4 July 2023 - Follow-up: Ofwat, the water industry and the role of the Government - Oral evidence

The Industry and Regulators Committee will hear from representatives of water companies about using nature-based and locally agreed solutions to reduce water pollution and reduce surface water run-off, as part of follow-up work on its March 2023 report ‘The affluent and the effluent: cleaning up the failures of water and sewage regulation’. The Committee will ask about the benefits of using nature-based and catchment-based solutions over traditional concrete and steel infrastructure and what barriers there are to their use in policy, regulation and delivery.

The Committee will also hear from the Chair and Chief Executive of Ofwat, the economic regulator of the water sector in England and Wales. The Committee will consider recent developments in the water sector, including the situation of Thames Water, and discuss levels of debt, dividends and investment in water companies. The Committee will also discuss the increased investment necessary to ensure future water supplies and improve the sector’s environmental performance, the extent to which this investment will be paid for by companies and their customers through increased bills, and the support available to customers struggling during the cost of living crisis.

Possible questions include:

• What proportion of the work needed to reduce water pollution and manage surface water can realistically be achieved through nature-based solutions? Is there scope for this to significantly reduce the costs of improving the water environment?
• What role will Ofwat play in the Government’s Plan for Water? Does the Plan give sufficient political direction and clear outcomes for regulators to work towards?
• To what extent will additional investment in infrastructure need to be funded by increased customer bills? Does Ofwat expect bills to increase at the next Price Review, and if so, does it have an idea of how much the increase might be?
• Is Ofwat comfortable with debt levels in the water sector? Will the regulator be taking greater powers or action to limit the debt that water companies can take on?