Water Industry: Financial Resilience Debate
Full Debate: Read Full DebateDepartment: Department for Environment, Food and Rural Affairs
Richard Fuller
Main Page: Richard Fuller (Conservative - North East Bedfordshire)Department Debates - View all Richard Fuller's debates with the Department for Environment, Food and Rural Affairs
Water Industry: Financial Resilience
Richard Fuller Excerpts(10 months, 3 weeks ago)
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Rebecca Pow
Ofwat is the independent regulator and, as the hon. Member will know, the Government direct it through the strategic policy statement. It is Ofwat’s job to ensure that in the price review, when the water companies submit their plans—they are going over the draft plans now—they demonstrate that they will deliver on the Government’s targets on storm overflows, leakage and demand reduction. It is for Ofwat to ensure that companies will be resilient in delivering that infrastructure. There is a firm structure in place. Ofwat also constantly monitors companies’ gearing—debt-to-equity—levels, and the Government are confident that the regulator is taking reasonable measures to challenge companies to reduce those gearing levels where appropriate.
Richard Fuller (North East Bedfordshire) (Con)
About a quarter of the country’s economic output is in sectors under regulators, including the water industry. With Ofwat and in other sectors with Ofgem and the Financial Conduct Authority, we have seen regulators not performing to the standards that the public, or indeed industry, would expect. If we are honest, we in this House and in Parliament do not have the toolkit to assess regulators’ performance on a systemic basis year in, year out. Will my hon. Friend work with ministerial colleagues to see whether we can improve the regular oversight of regulators such as Ofwat so that we can take a more rounded view on such issues, rather than have them come through urgent questions as brought by the Opposition?
Rebecca Pow
I thank my hon. Friend for that. It is essential that we have fully functioning regulators. Since the Government came to power, Ofwat has done an enormous amount to streamline what it does, improve transparency, change licences and make changes so that dividends are not paid if any environmental damage is being caused. The Government have directed that through the strategic policy statement. Indeed, our targets will ensure that the regulator enables the water companies to put the right measures in place. He is right, however, that one should never be complacent, and if things need to be improved through the regulators, they should happen. But I assure him that a big effort is being made.