Environment, Food and Rural Affairs Committee

Session 2004-05
1 December 2004 Publication of Report:

1 December 2004 Publication of Report:
Environment Committee questions water costs

Water companies must be more transparent about how they set water rates and what water customers are expected to pay for, according to a report released today by the Environment, Food and Rural Affairs Select Committee.

In the final report of an inquiry into the five-yearly review of water prices, the Committee says that it is time to look more closely at exactly what water customers are paying for. The costs of cleaning up agricultural pollution and urban runoff, as well as the increasing costs of climate change-including addressing the increased risk of sewer flooding-should not be included in water charges. The Committee considers that the Government must begin to address these costs in other ways under the “polluter pays” principle.

The Committee also believes that the Government must address the difficulties faced by lower income households. While benefit levels are set nationally, water rates vary across regions and may be much more expensive in some parts of the country. 

The report calls on Government to look into the process of the water review itself. Although the Committee welcomes the transparency of the earlier stages of the review, the later stages were less clear. Customers need to know what they can expect water companies to deliver. The bidding process for deciding water prices may be open to accusations of ‘horse trading’, with striking differences between the water companies’ proposals and Ofwat’s response. The Committee considers that the Government must ensure that this is ironed out in the next round.

Rt Hon Michael Jack MP, Chairman of the Committee, said: “The further rise in water bills over the next five years flags up the growing challenge of water affordability for Britain’s low-income families. In dealing with this challenge, the Government will also have to consider carefully the growing cost to water users of further environmental legislation, the effects of climate change and whether a five-year pricing cycle is the best way to deal with this problem.”



The report follows an inquiry announced on 28 June 2004 and conducted in October and November 2004.

The Committee received written evidence from a number of interested parties. The Committee took oral evidence from: Ofwat, the Department for Environment, Food and Rural Affairs, Water UK, WaterVoice and the Environment Agency and Elliot Morley MP, Minister for Environment and Agri-Environment, Department for Environment, Food and Rural Affairs.

The full report will be available on our website from around 3.30 pm on 1 December. Website: http://www.parliament.uk/efracom