Water industry
Water is an essential of life and the government is committed to fair and affordable water and sewerage services which incentivise environmentally responsible behaviour. The government is committed to reforming the water sector to introduce greater competition and to supporting households who face water affordability pressures.
Water white paper – Water for Life
The water white paper has now been published. Key reforms relating to water industry issues include;
- introducing 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;
- encouraging water companies to introduce social tariffs to support vulnerable customers; and
- with the Environment Agency and Ofwat, provide clearer guidance to water companies on planning for the long term, and keeping demand down.
Read Water for Life
This section of our website deals with both:
- Customer issues in relation to water supply and the water industry, including affordable water supplies, and issues relating to supplies to business customers; and
- Government’s role in regulation of the privatised water industry
Latest news
- 2 February 2012 – The Water Industry (Financial Assistance) Bill was introduced to Parliament
- 23 January 2012 - Tackling Bad Debt in the Water Industry consultation
- 31 October 2011: More choice and lower water bills for businesses (press release)
- 20 October 2011 – Defra and the Welsh Government relaunched a recruitment to appoint a new Chair of the Water Services Regulation Authority (Ofwat). Philip Fletcher CBE has agreed to remain as the Ofwat Chair until his successor is appointed.
Bad Debt
The Government is committed to tackling bad debt in the water industry as the failure of some customers to pay their bills adds approximately £15 per year to the bills of paying customers.
A public consultation was launched on 23 January 2012 which presents several options for tackling bad debt. This consultation will close on 6 March.
Competition
Extending competition was a key element of the Water White Paper and the government is committed to introducing a package of legislative reforms to increase choice for business customers and make the market more attractive to new entrants. This will take forward many of the recommendations made by Professor Martin Cave in his recent review of competition and innovation in water markets.
Affordability
The government committed in the Water White Paper to ensuring everyone has access to an affordable water supply and is working closely with Ofwat and water companies to develop social tariffs for customers who struggle to pay their bills and tackle bad debt in the water industry.
- Final report
- Earlier papers relating to the review
- 5 April 2011: Consultation: water affordability in response to the Walker Review of charging for household water and sewerage services
Social Tariffs
Recent analysis revealed that 23% of households spent more than 3% of their income on water and sewerage bills and 11% of households spent more than 5%. In order to support customers with affordability problems the government is developing guidance to help water companies create social tariffs to assist these customers. A consultation on draft guidance on social tariffs closed in January 2012. Final guidance is due to be published in 2012.
Regulation of the water industry
The water industry in England and Wales was fully privatised in 1989. To ensure that the private companies delivered a public service at good value Ofwat was established as their independent economic regulator.
Ofwat is a non-Ministerial government department, with Defra as its sponsor department. It is held to account by Parliament and the Welsh Government, which sets its statutory duties – the framework within which Ofwat carries out its functions.
Ofwat’s main functions are to approve water companies business plans every five years, to ensure that consumers get a good quality service at good value for money, and to ensure that companies can carry out their functions and earn a reasonable return on their investments.
Consumer representation
The Consumer Council for Water was established to represent and protect consumers. It plays a key role in managing complaints, working with Ofwat to ensure fair prices and acceptable levels of customer service and ensuring customer interests are considered in the development of regulations, price reviews and the development of social tariffs.
The role of Ofwat and the Consumer Council for Water were recently reviewed by David Gray.
Water and sewerage price limits
Price limits are the amount by which average bills can change each year and are set following reviews carried out by Ofwat on a five-yearly cycle. The 2009 periodic review (PR09) was launched by Ofwat in 2007 and ended in November 2009 when Ofwat set price limits for 2010-2015.
- More information: Price review 2009 (Ofwat website).
Defra’s contribution to PR09 included a Statement of Obligations to water and sewerage undertakers and Social and Environmental Guidance to Ofwat (see Defra’s archive).