The Government’s Water Bill has now completed both its Report Stage and Third Reading debates on the 6 January in the House of Commons.

The Report stage gave MPs an opportunity, on the floor of the House, to consider further amendments and proposals for change to the Bill after it had been examined in committee - the Third reading was the final chance for the Commons to debate the Bill as a whole.

The Bill was introduced to the House of Lords yesterday- the first reading is a formality that signals the start of the Bill's journey through the Lords where its 2nd Reading will take place on 27 January 2014. The 2nd Reading debate will be the first opportunity for the members of the Lords to debate the key principles and purpose of the bill as well as to indicate any concerns or specific areas where they think changes are needed.

In response to debates about Ofwat’s duties, the Government amended the new over-arching resilience duty (Clause 22 - Primary duty to secure resilience), at Report Stage. 

During its passage through the Commons, in addition to a range of amendments made by Secretary of State Owen Paterson, MPs have also tabled a number of new clauses seekking further changes to the Bill, including:

• On retail exit, for the Secretary of State to make provision about the transfer of an water company’s assets and liabilities associated with its non-household retail business into a separate company;
• disclosure of benefits information held for benefit entitlement purposes by the Department for Work and Pensions.’about occupiers to the water companies;
• Sustainable drainage and automatic right to connect – implementation of the provisions of section 32 and Schedule 3 of the Flood and Water ManagementAct 2010 no later than one month after the date the Act is passed;
• Reformed abstraction regime – an abstraction regime must be introduced no later than seven years after the date the Act is passed;
• Onshore oil or gas activities—effect on water environment – ability for the regulator to refuse an application for the grant, variation or transfer of an environmental permit if the regulated facility in question is to be carried on as part of an onshore oil or gas activity and the regulator is not satisfied adequate financial provision is made for preventing or mitigating pollution of the water environment;
• Introduction of a National Affordability Scheme for water, including an eligibility criteria to be determined by the Secretary of State:
• Billing information: affordability, whereby any company providing water services to a residential household must include on its bills details of any tariffs provided, a recommendation of the lowest possible tariff for each residential household; and information regarding eligibility criteria and how to make an application for assistance under Water Sure;
• Provision of information to water companies by landlords - where a water company does not have information about a resident in a property that is using water, if the occupants of that property are tenants, the landlord must, on request, provide to the water company contact details for the tenants;
• Water companies: recovery of losses – ability to prohibit losses to a water company due to non-payment of bills from being recovered through charges on customers;

An amendment has also been tabled for the water companies to provide the Secretary of State and Ofwat with an annual review which provides information about—

(a) their performance;

(b) the total amount of investment;

(c) their taxation structure;

(d) their corporate structure; and

(e) the total amount of dividends paid to shareholders.

A separate amendment is also seeking a wide-ranging review of the water industry to be undertaken by the Secretary of State and to report to Parliament on the performance of the water companies since privatisation came into force. The amendment proposes that the report must in particular review—

• the cost of water to the consumer
• the number of disconnections of water supply
• the purity of the water supplied and the number and consequences of water pollution incidences attributable to the operation of the water companies, the incidencies of leakages, low pressure and disruptions to water supply
• the levels of investment in the water supply infrastructure by the water companies
• the profits made and dividends paid to shareholders by the water companies
• the levels of management remuneration of the water companies
• the levels of taxation paid by the water companies.

Attention will now be focussed on whether changes sought by MPs will be further pursued in the House of Lords.

The Government has continued to reject proposals for a provision in the Bill which would enable water companies to exit the retail market following the introduction of competition.

In the House of Commons’ final debate on Monday Water Minister Dan Rogerson said:

“Were a company to exit and to leave household customers on their own—without the non-household element—customers would not only be left with a company that had limited incentives to focus on improving customer service, but would be at risk of having higher bills, because providing, as new clause 2 does, for forced legal separation of the companies’ retail businesses would reduce regulatory stability and risk increasing the cost of capital.”

“….Our opposition to a provision about retail exit has nothing to do with supporting the position of incumbent water companies; we expect Ofwat to use its regulatory powers to make sure that new entrants can be confident that they are competing on a level playing field.”