The Environment Secretary has said households will “never again” face major water bill hikes as he announced an overhaul of regulation of the troubled sector.
Steve Reed announced in a speech alongside the River Thames that regulator Ofwat would be scrapped, as part of measures to pull overlapping water regulation by four different bodies into one “single powerful” regulator responsible for the whole sector.
He made the announcement in response to an independent review by Sir Jon Cunliffe which called for the move, as one of 88 measures to tackle problems in the water sector.
The review was commissioned by the Government to answer public fury over pollution in rivers, lakes and seas, soaring bills, shareholder pay outs and bosses’ bonuses.
Mr Reed pledged the new regulator would “stand firmly on the side of customers, investors and the environment”, as he said the Government would cut sewage pollution by half by 2030 – based on a new, higher baseline of pollution in 2024 compared to previous targets relating to 2021.
And it would oversee maintenance and investment in water infrastructure so that “hard working British families are never again hit by the shocking bill hikes we saw last year”.
Quizzed by journalists after the speech about future bill hikes, Mr Reed insisted it was “absolutely the intention” that the reforms would ensure there was adequate investment in the long term to prevent the kind of 30% increase seen in customer water bills last year, at the next price review in five years.
“The reforms that we’re bringing in are intended to prevent the circumstances that led to those bill hikes,” he said.
“We’re bringing it in so that there will be adequate investment in the long term in our water pipes and our sewage pipes, so they don’t ever again crumble away to the extent that a big bill hike becomes necessary.”
He accused the Tories of failing to ensure sufficient investment in crumbling pipes and infrastructure that would have prevented the recent hikes.
In his speech, Mr Reed said the water industry is “broken” and has been allowed to fail under a “regulatory system that let them get away with it”.
“Our rivers, lakes and seas are polluted with record levels of sewage,” he said.
Mr Reed blamed soaring water bills for straining household finances and warned that poor infrastructure is holding back economic growth.
But ministers have refused to entertain the possibility of renationalisation, despite demands from campaigners to return water companies to public ownership, with Mr Reed warning it would cost £100 billion and slow down efforts to cut pollution.
He said nationalisation was not the answer, adding: “The problems are to do with governance and regulation, and we are fixing those problems so we can fix the problem of sewage pollution and unacceptable bill hikes in the fastest time possible.”
The reforms would see a single regulator replace Ofwat and take in functions related to the water sector from the Environment Agency, which currently investigates pollution incidents and licenses water abstraction from the environment, as well the Drinking Water Inspectorate and Natural England.
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