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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