The Environment, Food and Rural Affairs Committee is launching a new inquiry, Reforming the Water Sector, to scrutinise the breadth of issues confronting the water sector.
The inquiry comes at a time when water companies are facing strong criticism for their environmental, financial and customer satisfaction performance, and a backlash for paying out large dividends to shareholders and bonuses to company executives.
The water sector faces important concerns such as weak resilience of water supply systems and future water security, while the UK’s water supplies are affected by a number of threats including agricultural and sewage pollution.
MPs will run this piece of work as a long-term inquiry which will see them take evidence in the coming months on a range of issues including the financial stability of the water sector, support for vulnerable consumers, water security, sewage overflows and agricultural pollution, and emergency responses to flooding, outages and drought.
The Committee will hold the first evidence session of this inquiry in January, where it will consider the impact of Ofwat’s final determination on how much water bills will be permitted to rise over the next five years. It will then take evidence from some of the worst performing water companies to determine what has gone wrong in the sector and how the Government can make improvements.
This new inquiry will examine the Government’s work taking place in this area, including the progress of the Water (Special Measures) Bill, and the work of the Government’s Independent Commission into the water sector, which is expected to report in mid-2025.
The Chair of the EFRA Committee, Alistair Carmichael MP, said:
“Over the past few years we have seen a strong backlash to water companies’ failings. Companies have breached environmental rules over sewage discharges while paying out huge dividends to shareholders, and big bonuses to executives, even as they have taken on ever more debt.
“In this inquiry our Committee will investigate the deep-rooted problems underlying the industry. The experience of sewage discharged into our rivers and seas, supply outages and outbreaks of contamination in domestic water supplies have all fed a deep dissatisfaction with the current performance of water companies.
“Our inquiry will delve into the complex structuring of water companies’ finances, examine the challenges of upgrading the sector’s aged infrastructure, and investigate the real impact people are feeling from increases to their water bills.
“We need a water system that is fit for the future. The Government and the regulator Ofwat urgently need to restore public confidence in the sector.”
