In a written reply to a parliamentary question, environment secretary John Gummer said:
'I commissioned in September 1995 a review of water resources and supply arrangements in England and Wales in the longer term. It has been undertaken with the full involvement of representatives of the water companies and their regulators - the Environment Agency, the Office of Water Services and the Drinking Water Inspectorate. Other organisations have contributed views.
'As a result of that work, my department and the Welsh Office are publishing today a paper entitled 'Water Resources and Supply: Agenda for Action'. The paper confirms that the framework within which public water supplies are provided and developed is sound. It discusses the various factors which need to be considered in refining longer-term arrangements and identifies actions which the government will take, together with actions for the water companies and their regulators.
'Demand on existing water resources needs to be managed in order to reduce the need for new resources. This can be done by encouraging efficient use of water, through the development of effective and equitable charging arrangements for water supply, and by companies reducing leakage to economic levels. Against the background of maximum economic use of demand management and a clear understanding of the capabilities of each discrete water resource and supply system, there needs to be a dialogue between water companies and their customers on the balance to be struck between higher security of supply and higher costs, taking full account of the need for sustainable development.
'A case for new water resource development will be compelling only if there is insufficient scope for deployment of existing resources to meet properly-managed demand. Where there are local resource pressures, water companies need to consider the scope for bulk transfers of water or redistribution of water abstraction licences. The government believes that it is important that market mechanisms, including price signals, provide incentive for this and will publish a consultation paperon economic instruments in relation to water abstraction in early 1997.
'The Environment Agency has the central role in the planning of water resources at the national and regional levels. However, water companies have the duty to develop and maintain water supply systems and it is their responsibility, with full involvement of their regulators, to draw up plans for the timely development of new resources if the projected demand for water in particular areas cannot be reasonably or reliably managed to remain within the capacity of all the available existing resources. Where the existing resources are most finely balanced against projected demand increases, new resource planning should proceed in parallel with the continued implementation of measures to meet demand from the existing resources and against the background of continuous review of that balance.
'The paper also draws attention to the various contributions which water companies, manufacturers of water-using equipment and water consumers can all make to the sustainable management of water resources through water conservation. This Agenda for Action is for us all and outlines a strategy for the environmentally sustainable provision of water supplies in the longer term.'