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January 31, 2013 8:23 pm
A committee of MPs has criticised the government for being too slow to tackle the threat of flooding to households and businesses in spite of recommendations to reduce risk put forward almost five years ago.
The committee overseeing the Department of Environment, Food and Rural Affairs also criticised proposals under the draft water bill that could extend the discretion of Ofwat, the industry watchdog, in setting the price levels and investment plans of water companies across England and Wales.
Anne McIntosh MP, who chairs the Defra committee, said its members were broadly supportive of plans by the government to extend competition in the water market.
But they were concerned that the draft bill, published in July, contained only a broad framework that left too much of the important detail to be decided by Ofwat, or to be introduced through secondary legislation.
The report also criticised a lack of progress in the dredging of water courses and a failure to invest in improving weather warnings by public agencies – actions recommended in a report that followed severe flooding in the summer of 2007.
Publication of the report comes as ministers and the insurance industry remain at loggerheads over what to do to replace an existing 10-year deal to provide universal cover for flood-prone areas which expires in June.
“Solutions that would reduce the impact of flooding are out there and would make a difference, but successive governments have not had the mettle to put them into practice,” said Ms McIntosh.
“The lack of detail in the legislation leads to uncertainty for investors which could result in higher financing costs for water companies and higher water bills for customers,” she warned.
Regina Finn, Ofwat’s chief executive officer, defended the bill, saying: “Customers will lose out if we don’t get better at managing our water.”
Ms Finn said consumers could expect to benefit from key proposals in the bill such as encouraging companies to extend trading of water between operators that could deliver up to £1bn of savings in the long run.
“We welcome the £2bn extra benefits that can be captured for customers if we all work together to make the bill a success,” she said.
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