Safety fears scupper water sell-off

JOHN PRESCOTT'S plans to cut household water bills by throwing the industry open to full-blooded competition have been shelved amid fears of a backbench revolt over safety concerns.

The public furore over standards in the rail industry following the 31 deaths at Paddington has rendered deregulating the water industry a "political no-no", officials at the Department of the Environment, Transport and the Regions (DETR) believe.

Mr Prescott is already under fire from unions and Labour MPs over controversial plans, to be outlined in this week's Queen's Speech, to sell off part of the National Air Traffic Control Service (NATS). His advisers believe that releasing a report calling for huge numbers of new suppliers to be allowed to supply water to British consumers in future would cause uproar with the public, who increasingly associate privatisation with a threat to public safety or health.

Critics of rail privatisation have already laid much of the blame for the Paddington tragedy on the difficulties in ensuring public safety in such a fragmented industry.

Key officials within the DETR believe that it could be impossible to ensure sufficient purity levels in water supplies if the industry were opened up to full competition - which would involve a variety of suppliers using the same pipeline grid to distribute their water. The worst-case scenario is a repeat of disasters such as that in Camelford, Cornwall, just before privatisation in 1988. Hundreds of people were poisoned after 20 tons of aluminium sulphate were tipped into the wrong hatch at a treatment works.

"We have been told privately that ministers can't countenance releasing the report while Paddington is still so fresh in people's minds and Labour MPs are so exercised by the air traffic control sale," a senior water industry source said.

"They fear another backlash over public safety and being portrayed as kow-towing to industry fat cats wanting to make bigger profits at the expense of public health."

Mr Prescott's review of the water industry - expected to allow rival water firms to vie for customers in the same area for the first time - was first announced by the Chancellor, Gordon Brown, in the Budget in March and should have been published by now. DETR officials, while refusing to give reasons for the delay, confirmed that it would now not be released until next year at the earliest.

Last week, however, the water regulator, Ian Byatt, was trying to up the pace by instructing water companies to prepare to allow other suppliers access to their pipes. And John Redwood, the shadow environment secretary who was involved in the original water privatisation, said that full competition was vital "to get prices down". Water bills have risen five-fold in real terms over the past 20 years.

"DETR people still believe that you will end up poisoning people if you allow competition, but that's clearly preposterous, just as there is no evidence that privatisation was the major or even a contributory cause of the Paddington crash," he said.

Labour MPs are already complaining about bulging postbags from constituents concerned about the Government's plans to "privatise air" and are unlikely to want to weather any further controversy of that sort at a politically sensitive time.