Labour has expressed concern that the government seems set on promoting competition in the household water market, when its focus should be on protecting consumers’ interests and promoting sustainable development.
The Department for the Environment, Food and Rural Affairs (Defra) published its strategic policy statement to Ofwat yesterday.
Shadow minister for flooding and coastal communities Sue Hayman told Utility Week she was concerned that “there seems to me to be a very definite change in emphasis towards making competition one of Ofwat’s primary duties”.
She said she felt “it should be more about protecting the interests of consumers, and about promoting sustainable development”. “The Water Act in 2014 specifically made it very clear how Ofwat should embed sustainable development in its core, and that seems to have been quietly dropped.
“To me, it is about reading between the lines and looking at how the emphasis is changing towards more competition.”
The Treasury first floated the idea of domestic competition in November 2015, in a document published outlining plans to introduce competition into the sector as early as 2020.
However, since the original announcement government has, until now, been quiet on the issue, leading the industry to speculate that it may be stepping back from domestic reform.
In the strategic policy statement, Defra said it would work with Ofwat to build the evidence-base for domestic competition, before a decision is made “at the end of the Parliament or early in the next one”.
Hayman pointed out that, originally, the government said it would not bring competition in to the domestic market, but now “it looks like the focus is heading that way”.
Labour opposes measures to introduce competition into the domestic water market, as there is no compelling evidence to suggest it is in the best interests of customers.
Asked her thoughts on opening of the non-household retail market, Hayman said: “The Labour government brought [competition] in for very large users of water. I think that is reasonable because these businesses have to be competitive, and they have to be able to get the best deals they can right across the board.
“That was set at 50 megalitres by the Labour party, it was brought down to 5 megalitres by the coalition government. So again, that whole principle is changing.”
Commenting on the strategic policy statement, a Defra spokesperson said: “We are committed to improving the long-term resilience of our water supplies and protecting the most vulnerable customers.
“Water companies are already taking steps to manage the increasing pressure from climate change and population growth but we expect to see further action to reduce demand for water, tackle leakage and increase water trading and transfers.”