Water and Sewerage Undertakers (Exit from Non-household Retail Market) Regulations 2016

Baroness Parminter Excerpts

Tuesday 5th July 2016 Grand Committee

With those remarks, I again thank my noble friend the Minister and his officials, who worked exceptionally hard to face a significant addition to their workload at the end of the Bill’s process through this House a couple of years ago. I was not their favourite Member of the House of Lords at the time for being so proactive on this, but I respect them and place on record my thanks to them for the enormous amount of hard work that they have done so far. I ask that the Minister and his officials make sure that both the impetus and priority for this legislation continue right the way through to the market’s successful opening—as I believe it will be—in April 2017.

[Baroness Parminter (LD)]

My Lords, I too thank the Minister for the thoroughness with which he introduced these regulations and for the way that he has opened up consultation to Members of this House and elsewhere on this matter. That was in stark contrast to the way that this initiative was introduced during the passage of the Water Bill, which has been somewhat glossed over this afternoon—at the time, my noble friend Lord Marks of Henley-on-Thames referred to it as being introduced not at the 11th hour but at one minute to midnight. It was poorly done, but it is encouraging that since that time both the department and outside stakeholders have worked hard to ensure that the consultation and parliamentary scrutiny that I and others insisted on have happened. I thank the Minister and the department for that.

While I accept the comments of the noble Lord opposite that there was cross-party support for the proposal, it was not unalloyed support. Although my party was not against the proposal in principle, we were concerned about the complexities, the way in which the proposal was introduced and the need to protect the rights of customers—and I want to touch a bit on that. The Minister said that these regulations will have no implications for householders, but we must be concerned not only with those in the non-household market who will be affected but those households who will remain with incumbent providers that cannot divest themselves of their household customers. Such people could be stranded, and therefore these regulations will have implications for household customers.

Secondly, although at the time we in the Liberal Democrats welcomed the potential to innovate in retail services, which these regulations should provide, we were very concerned about ensuring that we should not lose the water-saving initiatives, which up until then had been delivered by water providers working together with their retail arm. The potential for such water-saving initiatives must not be lost, given the very severe water shortages that we face in certain parts of the country. For those two reasons—the need to protect all customers, both household and non-household, and to ensure that water-saving initiatives would not be lost—we asked for the fullest parliamentary scrutiny. I am pleased that the department has delivered on that.

I have just two questions for the Minister. Under “Monitoring & Review”, which I think is a fairly standard exercise for all such regulations, the Explanatory Memorandum talks about monitoring whether the regulations have “met their intended objectives”. However, the intended objectives make no reference either to the need to protect those household customers who will in effect be stranded or to the need to ensure that there is no diminishment in the opportunities for water-saving initiatives. That concerns me, so I ask the Minister to give us a reassurance that a full review of these regulations will be undertaken before any decisions are taken to extend their effect to the household market.

My second question is, given that the Government have now asked Ofwat to look at the cost-benefit analysis of extending the provisions to the household market—which suggests they are increasing the priority they are giving to this area—can the Government confirm that, in terms of new legislation and issues for the future, water abstraction regime reform is the top priority for this department, given that it will have significant constraints on its time over the forthcoming months and years because of the impacts of the Brexit decision? Given the fact that CAP accounts for 40% of the budget, there will have to be an awful lot of changes in the department. Can the Minister reassure us that water abstraction remains the priority, not extending to the household market provisions that are still unclear and untested and over which a number of us have serious concerns? Will that happen before the initiative to split the retail arm from the wholesale arm is extended to the retail market?