Opening up domestic water market not on Coffey’s agenda

Opening up the non-domestic water market to competition has had less impact than hoped, giving more reason not to extend the idea to households, Therese Coffey has said.

Giving evidence to the House of Lords Industry and Regulators Committee, which is conducting an inquiry into Ofwat, the secretary of state for environment, food and rural affairs was quizzed about whether there should be greater competition in water.

Coffey said that when water minister between 2016 and 2019, she did not support the idea that opening up the domestic water market would lead to the kind of “miracle” that competition had sparked in electricity supply.

And this sceptical stance had been reinforced by the opening up of non-domestic water supply to competition, Coffey said: “I’m not sure that has had quite impact that was maybe hoped for and gives even more reason not to move to that model for households: it’s not straightforward.”

The secretary of state also indicated she is not currently minded to introduce a single social tariff across the entire country but to allow individual companies to set their own charges for low-income water customers based on factors such as water shortages in their area.

However, she said that water companies should adopt a “consistent” approach to any social tariffs they offer.

Coffey additionally revealed that she is exploring making greater use of the research budget at Defra (Department of Environment, Food and Rural Affairs) to investigate innovation in the water sector.

“I’m considering whether we can spend our research budget on seeing what improvements we could make in that regard. Defra has a pretty substantial research budget so it could be a very good use of taxpayers’ money.”

She also told the committee that Defra officials are working up proposals to increase penalties on water company executives.