Reform Of The Water Industry
The Parliamentary Information Office of the Parliamentary Yearbook is currently
gathering news items for major features on the effects of climate change in the next
edition and has been monitoring response to the Natural Environment White Paper
and the Government’s draft Bill, “Water for Life”
In the Queen’s Speech on 9th May it was announced that a draft Bill will be published to
reform the water industry in England and Wales.
The draft Bill, Water for Life, describes a vision for future 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 and finite resource it is. And it explains that we
all have a part to play in the realisation of this vision.
One of the Key reforms proposed was the introduction of a package of reforms to extend
competition in the water sector by increasing choice for business customers and public
sector bodies and by making the market more attractive to new entrants
In a report published last week, the Environment, Food and Rural Affairs Select Committee
examined the proposals to reform the water industry in England to increase competition in
the sector. MPs conclude that Defra should set a clear target date for opening a competitive
retail market for water, and should take account of lessons that can be learned from
Scotland, where retail competition has already been introduced.
Anne McIntosh MP, Chair of the Committee said:
"We welcome plans to increase competition in the water industry, although we believe that
the White Paper’s proposals for reform will fail to deliver a well-functioning retail market. We
suggest how to remedy this and we look forward to examining revised proposals in more
detail once the draft Water Bill is published".
Today the plans to reform the water industry were published in Parliament as the
Government seeks to slash red tape, drive innovation and open the market to new
Under the proposals, which have been published for pre-legislative scrutiny, all businesses
and public sector bodies in England will be able to switch their water and sewerage
suppliers, allowing them to obtain more competitive prices, improve their efficiency and
tender for services better suited to meet their individual needs.
Evidence suggests that opening up the water market and allowing businesses to switch
supplier could deliver benefits to the economy of £2 billion over 30 years. In Scotland, after
similar reforms were introduced, the public sector alone is set to save around £20 million
over the next three years.
Secretary of State for Environment, Caroline Spelman said,
“This draft Bill will create a modern customer focused water industry and for the first time all
businesses and other organisations will be able to shop around for their water and sewerage
“By slashing red tape we will also stimulate a market for new water resources and incentivise
more water recycling.
“This will ensure that the water industry continues to provide an affordable and clean water
supply which is essential for the nation’s economic growth while at the same time protecting
the environment for future generations.”
Businesses, charities and public organisations with multiple sites will also be able to receive
just one combined water and sewerage bill for all their offices and buildings across England
Regina Finn, Ofwat Chief Executive Officer said:
“This Bill is good for the customer, the economy and the environment. As well as, for the first
time, giving choice to 1.2 million businesses and other organisations, the Bill is expected to
benefit the economy by almost £2 billion. The reforms will help the country become better at
valuing, managing and using our water. Now is the time for all players to step up to the plate
to deliver the vision of the Bill – including the industry, regulators, consumer bodies and
The draft legislation will remove current regulations which act as a barrier to new entrants
wishing to enter into the water and sewerage market. Currently any new entrant needs to
negotiate with up to 21 water companies before entering the market. Under these changes
there will be no need to do this as Ofwat will set out standard terms and conditions for
companies to follow. It will also encourage existing companies to look at offering alternative
supplies and services.
The legislation will also make it easier for bulk water trading within the industry, allowing
water companies to work more closely to find long term solutions to water security issues.
Increased competition in the wholesale market will give water companies an incentive to
come up with cheaper, more sustainable solutions to sourcing water.
The Bill will also make the costs of connecting new developments to the water and sewerage
system more transparent. Developers will benefit from the extension of environmental
permits to include water abstraction licensing and flood defence consents – reducing the red
tape around environmental regulation.
The Parliamentary Information Office of the Parliamentary Year book will continue to report
on the progress of the White Paper and the impact on competition and UK water supplies as
we go through the months ahead.