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 www.parliament.uk/efracom Back
6
Water for Life, p3 Back
7
Ibid, p9 Back
8
Q 256 Back
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