WATER workers were given a brief respite today when United Utilities unveiled rising half-year profits - but not the widely expected job losses.

However, the breather could prove to be short-lived, as the company said it was drawing up a business plan to cut costs by £400million over the next five years.

The group - which runs North West Water as well as electricity company Norweb - said the cost cuts were needed to meet price controls and efficiency targets set by the water and energy regulators.

But there was good news for customers as the group said those who take services from North West Water and Norweb will benefit from an average £48 cut in their bills next year.

And the group announced pre-tax profits of £233.3 million for the six months up to September 30 - 2.9 per cent up on 1998.

Chief executive John Roberts said: "These regulatory reviews are extremely tough, but the likelihood of achieving a substantially more favourable outcome does not justify the commitment of resources that a reference would involve.

"Prolonging uncertainty would not be in the interests of shareholders or customers.

"We will be imaginative and innovative in reducing costs. The multi-utility nature of our business gives us a variety of opportunities to build on efficiencies we are already making, including closer integration of our regulated operations and of back-office services such as call centres.

"Other ways of securing savings include the use of technology, reviewing our property portfolio and outsourcing."

The group is in the process of finalising a business plan to reduce operating costs and will announce further details at the beginning of February.

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