Conclusions and recommendations
Long term reform
1. The
recent drought has underlined the importance of introducing a
reformed abstraction regime able to provide sustainable and reliable
supplies of water. The timescales set out in the White Paper lack
ambition and unnecessarily risk further environmental damage.
We believe that ten years is an adequate period in which to plan
and implement reform of the abstraction regime and recommend that
the reformed regime be in place no later than 2022. (Paragraph
10)
2. Even
with this shorter timescale, momentum may be lost. We recommend
that the Government work with regulators, water companies and
environmental groups to produce a workplan setting out key milestones
for the duration of the reform period, and annually report on
progress against them. (Paragraph 11)
3. We
are pleased that the Environment Agency and the Minister acknowledged
the importance of ensuring that the agricultural sector retains
access to a reliable water supply. As the reforms go through,
we recommend that the Environment Agency maintains a constructive
dialogue with farmers and food producers, recognising their key
role in promoting self-sufficiency and food security. (Paragraph
13)
4. We
urge Defra and the Environment Agency to work with the Institution
of Civil Engineers to complete the reviews of both A guide to
the Reservoirs Act 1975 and the Floods and Reservoir Safety guidance
by December 2012. (Paragraph 14)
Short-term reforms: Restoring Sustainable Abstraction
5. The
current mechanism for the removal of environmentally unsustainable
abstraction licences is clearly unsatisfactory and is causing
ongoing and severe damage to the environment. We recommend that
the White Paper's proposal that funding for the Restoring Sustainable
Abstraction Programme be incorporated within the price review
process be implemented as a matter of urgency. Defra should work
with Ofwat and the Environment Agency to ensure that this change
is made in time for the RSA programme to funded from the 2014
price review. (Paragraph 18)
Bulk trading and interconnections
6. Defra's
decision to focus on maximising "strategic" interconnections
allowing water to be transferred over relatively short distances
is a sensible starting point and we look forward to the Environment
Agency's forthcoming overview of interconnection options. Defra
should remain open to considering whether large-scale infrastructure
may be an appropriate and cost-effective solution in some circumstances.
Defra and the Environment Agency should in particular look to
exploit interconnection opportunities presented by other large
infrastructure projects, thus minimising environmental impact
and economic costs. (Paragraph 23)
Floods, drainage and the automatic right to connect
7. Five
years on from the devastating floods of 2007 we are not convinced
that Defra's work to improve the management of surface water has
been carried out with sufficient urgency. Defra must ensure that
implementation of the relevant provisions of the Flood and Water
Management Act is not subject to any further unnecessary delay.
The White Paper says disappointingly little about the retrofitting
of Sustainable Drainage Systems and we recommend that Defra develop
more concrete proposals to encourage this. (Paragraph 29)
Flood insurance
8. It
is deeply worrying that with only a year remaining until the current
Statement of Principles on flood insurance is due to expire, and
eighteen months on from this Committee's call for urgency in establishing
its replacement, Government has not yet been able to reach agreement
with the industry. Defra must redouble its efforts to achieve
a workable and affordable solution to this issue. (Paragraph 32)
Metering
9. It
is extremely disappointing that a White Paper that places such
an emphasis on valuing water says so little about metering. With
water set to become an increasingly scarce resource, we believe
that the Government must use water meters as a means to encourage
responsible use of water. We recommend that the Government set
a clear and ambitious objective to increase levels of metering,
taking account of Anna Walker's recommendation that metering penetration
reach 80% by 2020. (Paragraph 41)
Rainwater Harvesting and Recycling Water
10. We
recommend that Defra take more active steps to promote rainwater
harvesting and water recycling and seek to incorporate incentives
or requirements for their inclusion in the design of new developments.
(Paragraph 44)
Leakage
11. We
recognise the progress that water companies have made in reducing
leakage levels but urge companies and the regulator to do more
to reduce the amount of water that is wasted through leakage.
We recommend that in reviewing guidance to companies on the Sustainable
Economic Level of Leakage, the Government and regulators should
take account of the impact that leakage levels have on customers'
willingness to engage with efficiency measures, if necessary carrying
out further research to seek to quantify this impact. (Paragraph
47)
Affordability
12. It
is simply unacceptable that, at a time when so many are struggling
to afford their water bills, customers face the additional burden
of subsidising those who refuse to pay what they owe. Legislation
already exists that would make it easier for water companies to
recover bad debt and the Minister acknowledged that money recovered
from debtors would be "money in the pocket" for those
who do pay their bills. We urge the Department to implement the
relevant provisions of the Flood and Water Management Act without
further delay. (Paragraph 55)
13. Take-up
levels of WaterSure suggest that many of those who currently qualify
for help with their bills do not receive it, and we are concerned
that company social tariffs will face similar barriers to take-up.
We recommend that the Government take a more proactive approach
to publicising the help that is available to poorer customers.
Defra should work with the Department for Work and Pensions to
ensure that all means-tested benefit claimants are given the option
to consent to the sharing of their data with their water company
for the purposes of help with affordability issues, and should
also use the opportunity to inform claimants of existing support,
such as the WaterSure tariff. (Paragraph 59)
14. We
recommend that the Government make clear that the design and promotion
of company social tariffs should not focus exclusively on customers
in receipt of benefits to the detriment of others who may struggle
to afford their bills. (Paragraph 60)
Market Reforms: Timescales
15. Increased
competition in the water sector will bring clear benefits to customers.
The Government should not delay reforms because of an overcautious
approach to investor confidence. We recommend that Defra open
the retail market three years from Royal Assent to a Water Act.
Reforms to the upstream market may necessarily follow a different
timescale to the retail reforms, but they should not be unduly
delayed. (Paragraph 68)
The Scottish experience
16. The
experience of introducing a competitive water market in Scotland
and the lessons learned from it must be fully exploited as the
White Paper's proposals for market reform are implemented. (Paragraph
71)
A joint Anglo-Scottish market
17. We
welcome the proposed joint Anglo-Scottish water market but would
be concerned should this lead to any duplication or conflict between
regulators, or any additional bureaucracy for water companies
and their customers. We recommend that Defra work with the Scottish
Government to ensure that the most effective regulatory model
is adopted, including an assessment of whether a single regulator
for the joint market may be appropriate. The Government should
ensure that protocols setting out the relationship between, and
respective duties of, the English and Scottish regulators are
in place before the joint market opens. (Paragraph 73)
Future structure of the water sector
18. Defra
should consider setting out a requirement for functional separation
in the draft Water Bill. Defra should also consider setting out
in legislation a lighter-touch regulatory regime for companies
which have legally separated their retail and wholesale functions.
(Paragraph 78)
19. We
are not persuaded by the Minister's arguments against allowing
a mechanism for companies to voluntarily exit the retail market
and we agree with the English and Scottish regulators that providing
an exit route should enhance competition and efficiency in the
sector. We note in particular Ofwat's view of the importance of
an exit mechanism in achieving a well-functioning and dynamic
market. We recommend that Defra include such a mechanism in the
legislation implementing the market reforms. (Paragraph 80)
Consumer representation
20. It
is essential that there is a strong voice to represent the interests
of consumers through the far-reaching reforms to the water sector
to be implemented over the coming years. We recommend that Defra
commit to retain the Consumer Council for Water in its current
form for a period of three years after the White Paper's market
reforms are implemented. Any new arrangements for consumer representation
which are introduced subsequently must take account of the unique
needs of business customers. (Paragraph 84)
21. We
expect the conclusions and recommendations in this report to be
taken fully into account as Government draws up the draft Water
Bill. We look forward to the timely publication of the draft Bill
for Parliamentary scrutiny. (Paragraph 87)
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