Environment, Food and Rural Affairs CommitteeWritten evidence submitted by Waterwise

Overall

1. Waterwise welcomes the commitment throughout the White Paper to using water more sustainably, and many specific statements to this end. We look forward to following these up with the Government and regulators as the draft Bill and guidance develop. However, we are concerned that the lack of concrete policies means the challenge laid out by Ministers will not be met. In addition, we lament the lack of a central strategy to manage the transition to full metering.

Waterwise Welcomes the following Content in the White Paper:

2. There is a need for water efficiency beyond the areas currently defined as water-stressed.

This is a major step forward.

3. There will be a link between water efficiency and the Green Deal: hot water included in ECO and Green Deal measures and cold water in Green Deal advice. Water companies have an opportunity to work with the Green Deal.

The consultation paper DECC issued in parallel to the White Paper recreates barriers such as the additionality clause, which has prevented the water and energy sectors working jointly in homes.

4. Water-efficient technologies can play a role in the green economy.

5. Government support for a campaign to save water.

This should involve the third and private sectors. It should not focus on financial drivers alone.

6. The evidence that water efficiency works and is cost-effective is now available.

7. There will be a clearer, tidier link between Water Resource Management Plans (WRMPs) and price determinations and drought plans. White Paper policy priorities will be made explicit to the water companies, through WRMP, and to Ofwat, in the new guidance.

8. There should be a wider cost-benefit analysis, reflecting social and environmental costs and benefits, and a longer-term horizon in price determinations.

9. The policy priorities from the White Paper (two of the four are “A long term perspective” and “Better reflecting water scarcity”) will be translated into a clear direction for companies, and reflected in the strategic policy statement and social and environmental guidance to Ofwat.

10. More demand management measures will be needed in the WRMP process, and the Government will be more specific on these requirements in guidance.

11. Water efficiency is important in adaptation planning for businesses.

12. Water scarcity has an impact on energy generation, and this will be investigated.

13. Metering is important in driving sustainable water use.

14. All stakeholders must change how they value water.

15. The understanding of motivations, barriers and effectiveness of messages will be improved.

16. “Water companies must have both the incentive and the freedom to try novel approaches: they must believe it to be worthwhile to take risks, benefiting from success rather than being penalised for failure. Ensuring traditional capital projects are not more financially attractive than operational spend must be part of this reorientation of the incentive structure.”

Addressing this capex bias would be a major factor in increasing the scale of water efficiency activity in the sector.

17. The increase in competition is expected to drive an increase in water efficiency, as in Scotland.

18. Support for a voluntary water efficiency label.

Concrete policies which Waterwise would have liked to have seen, to underpin Ministerial ambition on water efficiency

19. An overall government aim on water efficiency to which all policies and measures contribute.

20. Only social tariffs which drive water efficiency to be used.

21. Water efficiency retrofit and advice offered to all customers with new meters or affordability problems.

22. Evolution of the water efficiency targets on the water companies into a more mainstreamed industry approach (as in the energy sector).

23. Further measures to ensure sustainability in homes and buildings, such as a water efficiency element in social housing standards.

24. New green financial products such as mortgages to include water efficiency.

25. A single plumbing standard on water efficiency.

26. Support for water neutrality partnerships, whereby developers undertake local water efficiency retrofitting in existing schools and businesses so that water demand does not increase.

Sustainability Duty

27. Waterwise supports the Government’s view that in the absence of a primary duty on sustainable development, the price review process must include a broader assessment of benefits. The “strong steer”, central to its future guidance, which Government commits to providing to Ofwat on the interpretation of the current duty, will be fundamental to the scale of delivery of water efficiency in the next price review (and, as the Government says, a test of whether a primary duty is necessary).

Customers

28. Customer behaviour is key to more sustainable use of water. However, Waterwise is concerned at the commitment to “put customers at the heart of decision-making in the water sector”. Government, regulators and the water industry itself are better-qualified than customers to make complex decisions based on decades-long supply-demand scenarios and investment decisions.

Abstraction

29. The commitment to the role demand management will play in abstraction licensing reform—the seven objectives include “drive efficiency in water use”—is welcome. This must be honoured, to avoid the discredited policy approach of “predict and provide”. For example, supply-demand scenarios should include retrofitting an entire town for water efficiency rather than relying solely on the contribution of abstraction to supply.

Metering

30. The White Paper speaks glowingly about the importance of metering in affordability and managing demand. It is therefore disappointing that the Government rules out a strategic transition to full metering in favour of a patchwork of local solutions: and counter-productive, since affordability issues will be exacerbated during the transition, if unmanaged. A Government commitment to a managed increase in metering, to meet Walker’s 80% target for England by 2020—supported by water efficiency retrofit and advice, and social tariffs—would have been more effective.

Next Steps

31. The White Paper sets out laudable aims on water efficiency. In the absence of concrete policies, it is vital that the strategic policy statement, social and environmental guidance for Ofwat, social tariff guidance, draft WRMP guideline and draft Bill translate these into actions to deliver water efficiency on the scale of the ambition set out in the White Paper.

January 2012

Prepared 4th July 2012