Source · Select Committees · Public Accounts Committee
Recommendation 6
6
Accepted
Mandate Defra to clarify and fill gaps in water sector regulator responsibilities and trade-off considerations.
Conclusion
No-one is taking responsibility for ensuring that the regulatory system works, as is evident by its failings. Defra has overall responsibility for the regulatory framework. However, it is not planning an improvement of the system it describes as “piecemeal”. There are gaps in key areas such as oversight of the security (including cyber-security) of the wastewater network. The EA is not monitoring the net zero impact of water companies’ work, despite the fact that the wastewater network is responsible for 1.2% of all UK emissions. There is no single guiding mind balancing the need for improvements with the impact on bills and in the past the wrong approach has been taken. Regulators and the sector now face a 6 huge challenge to make environmental improvements and meet water supply needs. Long-term resilience in the face of climate change has also been deprioritised. recommendation Defra should use this Committee’s and the NAO’s findings, alongside any recommendations from the Water Commission once it is published, to clarify and fill gaps in regulator responsibilities and be explicit on when and how trade-offs will be considered.
Government Response Summary
The government plans to abolish Ofwat and merge its functions into a single new regulator, subject to consultation this autumn. It will publish a Strategic Policy Statement and ministerial direction this autumn to clarify expectations and respond to the Independent Water Commission's recommendations via a White Paper and a new Water Reform Bill.
Government Response
Accepted
HM Government
Accepted
The government agrees with the Committee’s recommendation. Commission’s recommendations, as set out in the statement made by the Secretary of State on 21 July. The government's initial response was that, subject to consultation this autumn, the government will abolish Ofwat and merge its functions with water functions across the Environment Agency, Natural England and the Drinking Water Inspectorate to form a single new regulator. Until the single water regulator is fully established, the existing regulators will continue to carry out their functions and enforcement responsibilities in full. The government will clarify its expectations through a Strategic Policy Statement and ministerial direction, expected to be published later this Autumn. The government will respond to the Independent Water Commission’s recommendations in full via a White Paper, published for consultation this Autumn, and a new Water Reform Bill that will be introduced early this Parliament. In its response it will consider the Committee’s and the NAO’s findings.