The Water White Paper - Environment, Food and Rural Affairs Committee Contents

1  Introduction

1.  With much of the UK gripped by a severe drought in the first half of 2012, the importance of managing our water resources effectively has been brought to the forefront of public attention. Defra's much-anticipated Water White Paper, Water for Life, was published on 8 December 2011. It builds on a series of independent reviews of aspects of water policy beginning with Sir Michael Pitt's 2008 report on the devastating floods of 2007,[1] and culminating in David Gray's Review of Ofwat and Consumer Representation, published in 2011. The previous Government had also commissioned independent reviews into competition and innovation in the water market (Cave, 2009)[2] and charging for water and sewerage services (Walker, 2009).[3]

2.  The Flood and Water Management Act 2010 implemented some of the reforms proposed by these reviews, in particular Pitt's recommendations on flooding. Later in 2010 this Committee inquired into flooding and water management policy with a view to assessing progress and identifying key priorities for the forthcoming Natural Environment and Water White Papers. The Committee's First Report of Session 2010-12, Future flood and water management legislation, was published in December 2010 and recommended that the Water White Paper should:

  • set out specific proposals to enable the wider value of water to be reflected in policies and charges, including a clear programme for reform of the abstraction licensing regime;
  • propose a clear strategy for implementation of a wider programme of metering and variable tariffs to help spur water efficiency while protecting those on low incomes from unaffordable price rises;
  • propose stronger measures to enable water companies to recover bad debts; and
  • pave the way for measured introduction of competition into the water industry, which maintains certainty for investors over the future regulation and structure of the industry.[4]

3.  The publication of the Water White Paper presented an opportunity to return to these and other issues which we considered in Future Flood and Water Management Legislation. We announced our inquiry on 20 December 2011 and invited written evidence addressing "whether the White Paper's aims are supported and the likelihood of these objectives being effectively fulfilled by the approach it proposes".[5] We received almost sixty written submissions and held four oral evidence sessions. On 22 February 2012 we heard from Ofwat, the Water Industry Commission for Scotland and Business Stream. On 6 March we took evidence from the Environment Agency and the Consumer Council for Water. Water UK, Anglian Water and United Utilities, followed by WWF-UK and Action for the River Kennet, gave evidence on 7 March. Our final session, with Richard Benyon MP, Parliamentary Under-Secretary of State for Natural Environment and Fisheries, took place on 27 March. We are grateful to all those who gave evidence in person or in writing.

The Water White Paper

4.  The Secretary of State's foreword to Water for Life states that it describes a "vision" for water management "in which the water sector is resilient, in which water companies are more efficient and customer focused, and in which water is valued as the precious resource it is."[6] The White Paper contains a raft of measures which set out how the Government intends to tackle the increasing pressures on our water resources caused by climate change and population growth. It sets out the principles and timetable for an overhaul of the abstraction regime, which governs how and when water can be taken from the environment for use by business, agriculture and the public; and explains how improved interconnections between water catchments will allow water to be moved more easily around the country to areas of need. It details Government policy on charging for water and providing help to those who struggle to afford their bills. Proposals in the White Paper to reform the water market, currently characterised by its regional monopoly structure, will see competition introduced for all business users of water, with the ultimate aim of increasing efficiency in the sector and reducing bills for both business and domestic customers.

5.  Many of the proposals included in the White Paper, not least the market reforms, will require primary legislation. During the course of our inquiry the Water Industry (Financial Assistance) Act 2012 was passed, addressing a specific commitment in the White Paper to provide Government funding to reduce disproportionately high water bills in the South West region. However, the bulk of the legislation implementing the White Paper's reforms is expected to be contained in a comprehensive draft Water Bill which the White Paper said would be published "in early 2012".[7] We note that with the summer recess fast approaching, no draft Bill has yet been produced. We call on Defra to publish the draft legislation as soon as possible to provide a greater level of certainty to water companies, regulators and the public about what the White Paper's proposals will mean in practice. We welcome the Minister's assurance that the draft Bill will be made available to this Committee for full pre-legislative scrutiny and we look forward to examining it in due course. [8]

1   Sir Michael Pitt, Learning Lessons from the 2007 Floods, June 2008 Back

2   Professor Martin Cave, Independent Review of Competition in Water Markets; Final Report, April 2009 Back

3   Anna Walker, The Independent Review of Charging for Household Water and Sewerage Services: Final Report, December 2009 Back

4   Environment, Food and Rural Affairs Committee, First Report of Session 2010-12, Future flood and water management legislation, HC 522 Back

5   Complete terms of reference for the inquiry can be found at Back

6   Water for Life, p3 Back

7   Ibid, p9 Back

8   Q 256 Back

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Prepared 5 July 2012