More 2 14/11/99

Britain's water industry is in state of flux. Later this month, the industry watchdog is expected to order hefty reductions in water bills. And this week, an influential think tank, the Institute for Public Policy Research, stepped up pressure on the Government to end profitable monopolies in the industry.

The water companies have had it good since privatisation in 1989 -- seeing profits double to £2 bn. But are the years of easy money over? This week (14.11) the Money Programme interviews Chris Mellor, managing director of Anglian Water, about his vision for the future.

Anglian is at the forefront of the drive towards competition - it has launched 55 bids to take over contracts to supply water outside of its region. The company believes it can survive and thrive in a more cut throat market. And it argues that competition is the way to lower prices long term

. The water industry regulator OFWAT angered Anglian, however, with a warning that it would compel price cuts -- averaging 14 per cent nationally. A final decision on the cuts will be announced on November 25th. Chris Mellor argued the move could hamper environmental programmes launched by the water companies.

This is despite rising profits and dividends in the industry. Anglian's profits doubled in 1999 to £223.7m and the company paid out £120m in dividends. Critics, including OFWAT, believe consumers can benefit from both competition and price caps.

Terry Messenger