Plans to reform the water industry, published in a draft water bill last week, are designed to cut red tape, drive innovation and efficiency and open up the market to new companies.
Under the Defra proposals, which will go out for consultation, all businesses and public-sector bodies in England will be able to switch their water and sewerage suppliers. This will allow them to obtain more competitive prices, improve their efficiency and tender for services better suited to meet their individual needs.
Responding, Ofwat claimed that opening up the water market and allowing businesses to switch suppliers could deliver benefits to the economy worth £2bn over 30 years.
Businesses with multiple sites will be able to receive one combined water and sewerage bill.
The draft legislation will remove regulations that require new entrants wishing to enter the market to negotiate with up to 21 water companies first. Under these changes, Ofwat will make the decision.
The legislation will also make it easier for bulk water trading within the industry, allowing water companies to solve issues such as drought.
The bill will also make the costs of connecting new developments to the water and sewerage system more transparent.
Sector leaders warn over wider management issues
- Tim Mudge, chief executive, Turfgrass Growers Association
"We hope that this doesn't muddy the waters when it comes to temporary use bans if other companies are allowed in. We need to understand more about what the structure will be."
- Nick Reeves, executive director, Chartered Institution of Water & Environmental Management
"While the Government has focused on the importance of competition to deliver better shareholder and customer value, the challenges are much more stark and require urgent and wide-reaching action. In a matter of weeks we have slalomed from drought and water restrictions to some of the worst summer flooding on record.
"The Committee on Climate Change, through its adaptation subcommittee, is the latest body to warn of the link between climate change and extremes of weather. The narrative is water - too much or too little. So we must manage it better, recognising its innate value to our everyday lives and over and above that which is reflected in our bills."