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

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)


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)


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)


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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Prepared 5 July 2012