Industry calls for bill reform, polluters to pay, resilience and a national grid

The Independent Water Commission’s call for evidence closed last week. Recommendations from the team are now expected in July.

Among those who made their responses public was Water UK, which championed extensive reforms in the name of supporting economic growth, securing water supplies and protecting the environment. Water UK’s core recommendations were:

1. Reform water bills by introducing mandatory smart metering and allowing new tariffs that abolish standing charges and shift costs away from the majority of households towards very high users of water such as those with swimming pools and second homes. This would potentially result in lower charges for low volume users.

2. Government should establish a powerful new consumer ombudsman to protect customers, one that has powers to enforce judgements once a company's complaints process has been exhausted, as is the case in the energy, communications and rail sectors.

3. Water bill payers shouldn’t have to pick up the cost of pollution from other sectors. A ‘polluter pays’ principle should be enforced that requires industries like pharmaceuticals and insecticide producers to make a ‘fair share’ contribution for the costs they add to water and wastewater processes, instead of putting additional costs on water bill payers.

4. Powers should be devolved away from Whitehall and handed to communities, so decisions can be taken by customers about how best to protect and enhance their local environment, bringing water companies together with other land users such as farmers to deliver the most effective local improvements.

5. We need the introduction of legally-binding resilience standards, ensuring that networks are upgraded to be resilient to climate change and extreme weather. This would heavily reduce the length and severity of service failures and emergency incidents.

6. Regulators should be given sharpened responsibilities and clearer duties — allowing each to focus on what it does best. This includes removing unnecessary duplication by ending Ofwat’s role in setting environmental targets, and further empowering the Environment Agency and Natural Resources Wales.  

7. We need to boost regulatory capability and accountability by funding regulators to pay sufficiently high and flexible salaries to attract and retain the most skilled people. The National Audit Office should be asked to support Parliament’s oversight function by conducting a review of the effectiveness of Ofwat’s decisions.

8. New supervisory teams should be empowered to intervene when a water company’s financial resilience is at risk, including by requiring minimum equity buffers and recapitalisation plans. The best performers should be able to achieve greater autonomy and earn higher returns based on delivering excellent service.

9. Introduce simpler performance regulation with a ‘supervisory’ approach that places expert teams within a regulator and empowers them to really understand each business and what it requires in the long-term interests of customers. This would allow a reduction in the regulatory burden that Ofwat currently imposes, and build trust between regulators and water companies.

10. A new vision should be set out for water in a White Paper, delivered within 12 months of the Commission reporting. This should set clear, long-term outcomes for water companies, regulators, government departments, other public bodies and — crucially — other sectors all to work towards.

11. Create a new pipeline and separate treatment of ‘enhancement’ programmes, so that major projects can be approved and delivered far more quickly, to boost economic growth.  

12. A century after we started building a national electricity grid, we need a National Water Grid for England to move water around the country to where it is most needed to balance supply and demand.