Defra publishes Government's Strategic Policy Statement for Ofwat


Defra publishes Government's Strategic Policy Statement for Ofwat

Defra has also launched a new consultation seeking views on the new statement - as the independent economic regulator for the water industry, the decisions taken by Ofwat can have significant impacts on customers, the environment and wider society.

The 23 page draft statement says that in line with its duties and functions, Ofwat should consider how its regulatory tools can enable the water industry to deliver these long-term strategic priorities:

• Protecting and enhancing the environment: Ofwat should drive water companies to be more ambitious in their environmental planning and delivery to contribute towards the priorities set out in the 25 Year Environment Plan. Ofwat should drive water companies to improve their day to day environmental performance to enhance quality of the water environment.

• A resilient water sector: Ofwat should challenge the water sector to plan, invest and operate its water and wastewater services to secure the needs of current and future customers, in a way which delivers value to customers, the environment and wider society over the long-term.

 Serving and protecting customers: Ofwat should push water companies to provide a better and fairer water service for all, by improving customer services and complaints handling. Ofwat should drive water companies to meet the needs of vulnerable customers, including those who are ‘transiently’ vulnerable.

• Driving markets to deliver for customers: Where appropriate, Ofwat should consider how the use of markets-based tools, such as competition, can deliver greater benefits for customers and support the delivery of government’s wider priorities. Ofwat should encourage markets to drive innovation, efficiencies, and promote longer term sustainable investment across the sector.

Key questions Defra is seeking comment on in the consultation  include:

  • Has the government identified the most relevant strategic priorities for Ofwat? If not, please provide details of the priorities that should be included.
  • Does the strategic policy statement effectively set out government’s expectations of Ofwat in supporting delivery of our priorities? If not, please identify where these expectations could made clearer.

It is the Government’s responsibility to set the strategic framework and policy priorities within which economic regulators such as Ofwat operate.

NIC - strategic policy statements "could be better supported by complementary updated statutory duties"

Giles Stevens, Director of Policy at the National Infrastructure Commission, said:

“Strategic policy statements play an important role in providing direction to regulators, though the Commission continues to argue that they could be better supported by complementary updated statutory duties. In the draft SPS for Ofwat, we welcome the focus on long term environmental and climate resilience, which reflects the emphasis we have recommended should be baked into such duties across all sectors.

“The proposed statement builds on recent examples of closer collaboration between regulators to meet the pressures of the future, particularly improving drought resilience by enhancing the capacity of the water supply system as the Commission has recommended. We hope that this strategic and coordinated approach can be replicated for drainage and wastewater to meet the challenge of improving the aquatic environment and believe that the draft statement indicates an important step in this direction.

“We further welcome the continued commitment to increasing competition where feasible, which should also be applied to the provision of strategic infrastructure, recognising the need to protect customers’ interests while meeting growing future challenges.”

Deadline to submit responses to the consultation is 22 September 2021- click here to access the consultation online

Click here to download the Government’s draft strategic policy statement

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