulator. Even before the summit has begun, more controversial measures have been ruled out, including targeted water metering of wasteful users, which can go a long way to conserving our limited supplies (and has already been initiated by some water companies). Will the summit amount to anything more than a talking shop, followed by a rehash of old policies wrapped in New Labour packaging?

If Labour wants to suggest it is a fit alternative to the previous Tory administration, it must go beyond merely pointing out what it is against. The problems of water resources, environmental and social impacts of water usage, pricing and financing mechanisms need imaginative solutions. I am encouraged that Labour has said that it will introduce tough mandatory leakage targets for each water company. That has long been a Liberal Democrat priority and will be fully backed by the party. The water industry can no longer be allowed to leak away almost 30 per cent of the water in the system.

We will also be looking for a review of all abstraction licences in force. Many of these were granted in the past, when environmental standards were lower and there was little in the way of environmental impact assessments. The dried-up rivers around the country are the legacy of this short-term approach. Each company must agree with the Environment Agency and other environment and consumer groups detailed plans for dealing with drought problems.

We also need to encourage a lifestyle change among the population. Water is a scarce resource. I believe that the best way forward is through the establishment of an independent Water Services Trust, which Liberal Democrats would like to see funded by a 2 per cent levy on excessive water company profits. The Trust would promote water efficiency, provide support for environmental projects of national importance, and help the poorest families with the costs of more water-efficient household goods. The Government itself should play a part by setting new standards in the building and plumbing trades, and by encouraging eco-labelling schemes for water-efficient appliances.

Unlike the present government, Liberal Democrats have not ruled out targeted metering. Metering makes clear to the consumer the value of the resource being used, and provides incentives to conserve water and prevent leaks. A water sprinkler can use in a few hours the water a typical family uses in a week - yet no one needs to use a sprinkler. Trickle-feed systems do the job better for the garden at less cost to the environment, and if people want to go on wasting water they should pay the cost. But for both economic and social reasons, the Liberal Democrats do not support the introduction of universal metering on a compulsory basis. It would, in any case, be staggeringly expensive and that money could be better spent on improving water efficiency elsewhere.

Today's water summit is the first real test of Labour's commitment to the environment. Tough action is needed. The ball is firmly in their court.

The writer is the Liberal Democrats' spokesman on the environment.