Water UK, the organisation which represents all UK water and wastewater companies at national and EU level,is calling on the Government to put a formal competition governance framework in place for the water sector.

Responding to the government's consultation on how it should take forward the recommendations of the Cave Review on competition and innovation, Water UK said that a formal governance framework was essential to extend competition successfully.

The Water UK response said that the water companies “strongly believe” that the broad enabling powers sought by industry regulator Ofwat to introduce competition would not provide adequate governance, would increase regulatory risk and increase the cost of extending competition unnecessarily. The water companies also want the Government to impose an obligation on Ofwat to ensure that the costs of setting up agreed market arrangements are recognized in the price setting process which determines how much the utilities can charge their customers.

Water UK Chief Executive Pamela Taylor said:

"The government must now create a strong framework that will support a phased approach to competition.

"What society wants from its water industry is sustainable services, in other words a reliable supply of high quality drinking water and failsafe sewerage. Everyone knows that the industry's work is essential to a healthy environment, a successful economy, and a good quality of life.

"It follows that there must be true democratic accountability for the way the water sector develops. For competition to support government's objectives for water, Parliament must determine a specific regime of statutory governance.

"Just giving Ofwat broad enabling powers to extend competition won't provide adequate governance, but will increase regulatory risk and lead to unnecessary extra costs that will affect everyone."