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The future of water

Source: Public Sector Executive Sept/Oct 2013

There was much to discuss at a Conservative Party Conference fringe event on water policy, ‘Pipe Up: Will the Water Bill deliver for the consumer?’ Adam Hewitt reports.

Environment secretary Owen Paterson told the All Party Parliamentary Water Group fringe event at his party’s conference that he was “proud” that the Conservatives had privatised the water industry and said it had brought in £110bn in private investment. 

But he said we only use 5% of the water that falls on the country, and that we must do more do capture more of it and use it sustainably. 

The draft Water Bill is to go through Parliament soon, and includes measures to introduce competition for business, charity and public sector customers; to make it easier for new entrants to the ‘upstream’ market; to make it easier for water companies to trade water; encouraging small-scale water storage; and to change Ofwat’s role and give it a duty to take greater account of long-term resilience.

Colin Skellett, chairman and chief executive of Wessex Water, who helped steer the company through privatisation 25 years ago, noted that it was a “very unpopular” measure at the time but said it had been a huge success and that now was a good time to reflect on the next 25 years. 

Like all the water company bosses at the event, he said climate change and the need for resilience would be part of the context for water suppliers in the future – though Paterson, widely seen as a climate change sceptic despite being the environment secretary, did not address that point. 

Skellett said customers had growing expectations and that affordability remained an issue, with more people struggling to pay their bills. But he welcomed the changes at Ofwat, which he said have led to “less micro-management”. 

Steve Mogford, chief executive of United Utilities, said water companies are doing better at sharing best practice, and also addressed the affordability question, saying the Water Bill “encourages us to think about the use of social tariffs”. “Very few people want to be in debt,” he said. “We’ll help people back into payment.” 

Bob Wilson, director of water business at Anglian Water, said he has been “waiting for competition for a long time…there’s very little of it at the moment, despite a few false dawns. But we’ve tried to treat business customers as if they had choice.”

He said the company has learnt to do more with less, and also addressed concerns about climate change, saying that regardless of the impacts on the UK – models suggest the UK will get wetter, not drier – the global impact will have knock-on effects here in terms of water management. 

Although not in the draft Bill, there are likely to be measures to help deal with bad debt – a problem that adds £15 to the annual bills of everyone who does pay for their water. This could include a requirement for landlords to provide details on tenants when they move. 

Paterson spoke about the discussions with the Association of British Insurers about flood insurance. In September, a consultation was published suggesting individual firms could get quotas of high-risk properties they must ensure if a levy-funded reinsurance pool fails. Low-risk properties in effect cross-subsidise high-risk properties, to the tune of £10.50 a year, under the Flood Re model capping premiums. 


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