Water industry watchdog Ofwat has been ‘weak’ in defending consumers and should take tougher action against failing suppliers, an influential MPs’ committee said today.
The Public Accounts Committee urged the regulator, which oversees the 22 biggest water companies in England and Wales, to impose maximum fines on companies which fail to plug leaks.
Its report comes after two dry years in which eight companies imposed hosepipe bans because of water shortages.
But the MPs warn that further shortages can be expected in coming years, despite the wet winter of 2006-07.
A key factor in beating shortages is ending the leakage of millions of gallons of water from broken pipes.
But today’s report says that Ofwat has been ‘weak… in using sanctions against companies that under-perform against their commitments to meet all reasonable demands for water, while limiting environmental impacts’.
Despite missing its leakage targets every year since 2000, Thames Water received no sanction until 2005/06, said the committee.
Even then, Ofwat did not use the new powers it was granted in 2005 to impose financial penalties on Thames Water.
Instead it accepted a legally binding undertaking from Thames Water to carry out the £150 million replacement of 230 miles of water mains.
But in an interview with Which? in April, Ofwat Chief Executive Regina Finn defended the regulator’s actions over Thames Water. However she said there would not be ‘many more chances left’ if Thames Water failed to hit its targets this year.
Today’s Public Accounts Committee report warned that without efficiency improvements, demand for water will outstrip supply in many parts of England and Wales – particularly the heavily populated South-East.
Committee chairman Edward Leigh said: ‘Ofwat has been passive in its regulation of the water industry. At the same time it has paid little heed to the interests of water users.
‘Nowhere is its limp attitude towards the industry demonstrated more clearly than in the case of the serious wastage of water by Thames Water.
‘Thames missed its annual leakage targets for six years in a row without so much as a slap on the wrist. In future, such a wanton waste of water by a company must be rewarded with the maximum possible fine.’
He added: ‘As another dry summer approaches, the patience of water consumers with the industry regulator will wear increasingly thin.’
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