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08Oct92 UK: SPENDING ON INFRASTRUCTURE BY WATER SERVICE COMPANIES IS ON TARGET ACCORDING TO REGULATORY BODY OFWAT.

Spending on infrastructure by water service companies is broadly on target despite a sharp fall in tender prices and changes in programmed work.Water watchdog Ofwat last week estimated construction prices were running 15 per cent below levels assumed in 1989 because of the recession.Water and Sewage companies have spent some of the extra cash on accelerating their programmes to meet EC standards for bathing water and waste water.But this has knocked back investment elsewhere. In the five years to 1995 the industry is expected to underspend £89 million on water resources, £77 million on planned sewage upgrading and £5 million on water resources.The shortfall will be covered by a sharp rise in sewage and water treatment spending of more than £1,000 million above initial forecasts.But Ofwat director general, Ian Byatt said customers' will drop by a further 1 per cent next year.This will not affect infrastructure charges which house builders complain are too high.Ofwat's annual report said spending last year totalled £3,100 million. This compares with £2,900 million in 1990-91 (1991-92 prices) and falls into line with industry investment targets.Ofwat is confident that water service companies will meet the expected 1994 spending peak.Mr Byatt also reported that half of the infrastructure programme was designed in-house. Consultants won just 20 per cent of available design work, behind manufacturers which specified 25 per cent.Three-quarters of construction work went to competitive tender and further 16 was let through negotiated contracts.Mr Byatt added: 'Overall these figures show that the companies are meeting their investment requirements.'