British water suppliers face scrutiny after government promises action on prices

LONDON Fri Nov 1, 2013 6:19pm GMT

Water drips from a standing pipe on Boucher Road in Belfast, Northern Ireland December 30, 2010. REUTERS/Cathal McNaughton

Water drips from a standing pipe on Boucher Road in Belfast, Northern Ireland December 30, 2010.

Credit: Reuters/Cathal McNaughton

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LONDON (Reuters) - British Prime Minister David Cameron will take action to help households struggling to meet rising water bills, his spokesman said on Friday in a signal that Britain's biggest water companies will face greater political scrutiny over pricing.

His comments indicated that water supplies could join energy companies at the centre of a political row over the rising cost of living ahead of an election in 2015.

"There'll be some progress next week on water bills," the spokesman told a press briefing. "The prime minister wants to see household expenditure being brought down."

He declined to give any further details.

The soaring cost of everything from gas to train tickets has shot up the political agenda since the return of economic growth forced the opposition Labour party to shift its line of attack to the decline in real incomes that has squeezed voters.

Defra, the government department in charge of water, confirmed the moves.

"We want to ensure customers get a good deal from the water sector and will be setting out our approach next week," it said in a statement.

Thames Water, privately-owned by Australia's Macquarie and other investors including China Investment Corporation, and regulator Ofwat declined to comment on the spokesman's comments.

Pennon, one of Britain's main water players, also declined to comment. FTSE 100 company Severn Trent could not immediately be reached.

Labour leader Ed Miliband told the Western Morning News earlier on Friday that the water industry should be "scrutinised to make sure it's working properly".

Britain's water industry regulator Ofwat said this month it planned to block an 8 percent price hike proposed by Thames Water because it was not justified.

Labour's environment spokeswoman Maria Eagle said the party would look to amend existing draft legislation, review the need for tougher regulation, and push for new ways to help reduce bills for low-income households.

Lawmakers this week publicly questioned energy executives over their prices after some of them raised their charges by more than three times the rate of inflation, frustrating consumers whose utility bills have risen by 24 percent over the last four years.

(Reporting by Sarah Young, William James and Limei Hoang, Editing by Angus MacSwan)

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