asked Her Majesty's Government:

Further to the Written Answer by Lord Rooker on 21 April (WA 272), how Ofwat plans to balance the needs of consumers, the environment and water leakage when the Government's new house building programme begins; and whether the final water leakage target will cause difficulties for the water and sewage sectors. [HL5504]

Guidance from the Environment Agency and from Ofwat requires water companies to take into account the Government's projections for housing development when preparing their water resource management plans and their draft business plans.

Ofwat also requires companies to take into account all of the costs and benefits—including environmental and social costs and benefits—of different options to maintain a sustainable, economic balance between supply and demand. Ofwat expects companies to balance supply and demand in a way that delivers best value for consumers and the environment.

Controlling leakage is one of the means by which companies can maintain a balance between supply and demand. Ofwat expects companies to maintain leakage at a sustainable, economic level, again taking account of all of the costs and benefits of leakage control compared with the costs and benefits of other options to balance supply and demand.

Ofwat recently completed a study of leakage issues, and has required companies to adopt a number of improvements to their methodologies. The targets that Ofwat will agree for companies for the period 2010-11 to 2014-15 (as part of the 2009 periodic review of prices) will be challenging but achievable.