A slurry of under investment, insufficient government strategy,
and inadequate co-ordination has resulted in a failure to “treat
water with the care and importance it deserves”, a House of Lords
Committee report warns today (Wednesday 22 March).
The Industry and Regulators Committee has been investigating the
regulation of the water industry, including looking at Ofwat’s
performance in relation to its statutory duties, the investment
and approach needed to prevent storm overflow overuse, and steps
that must be taken to secure future water supply.
During its investigation, the Committee took evidence from
Thérèse Coffey, Secretary of State for Environment, Food, and
Rural Affairs, regulators, water company CEOs, consumer groups,
and industry and investment experts.
While the report, titled ‘The affluent and the effluent:
cleaning up the failures of water regulation’, welcomes
planned improvements by regulators, including linking executive
pay to performance and monitors being present on all storm
overflows by the end of 2023, the Committee found:
- Ofwat has failed to ensure companies invest sufficiently in
water infrastructure, choosing to keep bills low at the expense
of investment that is now sorely needed.
- water companies have been overly focused on maximising
financial returns at the expense of the environment, operational
performance, and financial sustainability.
- water company bosses should not be able to receive
substantial bonuses while their companies have missed performance
targets and polluted the water environment.
- the Government has not put in place a joined-up approach to
the key issues facing the sector, including reducing water
pollution and securing future supply.
- Ofwat and the Environment Agency must go further to hold
water companies to account for environmental pollution through
penalties and prosecution. The Government must ensure adequate
funding is available for this.
- Ofwat needs to find ways to increase investment outside the
Price Review process and consider the important role that
third-party competition could play in reducing costs, as it did
with the Thames Tideway tunnel project.
As a result, the Committee is calling on the Government to:
- give Ofwat guidance on how it should handle the trade-off
between balancing the financial needs of customers during a
cost-of-living crisis with the urgent need for infrastructure and
environmental investment.
- legislate to introduce a single social tariff in time for its
inclusion in the next Price Review which will protect vulnerable
customers from bill increases and provide a baseline of support
for customers regardless of who supplies their water.
- publish a National Water Strategy which sets clear
expectations in relation to the quality of the water environment
and the resilience of water supplies, giving regulators clear
benchmarks to work towards.
- consider banning the sale of wet wipes that are not rapidly
biodegradable.
- ensure adequate funding is available to the Environment
Agency to inspect and enforce environmental offences by water
companies.
- give Ofwat powers to prevent directors of companies that are
responsible for serious pollution incidents from continuing to
work in the sector, providing individual accountability.
- accelerate the planning process for reservoirs, including by
designating, and if necessary, amending its National Policy
Statement for Water Resources Infrastructure as a matter of
priority.
- make water metering compulsory for all households and
businesses where it is possible to do so.
, the Chair of the Industry and
Regulators Committee, said:
“During our inquiry, we have taken evidence from local
communities and activist groups and received a considerable
amount of written evidence.
There is an overall feeling of dismay, anguish and, anger from
respondents, about the state of our waterways and the apparent
failure to get to grips with the problem.
We are calling on regulators and the Government to consider our
report’s findings and recommendations and act fast before we are
all left up sewage creek.”
