You can ask the neighbour to relocate. He may go for it as it would probably be cheaper than re-laying block paving or he may say he has an easement allowing him to run his water supply under your drive. You can also be obstructive and deny him access to your property. Then he may take you to court citing the easement, but at least the court will give him clear rules to follow. Best to be seen making reasonable requests first though.
Quite honestly, I'd write him a letter saying if he needs to dig up your drive, you'll need to know exactly how much he needs to dig up and then you'll get a quote from the person who laid the drive in the first place to carry out the permanent repair to the same standard as the rest and it is a condition of him being allowed access that he pays you the money BEFORE he digs up the drive on the understanding that you will give him any money left over if your repair work proves cheaper, and a copy of your firm's invoice. Also that you want to see the Public Liability Insurance of the person/firm doing his work if you're concerned the person is not a bona fide tradesman.
In all honesty, I water supplies are often 'moled' so no digging would be required. I had the impression that a new water supply pipe wouldn't usually cost more than two thousand, but I'll leave others to comment on that.