Water White Paper

Thursday 8th December 2011 Written Statements

[The Secretary of State for Environment, Food and Rural Affairs (Mrs Caroline Spelman)]

I am today laying before Parliament “Water for Life”, our water White Paper. This sets out the Government’s vision for securing sustainable and resilient water supplies through to 2050. It builds on the success of the sector since water privatisation, while recognising that population growth and climate change will place extra demands on a system designed to meet the needs of today, not tomorrow.

The White Paper includes new scenarios of water availability in the 2050s. We need to start planning now to build flexibility and resilience into our water and sewerage infrastructure. Our approach must include better management of demand, but we will also need substantial new investment in infrastructure so we can capture more water and start to use the supplies we have more efficiently. We need to connect up our water system more effectively so that we can move supplies to areas where they are scarcer. We also need to ensure our drainage system can continue to operate effectively as infrastructure ages and pressure on capacity grows as the population increases.

The White Paper sets out how we will take forward our commitment in the natural environment White Paper to long-term reform of the water abstraction regime. Reform is vital given the challenges of climate change and population growth and the lack of flexibility in the existing regime to deal with them. This will be a complex task, and we will work closely with abstractors and other stakeholders to deliver it. We plan to consult on proposals in 2013, and aim to introduce legislation subsequently, implementing the new regime fully by the mid to late 2020s.

As well as looking to the future, we want to tackle the problems of pollution and over-abstraction affecting our rivers and wetlands currently. We can succeed only by drawing in the enthusiasm and knowledge of those with a clear stake in their local environment. We set out how Government and regulators are already starting to make this happen through new catchment pilots as well as a concerted effort to align advice, incentives and regulatory tools to address diffuse pollution and improve the environment. The White Paper explains how we will extrapolate from around 70 catchment scale pilot projects, and provide intensive support to 25 of them, as a precursor to rolling out this approach across the country.

We know that affordability of water bills is a growing problem for householders, and we want to enable businesses to keep their costs down. We set out our new framework to enable water companies to target more help on those household customers who need it most by introducing company social tariffs.

If bills are to be kept affordable over the longer term, and customers are to receive better service from their water companies, the regulatory framework governing the industry must change. The White Paper sets out how we are helping business customers and public bodies to reduce unnecessary costs by a package of deregulatory reforms to introduce more competition into the water industry. The reforms we propose will provide non-household customers with more choice and open up the market to new entrants, removing the anti-competitive barriers in the existing regime. Our proposals will increase the size of the market to include all non-household customers; remove a restrictive access price mechanism that makes it difficult for new entrants to compete on price and which unduly protects incumbents and replace it with a more transparent wholesale access price regime; increase opportunities for new entrants by extending the regime to cover sewerage services; and introduce changes to the existing regime for upstream competition to encourage new entrants and stimulate the market. We will work with the Scottish Government to enable a cross-border market in water and sewerage services.

As a result, we expect business and public sector customers to receive a range of benefits from more customer-focused suppliers with an incentive to improve the services they offer, such as aggregated purchasing, discounts for direct debits or improved information on how to improve water efficiency and cut costs.

However, we do not propose to introduce more fundamental structural reform of the water industry, for example through mandating legal separation of the retail arm of water companies. Given the challenges we are facing to build resilience in the sector, which will require ongoing investment in infrastructure, I am not proposing to make changes which could reduce the attractiveness of the water sector as a low-risk, stable home for investment.

If we are to deliver our vision for the future of a sustainable and resilient water system we must change the way we all value water. We need to start using water more efficiently, and recognising it as the precious and limited resource it is. We need to build awareness of the connection between water in the home and the condition of local rivers to encourage behaviour change. The White Paper sets out our approach to encouraging more efficient use of water, including through the linkage to the green deal.

The White Paper is available on the DEFRA website at http://www.defra.gov.uk/environment/quality/water/legislation/whitepaper/