Water Companies: Licences

Lord Rooker Excerpts

Monday 24th April 2023 Lords Chamber

[Lord Benyon (Con)]

My noble friend raises a key point. The Government give direction to the regulators of utilities such as water companies, and we have given very clear direction, which has been manifest in the latest Ofwat demand that water companies tackle this. It is not the only regulator. As I said earlier, the Environment Agency has huge powers and will levy fines and make sure that water companies that fail are taken into account. Of course, Ofwat also has to balance the importance of the pressure of bills on households with an increasing level of investment in tackling these issues. It is a constant balancing issue and one that I hope we are getting right.

[Lord Rooker (Lab)]

Can the Minister please explain how competition in the water industry is of direct benefit to the public?

[Lord Benyon (Con)]

It allows us to make comparisons between good and bad performers and to ensure that they are able to operate in the open market and borrow on the capital markets in a regulated way. Dividends are really important because they pay for investment, and very often they are paid to pension companies that invest in these companies. The average dividend is around 3.8%, which is not massive, but we want to make sure we get that balance right. Competition is also in the customers’ interest. Evidence shows that if it had not been for the kind of competition that we have created in the water industry, there would be higher bills for households and less money spent on infrastructure.