Prescott turns up the pressure ... on water

Water companies will be compelled to cut their leakage, year after year, and meet tough annual targets to do so, the Deputy Prime Minister told a "water summit" yesterday.

John Prescott called on all 29 companies in England and Wales to offer to locate and repair leaks in their customers' supply pipes free of charge. He asked them to write to him within three weeks ''explaining how they can respond to the challenge and implement the measures we have suggested''.

Under its Welfare-to-Work scheme financed by the windfall tax on utilities, the Government is also considering training unemployed young people to help households save water.

The London summit was the Government's first public encounter with a privatised industry on which it heaped criticism while in opposition. Mr Prescott said he wanted rapid, sustained change - and the Government was prepared to bring in new legislation if necessary.

There will be a review of how companies charge for water. And there were the first signs that in power Labour is softening its total opposition to the policy of compulsory water meters for some kinds of consumer.

Mr Prescott was non-committal pending the outcome of the review and did not mention meters in his speech, even though the industry's two Government regulators, the water companies and environmental groups agree there is a need to meter affluent households with heavy water consumption in drought- prone areas.

But Environment Minister Michael Meacher said he was ''certainly prepared to consider selective metering'' for households with swimming pools or large gardens with sprinklers.

Mr Prescott told the audience of senior water executives, industry regulators, environmental groups and consumer re- presentatives that he did not wish to make ''the usual comments about fat-cat salaries''. But he went on to say that people saw an industry ''whose directors look after themselves rather than their customers.''

They also saw an industry which could not promise to maintain supplies without the threat of restrictions, whose demands for water threatened the environment, an industry which allowed nearly 30 per cent of its product to leak away before customers could use it and which offered them too little practical help in saving water.

At present, the water companies of England and Wales set their own leakage targets in consultation with the industry's economic regulator, Ian Byatt of Ofwat. From now on, said Mr Prescott, the regulator will set each company a fresh target each year, in consultation with the Government.

Ministers accept that there is a point at which efforts to cut leakage are no longer cost-effective. But they believe that point is reached when only about 10 per cent or less of the treated water the companies pump into their mains is lost.

Few companies now achieve that and Thames Water - the worst leaker - loses just over 25 per cent of its water through the mains. Adding that which is lost on the customers' side, once the supply pipe crosses the boundaries of homes and businesses, brings the percentage lost up to 38 per cent.