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Water Industry: Competition and Regulation

Volume 722: debated on Thursday 17 November 2022

2. If she will instruct Ofwat to publish and execute plans to strengthen competition and reduce regulatory burdens in the water industry. (902204)

I thank my hon. Friend for his independent report, “Power To The People”, which focuses on competition in the regulated sectors. Through our strategic policy statement, we have instructed Ofwat not only to put the environment at the top of the agenda but to promote competition where that would benefit consumers. This year, we also instructed Ofwat to produce a competition stocktake. It published that in July and we are reviewing it.

I thank my hon. Friend for her kind words about my report on competition in all utilities, including the water sector, which was commissioned by the Government but, as she says, is independent. I am pleased to hear that we have now got a statement or a request—a demand, I suppose—that Ofwat introduces more competition. It is essential that we get dates and deadlines on introducing more competition and reducing the regulatory burden. Will she promise me that the Government’s response will aim for those dates and deadlines, so there can be no backsliding in progress towards helping my constituents with their water bills?

By putting competition on the agenda for Ofwat, we have already demonstrated that we mean business on this issue and we will respond to that report. Ofwat has already put an outcomes-based approach in its 2024 price review and it is already enforcing competition for the procurement of infrastructure. That demonstrates that we are going in a direction that I think my hon. Friend may be pleased with.

South West Water, which covers both my constituency and that of the Minister, has been given a one-star rating by the Environment Agency because of water pollution. It is clear that Ofwat cannot properly regulate some of the wayward companies that continue to pay out huge sums in dividends while failing our communities. Does the Minister agree with me that Ofwat should be abolished so that we can create a new regulator that actually has some teeth?

The answer to that is no. We are working very constructively with Ofwat. It can fine a water company that is found to be in breach 10% of its turnover. It has used fines, and Environment Agency fines have significantly increased over the last year as well. I am certain that working with Ofwat, so that it works with the water companies to bring them into line, is the right way to approach the issue, and that is what Ofwat is doing.