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05May94 UK: WATER CONTRACTORS FEAR SPENDING RUN-DOWN.

Water contractors and suppliers fear a run-down in capital spending as the industry holds its breath ahead of the results of a financial review in late July.Watchdog Ofwat is running the rule over water companies' strategic business and spending plans for the next five years before clearing the next water bill increases.But contractors and suppliers say work has tailed off ahead of the review and that programmes will suffer unless they are tied to profit margins or legal obligations.Firms bidding for water and sewerage pipelines estimate the water companies have underspent by £280 million, compared with the figures in company accounts.Chris Rees, secretary of the Sewer Renovation Federation (SRF), said: 'Ofwat told us in January 1993 that at the end of five years everything should balance, but it now appears this is a 15-year period extending into the 21st century.'Three of the SRF's 19 members have gone bust in the past few years, and an independent analysis of their accounts shows their joint annual turnover has fallen from £17 million to £10 million.And Mr Rees said some schemes had been deferred repeatedly. Both the SRF and materials suppliers in the Water Industry Suppliers Group (WISG) warn that Britain's underground infrastructure will suffer.WISG chairman Geoff Nicholls said: 'Capital spending has increased, but the focus has been on water treatment plants to deal with new regulations.'A spokeswoman for Ofwat said improving water quality had been the priority, but that it had always been expected that the focus would then shift to infrastructure renewal. CONSTRUCTION NEWS