Water regulator urged to crack down on serial offenders

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The water industry's regulatory body in England and Wales has been criticised for failing to take action against firms who consistently miss leakage targets.

According to MPs Ofwat's "limp attitude" was most clearly demonstrated when it opted not to fine Thames Water for failing to cut down on leakage for six straight years.

Ofwat said in response to today's report that it was protecting consumers by "keeping prices down, driving improved services and where companies fail to deliver taking effective action".

In the winters of 2004-05 and 2005-06, eight water companies in England and Wales applied restrictions on customers.

But despite the wet weather experienced during the last winter, the House of Commons public accounts committee (PAC) warns that future demand for water is likely to exceed supply.

The committee said that Ofwat "does not understand" how consumers use water and accused it of not collecting enough "robust evidence" to determine which water efficiency projects are the most effective.

PAC chairman Edward Leigh said today: "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."

On the failure to hand Thames Water a fine for failing to hit leakage targets, Mr Leigh noted: "In future, such a wanton waste of water by a company must be rewarded with the maximum possible fine."

The chairman added that consumers' patience with the water industry was wearing "increasingly thin", a situation that could be aggravated with the prospect of a dry summer ahead.

"Ofwat simply hasn't done enough work to understand the factors underlying water usage by consumers and the schemes which might be most effective in encouraging them to save water," Mr Leigh concluded.

"Without Ofwat's work, the average water bill would be £90 per annum higher today than it is," a spokesperson said in response to MPs' findings.

"In the last decade leakage has gone down by a third. Where companies have not delivered, we have taken action to protect consumers."

And the regulator says the action it took against Thames Water last year was the "best outcome for consumers".

"We agreed a legally binding undertaking that committed the company to invest, at shareholders expense, an extra £150 million – more than twice the maximum fine we could have imposed," the spokesperson added.

Commenting on today' report, Susan Kramer, the Liberal Democrats' spokesman on trade and industry said: "Thames Water may have finally pulled its socks up, but all this shows is that stopping leaks was always possible.

"I suspect that if Ofwat had taken a tough stand earlier, this leakage problem could have been long solved, and we would never have lived with last year's water restrictions."

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