Draft Water Bill

Written evidence submitted by Blueprint for Water coalition

 

Summary

1. The Blueprint for Water coalition (‘The Blueprint’) welcomes parts of the draft Water Bill, in particular:

1.1. The alignment between Water Resource Management Plans and drought plans, and the potential for them to be formally linked to price review timetables;

1.2. The removal of the requirement for Ofwat to agree all water company tariffs every month, to increase their use of social tariffs (which should support a faster move to full metering);

1.3. The revision of the process of charging developers for water and sewerage infrastructure – Blueprint would like to see this linked with resources via a scarcity element (variable charge);

1.4. Ministerial statements to the effect that increased competition will support greater water efficiency in the non-domestic sector.

2. However, we believe that the recent drought has highlighted the urgent need to place water resources and water industry regulation on a more sustainable footing. This has lead us to conclude that the Bill has serious omissions. It should therefore be amended to:

 

2.1. Include an enabling legislative framework for abstraction reform that gives the Government the powers to reform the abstraction regime from 2015 – according to the Principles set out in the Water White Paper, Water for Life – and to be in effect and operational within a 10 year timeframe;

 

2.2. Remove red tape that prevents water companies rolling out compulsory metering in areas outside of water scarce areas, even when there is a clear business case to do so;

 

2.3. Elevate Ofwat’s current duty to sustainable development to a primary duty, to redress the bias towards supply-side measures.

 

Addressing current unsustainable abstraction

3. Water for Life included welcome plans for dealing with the environmental legacy of unsustainable abstraction, which, as the drought has demonstrated, is a problem here and now. We agree with the Government that the current approach to tackling damaging abstraction has failed to encourage quick or cost-effective change. Water for Life provides some solutions, including: bringing water company Restoring Sustainable Abstraction schemes into the price review; the development of an Abstraction Incentive Mechanism to encourage companies to take less water from environmentally vulnerable sources, and; clear intention to start using the power from Water Act 2003 to revoke or vary abstraction licences that are causing serious environmental damage. It is essential that these proposals are implemented quickly – they do not need additional legislation to be progressed.

A sustainable abstraction regime

4. The draft Water Bill should include an enabling legislative framework for abstraction reform, giving the Government powers to reform the abstraction regime from 2015 – according to the Principles set out in Water for Life – and be in effect and operational within a 10 year timeframe. Water for Life included welcome plans for dealing with the environmental legacy of unsustainable abstraction, which, as the drought has demonstrated, is a problem here and now. It is essential that these proposals, which do not need additional legislation, are implemented quickly. However, Water for Life also set out a compelling case for systemic change of the abstraction regime. With a rising population and a changing climate the existing system will be increasingly unfit for purpose, placing limits on economic growth as abstractions fail and continuing to threaten the integrity of our freshwater ecosystems.

5. To address this, Water for Life set out a vision of a future, sustainable abstraction regime with clear goals for the design of the regime (e.g. the need for abstraction licences to signal availability, reflect the value of water, protect the environment and drive efficient use) and four principles for the transition (new licences to take account of existing rights, amendment of licences without compensation, not using the transition to address the legacy problems and not creating barriers to investment). These are a vision, goals and principles which the Blueprint fully supports and we are working with the Government – through the Abstraction Reform Advisory Group – to help develop the necessary detail to turn this into a clear implementation strategy.

6. While we understand that the Government intends that the reforms will be rolled out from 2018, it seems it will be the late 2020s before the regime is in place across the country. We are extremely concerned that the Government has delayed legislation on abstraction reform until the next Parliament, which is likely to result in greater uncertainty and a more expensive transition for abstractors if they are not given sufficient time to adapt their business planning. The important work underway to develop the detailed implementation plan should not hold up the legislative process; instead, the Water Bill should provide for reform to be brought in at a later date by secondary legislation, after sufficient consultation.

Keeping bills affordable and reducing water waste through metering

7. The draft Water Bill should remove red tape that prevents water companies rolling out compulsory metering in areas outside water scarce areas, even where there is a clear business case to do so. Widespread metering, with tariffs to protect the vulnerable, provides a vital foundation for fair, affordable, sustainable and reliable water supplies. Significant reductions in leakage and per capita consumption are unlikely without widespread metering. There is clear evidence of the benefits of metering both to customers and the water environment. [1] Presently, however, red tape means that only water companies with areas designated as ‘Serious Water Stress’ can install meters on a compulsory basis. Unfortunately, the official designation of Serious Water Stress is a blunt tool, which ignores the many places outside these areas that can face water shortages. Significantly, it also means that customers outside the designated areas are denied the option of widespread metering, when it would be in their best interests as a method of addressing affordability issues and limiting bill rises. The Government and Ofwat are now devolving more power to customers to decide the outcomes of the water price setting process – we believe this should include customer choice over compulsory metering.

A sustainable water sector

8. The draft Water Bill should elevate Ofwat’s duty to sustainable development to a primary duty, to redress the bias towards supply-side measures. Effective demand management is a cornerstone of a sustainable water sector. However, this is not pursued on the level that is needed, partly because the system does not reflect the value of water and is biased to supply side options. The lack of a statutory commitment to demand management in Water for Life means that these decisions have been devolved to companies and customers. The updated Water Resource Management Planning guideline sets out clear requirements on demand management though, which are to be welcomed. Ofwat therefore has a leading role in ensuring the development of a sustainable water sector, characterised by reduced water demand.

9. Ofwat has a duty to "contribute to the achievement of sustainable development". However, this is a secondary duty, which means that it is ignored if the contributions interfere with Ofwat’s primary duty (i.e. if there are significant financial implications for companies). The practical effect of this, as seen in the 2009 price review, is that Ofwat is forced to strike out investments that would deliver demand management in ‘over abstracted’ areas, or areas in which it would address supply deficits that exist beyond the five-year planning horizon.

10. Giving Ofwat a primary duty to sustainable development would be in line with the primary duty of Ofgem, the energy regulator (a duty which has been critical in driving cultural change both within the regulator and across the energy industry).

About the Blueprint for Water coalition

11. The Blueprint for Water coalition is a unique coalition of environmental, water efficiency, and fishing and angling organisations that is calling on the Government and its agencies to set out the necessary steps to achieve "sustainable water" by 2015 (www.blueprintforwater.org.uk). The Blueprint for Water is a campaign of Wildlife and Countryside Link.

12. This submission is supported by the following 14 organisations:

· Amphibian and Reptile Conservation

· Angling Trust

· Buglife – The Invertebrate Conservation Trust

· Freshwater Biological Association

· Pond Conservation

· Marine Conservation Society

· National Trust

· Royal Society for the Protection of Birds

· Salmon & Trout Association

· The Rivers Trust

· The Wildlife Trusts

· Waterwise

· Wildfowl and Wetland Trust

· WWF-UK

September 2012


[1] Walker, A. (2009) The Independent Review of Charging for Household Water and Sewerage Services: final report ; also www.fairnessontap.org.uk .

Prepared 21st September 2012