Mr Speaker, I would like to update the House on the Government’s plans to reform the water sector.
The water industry quite clearly is failing.
Our rivers, lakes and seas are polluted with record levels of sewage.
Water pipes have been left to crumble into disrepair.
And I share customers’ fury at rising bills.
There are hosepipe bans right now in place across the country because not a single new reservoir has been built in over 30 years.
And the lack of water infrastructure is blocking economic growth.
Water companies have been allowed to profit at the expense of the British people when they should have been investing to fix our broken water pipes.
They got away with this because of a broken regulatory system that has failed customers and failed the environment.
The public expressed their fury during last year’s General Election, and they voted for change.
That change will now come.
In just one year, we have put in place the building blocks for change.
First, we restored accountability by giving the regulators more teeth with a ban on unfair bonuses, severe and automatic penalties for breaking the law, and jail sentences for the most serious offences.
Second, we are investing £104 billion pounds of private sector funding to rebuild the water network.
Upgrading crumbling pipes, repairing leaks, building new sewage treatment works, and digging out new reservoirs.
This is the single biggest investment in the water sector’s history and it allows me to make a new commitment to the country:
That this Government will cut water companies’ sewage pollution in half by the end of this decade.
This is the most ambitious commitment ever made by any government about water pollution. And it’s just the start.
Because over a decade of national renewal, we will restore our rivers, lakes and seas to good health.
The third building block for change is today’s final report from Sir Jon Cunliffe’s Independent Water Commission.
And I’d like to express my thanks to Sir Jon, his officials and all those who have contributed to this outstanding piece of work.
I agree with Sir Jon that water regulation has been too weak, too complex and ineffective.
Having four separate regulators with overlapping and conflicting remits has failed customers and the environment.
Ofwat has failed to protect customers from water companies’ mismanagement of their hard-earned money and failed to protect our waterways from record levels of pollution.
Today I can announce that this Government will abolish Ofwat.
We will bring water functions from four different regulators into one.
A single powerful super-regulator responsible for the entire water sector, and with the teeth to enforce the high standards the public rightly demand.
The new regulator will stand firmly on the side of customers, investors and the environment and it will prevent the abuses of the past.
For customers, it will oversee investment and upgrade work so hardworking British families are never again hit by the shocking bill hikes we saw last year.
For investors, it will provide the clarity and direction required for a strong partnership between Government, the sector and investors to attract billions of pounds of new funding.
For the environment, it will reduce all forms of pollution to clean up our rivers, lakes and seas for good.
We will work closely with the Welsh government to devolve economic regulation of water to Wales.
I will publish a White Paper this Autumn giving the Government’s full response to the Independent Water Commission’s final report, and launch a consultation on it.
Following that, I will bring forward a new water reform bill early during the lifetime of this Parliament.
Ofwat will remain in place during the transition to the new regulator and I will ensure they provide the right leadership to oversee the current price review and investment plan during that time.
To provide clarity during this period, I will issue an interim Strategic Policy Statement to Ofwat and give Ministerial directions to the Environment Agency, setting out our expectations and requirements. We will publish a transition plan as part of our full Government response in the Autumn.
Today we are immediately taking forward a number of Sir Jon’s recommendations.
First, we will establish a new statutory water ombudsman – a single, free service to help customers resolve complaints such as incorrect bills, leaking pipes or water supply failures.
The new ombudsman will have the legal powers to protect customers and will bring the water dispute resolution process in line with other utilities like energy – it is part of the Government’s ambition to put customers at the heart of water regulation.
Second, we will end the era of water companies marking their own homework.
We will end operator self-monitoring and transition to Open Monitoring to increase transparency and help restore public trust.
Water companies are already required to publish data on some sewage spills within one hour. We will roll out real-time monitoring across the wastewater system. All this data will be made publicly available online.
This will ensure both the regulator – and the public – have the power to hold water companies fully accountable.
Third, we commit to including a regional element within the new regulator to ensure greater local involvement in water planning. By moving to a catchment-based model for water system planning, we can tackle all sources of pollution entering waterways so they can be cleaned up more effectively and more quickly.
This will ensure, for the first time, that water infrastructure investment plans align with spatial planning to support faster regional economic growth. The lack of water infrastructure that held back development around Cambridge and Oxford for so long will not happen again.
The new regulatory framework will recognise the risks investors take and, if they meet their obligations, they will see a fair, stable return on their investment.
Just last week, I signed the Government’s new Water Skills Pledge to make sure the sector has the skills and workforce it needs to deliver this vast investment.
This Government was elected to clean up water pollution and ensure unacceptable water bill hikes can never happen again.
We now have all the building blocks in place to make that happen.
We are establishing a new partnership based on effective regulation where water companies, investors, communities and the Government will work together to clean up our rivers, lakes and seas for good.
