A MAJOR shake-up of the water industry which could see bills in the North West fall is set to be announced.

Factories and residents could soon choose which company they buy supplies off - but the radical plans have been attacked as 'window-dressing' by angry Labour MPs.

The move comes just days after United Utilities announced 1,700 job losses among North West Water and Norweb staff and a 5.8 per cent rise in bills from this month.

Government ministers are believed to be increasingly unhappy about the privatised water companies and the fact that average bills across the country have almost doubled since privisation. Under the plan the water companies will sell water to each other to meet contracts with customers with the possibility of building connecting pipes between different areas.

MInisters hope that competition could be introduced within months, with large industrial users the first to benefit.

They will pay the other company for the water and it will then be piped into their local regional network to make up for the shortfall. Under the proposals domestic customers could have the chance to choose which water company supplies them in around two years.

Environment Secretary John Gummer promised it would not increase bills to ordinary householders and would bring prices down in the long run, but Labour's Frank Dobson slammed it as "window dressing". The Shadow Environment Secretary said the change was a sham but also a recognition that privatisation had failed to benefit customers.

He said it would allow only a limited transfer of water and let big firms shop around for a cut price, begging a question about whether it might lead to higher domestic bills.

Mr Gummer was announcing the plans in the Commons this afternoon and allowing three months of consultation.

North West water watchdog Anthony Goldstone today welcomed the thrust of the proposals.

"Anything which removes the monopoly is something to be welcomed."

But Rossendale and Darwen Labour MP Janet Anderson said: "This is ludicrous. How are they going to do it?

"This is an admission that privatisation has not worked."

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