COMMONS

Water market: more competition, better protection for consumers

01 February 2013

The Government's plans for more competition in the water market receive a qualified welcome from the Environment, Food and Rural Affairs Committee. But more urgency needed to push through changes that will improve resilience and flood prevention.

Launching the report on the pre-legislative scrutiny of the Draft Water Bill published today, Committee Chair, Anne McIntosh MP, said,

"The Government has been too slow to implement changes that would protect homes and businesses from the shattering effects of flooding. New laws will increase competition in the retail water market - while we welcome those changes, Government must get on with implementing changes that would reduce flooding - many of which were recommended nearly five years ago."

The MPs highlight the importance of managing our water resources sustainably and efficiently. They recommend that encouraging sustainable development be elevated to a primary duty of the regulator and that the Government brings forward legislation to enable the abstraction regime to be reformed by 2022. In addition they recommend implementation of existing provisions on bad debt and encouraging greater use of water meters, both of which would lower customers' water bills.

Miss McIntosh added,

"Widespread flooding has once again wrought devastation and heartache in communities across the country, including in my constituency. Solutions that would reduce the impact of flooding are out there and would make a difference but successive Governments have not had the mettle to put them into practice."

The Draft Water Bill sets out proposed new legislation, much of which would extend competition in the water industry. The MPs are concerned that the Draft Bill contains only a broad framework and leaves too much of the important detail to be decided by the regulator, Ofwat, or to be introduced through secondary legislation that receives less parliamentary scrutiny.

In welcoming the opportunities for greater competition within the retail water sector (providing billing services) the MPs ask the government to make amendments that would ensure householders are protected. However, the report concludes that the Government needs to undertake further work before embarking on "upstream" competition, which would enable companies to compete in the supply of water.

Commenting further, Committee Chair Anne McIntosh added,

"The lack of detail in the legislation leads to uncertainty for investors which could result in higher financing costs for water companies and higher water bills for customers. We want the Government to put enough meat into this legislation that investors and water companies can have the confidence to invest. We want to see provisions in the legislation that protect consumers and we do not accept the Government's arguments that those protections would undermine investors' confidence in the water industry."

Further information

Image: iStockphoto

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