Select Committee on Environmental Audit Minutes of Evidence


Examination of Witnesses (Questions 137-139)

3 MARCH 2004

MS FIONA PETHICK, MR PHILIP FLETCHER AND MR BILL EMERY

  Q137 Chairman: Good afternoon, thank you for joining us and thank you for your written submission. You were able to hear the evidence session immediately before you and no doubt you may wish to comment on some of the things we have been discussing. Can I ask you first about one of the new elements in the process which is the cost of the benefit analysis which has been developed by the Environment Agency, I think you were involved in determining the methodology behind that?

  Mr Fletcher: We have certainly consulted as the methodology has developed and we accept that what the Environment Agency is now doing is a considerable improvement on their multi-attribute techniques approach, which was the approach used, as some of the longer standing members of the Committee may remember at the previous review. However, I do think it is worth pointing out that cost-benefit analysis, echoing Water UK, in the environmental field is a very difficult science and it is still being developed. We believe there is more to be done and it is worth noting that cost-benefit analysis, even in this still fairly elementary form, has only been applied to some 10% of the programme which the environmental regulators are seeking because the rest of it is driven by the statutory requirements and is therefore declared to be necessary. I think for customers it is regrettable we are not looking more at everything in terms of whether cost matches the value to be achieved, but I recognise we can only make progress over time.

  Q138 Chairman: Given those caveats in practical terms, has it been a worthwhile exercise for you?

  Mr Fletcher: Yes, it has. It all helps to advance things. We are not in this whole business for a year, two years, five or 10 years, it is a very long-term industry, it will be making progress over a very long time and the progress that we make incrementally will yield fruit steadily over time. Could I on the back of that just make the point that we are not going to go backwards. This sort of debate can get rather confused with issues like cuts. The huge improvements that have been secured by the water industry at the expense of its customers, many of them environmental improvements, over the last 15 years are secure and will remain secure, more or less whatever it takes, in terms of additional pressures on customers' bills.

  Q139 Chairman: That is of some comfort. We were told yesterday by the Environment Agency that more than just querying the reliability of the cost-benefit process, which is known to be difficult, you had some specific criticisms to make about some of the outcomes of that, are you able to shed any light on that?

  Mr Fletcher: I was not unfortunately able to be here and for some reason my colleague who was here was not able to get into the room for the first ten minutes so I am not fully aware of what was said.


 
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