It is a fact universally acknowledged that the moment any government minister announces a hosepipe ban the heavens open and we get days of unending rain. The drought in parts of England, however, is just the latest example of a long-standing policy failure to properly manage our water supply. This government promised a draft water bill for pre-legislative scrutiny ‘early in 2012’. Instead we got an emergency bill rushed through parliament to tackle the specific problems of the cost of cleaning beaches in the south-west and the cost of treating sewage in London.

What we need is a comprehensive bill that deals with five key problems:

•    Abstraction reform
•    Interconnections and water trading
•    Market reform
•    Water affordability
•    Resource efficiency

Abstraction reform

Abstraction licences are currently granted to more than 20,000 enterprises which have the right to draw water out of our rivers to supply their business or irrigate their farms. Approximately 130,000m litres of water each day can be sucked out of our rivers in this way. These licences were given out on a ‘first-come-first-served’ basis some 50 years ago and currently they cannot be varied to reflect priority of need or availability of supply. Even when supplies are low, the local toffee factory with a licence cannot be put on short rations.

In 2003 Labour’s Water Act insisted that all new licences must have a start and end date but we now need much tougher laws with the power to stop abstractions that are damaging the environment without compensation. Currently revoking a licence can take many years.

The government’s timetable for abstraction reform is frankly risible. The minister recently told parliament that he wanted ‘to see the new regime in place by the mid-late 2020s!

Water trading and interconnections

This month Severn Trent Water announced their proposed sale of 30m litres a day to Anglian Water. Many people wondered why this was news. They simply assumed that we have a national water system where those parts of the country with surplus water supplied drought-ridden areas like East Anglia. In fact there is no national infrastructure for shifting water long distances. Water is heavy and transporting it takes a lot of energy. The Romans built some fine aquaducts and the Victorians were particularly good at sewers, but when it comes to long-distance water supply these two were very much the historical exceptions.

The government recognises the problem of a purely local approach to tackling the mismatch between supply and demand in a given region. It proposes to allow greater interconnections on a local subregional basis such as the Severn-Anglian trading deal, but has turned its face against long range infrastructure. The principle of greater interconnectedness rather than a long range national infrastructure is sound. However, there are once in a generation opportunities such as high speed two which the government should not ignore. HS2 is a key opportunity to investigate the synergy of a combined approach between transport and water infrastructure.

Market reform

At present water in England and Wales is supplied by 21 vertically integrated regional monopoly water companies. Only the very largest commercial customers have the right to switch their water supplier. Businesses operating on several sites across the country have to process multiple bills from different suppliers and the lack of competition hinders innovation and efficiency. A review chaired by Martin Cave set up under the last Labour government recommended that incumbent monopolies should be compelled to legally separate their retail from their upstream operation.

Unsurprisingly, this government has listened to the complaints from these monopoly companies and has backed away from requiring legal separation. They have also capitulated to threats about reduced investment which the companies predicted would arise if both retail and upstream competition were allowed at the same time. Once again the government is pushing real reform into the far future.

Water affordability

When it comes to those in genuine difficulty over their water bills, the government is dithering between providing additional financial support itself, and demanding that companies cross-subsidise from other customers bills through effective social tariffs for those on benefits. They claim data protection rules prevent them sharing information with the water companies. I propose that benefit claimants could claim social tariffs from the water company on initial proof of their entitlement to benefit, but only on condition that they sign a consent for government to notify the water company of any changes in their benefit status and share information with the water company.

Resource efficiency

Anna Walker’s review of charging for water and sewerage services in 2009 made it explicitly clear that metering of supply is the most significant factor in reducing consumption of water. She set a target that 80 per cent of all households should be metered by 2020. Ditching this target, the minister, in his evidence to the select committee, said that he would like to see more metering, but it was ‘not the total solution’. While it is true that metering can bring increased bills for some poorer families, issues of affordability should be tackled by the social tariff structure and not used to fudge the absolute necessity of improving our more efficient use of this precious resource.

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Barry Gardiner MP is Ed Miliband’s special envoy on climate change and the environment

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Photo: Steve Johnson