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Draft Water Bill

Volume 548: debated on Tuesday 10 July 2012

I am publishing today a draft Water Bill for pre-legislative scrutiny. The draft Bill includes measures to strengthen the water sector’s ability to respond to the challenges of a growing population and less certain water supplies, and improve the deal it offers to its customers by offering more choice, and driving efficiency and innovation. These build upon the vision we set out in the water White Paper, “Water for Life”, for a resilient, affordable and sustainable water supply.

At the heart of our Water Bill are measures to give businesses and other non-household customers in England more choice by enabling them to switch their water and sewerage suppliers and to remove some of the existing regulatory requirements that act as a barrier to entrants wishing to enter the market.

A combination of greater pressure on suppliers from customers entitled to switch and new players will create a more vibrant and competitive market, bring new ways of working to the water sector, improve customer service and help keep the cost of bills down.

The Water Bill will also aid the development of a cross-border retail market for water and sewerage services by reducing burdens for operators that wish to supply services both in Scotland and in England and to eligible water supply customers in Wales. We want to see the market develop so that water suppliers on both sides of the border can work with their businesses and public sector customers to manage their water and sewerage services in the same way that they manage other utilities, increasing choice, providing tailored services, improving efficiency and cutting costs.

Measures in the Bill will further stimulate a market for wholesale water supply services by introducing a more flexible upstream pricing regime, and by allowing new opportunities in the upstream supply sector for new entrants to offer alternative supplies and services on behalf of customers and to other water supply licensees. These reforms will be mirrored in an extension of the licensing regime to sewerage services. This will help unlock new supplies of water and diversify methods of dealing with sewage.

To help these markets run more effectively we will allow Ofwat, other regulators and market participants to establish flexible charging rules and market codes. These changes will help facilitate new transfers of water between water companies—increasing flexibility and resilience in the water supply network, and make the cost of connecting to the water and sewerage networks more transparent for developers.

The Bill will also reform the special merger regime for the water sector to exclude more mergers from automatic referral to the Competition Commission by introducing a two-tier referral system.

In addition to reforming the water supply and sewerage markets, the Water Bill will enable the extension of the scope of the environmental permitting regime from prevention of pollution to include abstraction and impounding licences, flood defence consents and fish pass approvals. This will allow businesses to apply for just one permit covering these and a range of other activities, reducing red tape.

I am confident that measures contained in this Water Bill will increase choice for business customers and public sector bodies, drive innovation, improve customer service, keep bills down, make more flexible use of our water resources to improve resilience to drought over the long term and help secure future investment.

I am inviting the Environment, Food and Rural Affairs Select Committee to scrutinise this draft Bill over the coming months.

Copies of the draft Bill and associated documents will be available in the Vote Office. The documents will also be available on the DEFRA website at: